India buy fuels wheat to new high

Wheat rose to within 0.3 per cent of a record in Chicago after India bought more of the grain and on speculation supplies from Russia and Australia, accounting for about a quarter of the global exports, will be lower than expected.

India, the world's second-biggest wheat consumer, yesterday bought 50 per cent more grain than offered by suppliers to rebuild its emergency reserves.

Glencore International AG, Toepfer International and Starcom won contracts to supply 795,000 metric tonnes of wheat to India at record prices.

India bought 50 per cent more wheat than the 530,000 tonnes offered by suppliers at a tender last week at $384 a tonne to $397.45 a tonne, depending on the port of delivery, a government official, who didn't want to identified, told reporters in New Delhi. India's government would pay an average $389.45 a tonne for the grain, the official said.

Australia's wheat output, meanwhile, may be 18 per cent less than a government estimate because of dry weather, a survey showed, and Russia said it may curb exports.

"Add them all together and we continue to march higher,'' said Brett Cooper, senior client adviser, commodities, with broker MF Global Australia. "Until immediate supply concerns are fixed, there's no reason why we should stop at the moment.''

Wheat rose to a record in Chicago last week as global consumption outpaces supply and inventories head for their lowest level in more than a quarter of a century. Prices have surged 54 per cent in the past three months, increasing costs for companies, including Premier Foods, the maker of Hovis bread.

Wheat for delivery in December rose as much as 30 cents, or 3.9 per cent, to $8.055 a bushel on the Chicago Board of Trade in after-hours electronic trading. The contract was at $8.05 a bushel in London. Prices reached a record $8.0775 on August 31.

Output in Australia may be 18.5 million metric tonnes, a Bloomberg survey of eight analysts and traders shows. That compares with the government's June estimate of 22.5 million tonnes and last year's drought-reduced harvest of 9.8 million tonnes.

Russian exports

Australia is forecast by the US Department of Agriculture to be the world's third-largest wheat exporter in the year through June, with shipments rising to 14.5 million tonnes from 11.5 million tonnes in the previous year.

Russia is considering sales from state inventories, as well as export duties and quotas, to curb domestic grain prices.

A "working group'' from the agriculture ministry, the Grain Union and the Flour and Cereal Producers' Union will report by mid- September, a ministry spokeswoman said yesterday. The group next meets on September 11.

Russia was the fifth-biggest wheat exporter in 2006-07, according to the US Department of Agriculture.

Wheat for November delivery on the Euronext.liffe exchange gained 10.75 euros, or 4 per cent, to 277.50 euros ($377) a tonne in Paris.