Wheat prices are surging this week as temperatures plunge in the U.S. Plains states and after a government report showed domestic supplies slipped.
The price of wheat for December delivery climbed 11 cents, or 2 percent, to $5.54 on Thursday, taking its gains for the week to 7.6 percent. If the crop holds its current level it will be the biggest weekly price surge since March.
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Prices started rising on Monday when a monthly report from the U.S. Department of Agriculture lowered its estimate for domestic wheat supplies. Weather issues in Australia have also damaged the crop there.
The week's cold snap in wheat-growing states, such as North Dakota, Kansas and Nebraska, also pushed prices higher, as traders speculated that the winter wheat already planted could by damaged, said Mike Zuzolo, president of Global Commodity Analytics & Consulting in Atchison, Kansas.
The government's report "brought the weather from a back-burner issue to a front-burner issue," Zuzolo said.
The wheat market is recovering from a slump that sent prices to their lowest level in more than four years in September. Despite a rebound since the late summer, prices are still down 8 percent this year.
In the corn market, prices are also surging because of the cold weather, Zuzulo said.
The government is still forecasting a record corn crop this year, but on Monday nudged its estimates lower by 68 million bushels to 14.4 billion bushels. About 20 percent of that crop has yet to be harvested, though, in states including Illinois, Michigan and Nebraska.
While it is unlikely that the crop will be damaged by the plummeting temperatures, the snow and wintry conditions could make it difficult for farmers to gather the crop and for grain trucks to collect and distribute it.
Corn for December delivery rose 8.5 percent, or 2.3 percent, to $3.86 a bushel on Thursday. Prices are up 5 percent this week, but are down 9 percent this year.