Wheat futures hit record $9

Wheat prices surpassed $9 a bushel for the first time as a drought in Australia cut production, pushing global stockpiles toward a 26-year low.

Australia's wheat crop will fall to 18 million metric tonnes, a US report may say today, from a previous forecast of 23 million tonnes. Stockpiles of the grain in Canada, the world's second-largest wheat exporter, plunged 29 per cent at the end of July from a year earlier, Statistics Canada said yesterday.

Increasing demand from Egypt to India and weather damage to crops from Canada to Australia have driven up global prices by 80 per cent this year. Users including Sara Lee Corp. and PT Indofood Sukses Makmur, the world's biggest producer of instant noodles, are responding by raising prices, fuelling inflation.

"The market is in a real frenzy,'' said Tobin Gorey, a commodity strategist with Commonwealth Bank of Australia in Sydney. "It's feeding through to the consumer.''

Wheat for December delivery rose as much as 20.75 cents, or 2.3 per cent, to $9.1125 a bushel in after-hours electronic trading on the Chicago Board of Trade. The contract was at $9.055 a bushel in London.

The advance comes as Egypt, Jordan, Japan and Iraq plan to buy 460,000 tonnes of wheat. India is seeking to import 5 million tonnes this year to replenish its inventories. The grain, used in livestock feed, noodles, cakes and bread, trades in 60-pound bushels, each with enough grain to make 73 loaves, according to the Web site of Lake Oswego, Oregon-based bread.com.

Milling wheat futures traded on the Liffe exchange in Paris rose ¤4.75, or 1.7 per cent, to ¤280 a tonne. Prices have doubled in the past 12 months.

Wheat for December delivery, the most active contract on the South African Futures Exchange in Johannesburg, rose 65 rand, or 2.1 per cent, to a record 3,242 rand ($452) a tonne.

Rising prices of food, from wheat to milk and pork, are stoking inflation at a time when traders expect the US Federal Reserve to cut interest rates to bail out the housing market and avoid a recession.