Wheat surging as La Nina threatens harvests

Wheat crops in China, the world’s biggest producer, and the US are threatened by continuing drought as La Nina persists, weather forecasters said.

The countries will be the last to emerge from the dry weather linked to La Nina, a cooling of the Pacific Ocean, and the conditions may linger for two more months, said British Weather Services and Telvent DTN Inc. Wheat may average $8.50 a bushel in Chicago from now to June 30, said Abah Ofon, an agricultural commodity analyst at Standard Chartered Bank in Singapore. That’s 12 per cent more than the price today.

Wheat climbed five per cent on Thursday as grain prices soared after US corn stockpiles dropped to 6.52 billion bushels at the beginning of March, the lowest for the date since 2007, according to the US Department of Agriculture. Global food costs climbed to a record in February, the United Nations estimates, contributing to unrest in northern Africa and the West Asia and helping oust leaders in Tunisia and Egypt.

“If it takes another two months, we’re going to be in serious trouble,” said Jim Dale, a senior risk meteorologist at British Weather, in an interview. “Time is of the essence. If you lose time, you’re losing money, quantity and quality.”

Sustained dry conditions in China and the US will parch crops that have already deteriorated in Texas and Oklahoma and that are developing in northern China, BWS and DTN said.

“Weather is going to be key,” Sudakshina Unnikrishnan, an analyst at Barclays Capital, said in an interview in Singapore yesterday. “Even if we have a move-up in acreage, it doesn’t automatically translate to an increase in production.”