Wheat Hits Record on US Inventory Report

Wheat futures hit a record high for a third day Friday, soaring near $11 a bushel in Chicago after a U.S. government report confirmed dwindling stockpiles of the grain used to make bread, pasta and other foods.

Wheat's rally lifted other agriculture commodities, with corn and soybean futures trading sharply higher. Precious metals and energy futures also rose.

Wheat prices have surged to historic highs as bad weather has battered crop after crop around the globe, most recently in India and Canada. Foreign buyers scrambling to lock in supplies have increasingly turned to the United States, which is exporting the grain at record pace. The U.S. Department of Agriculture issued a bullish report Friday predicting U.S. wheat inventories will total 272 million bushels by the end of May, the lowest in more than five decades and about 7 percent less than expected last month.

"There's only one thing going on with wheat and that's a shortage of red wheat that can be milled into bread and pasta," said Elaine Kub, analyst with DTN. "People are just buying up whatever wheat they can."

Wheat for March delivery surged the 30-cent daily limit to settle at $10.93 a bushel on the Chicago Board of Trade _ the highest ever for that contract. Wheat also hit record-highs on Thursday and Wednesday.

Unprecedented demand for agricultural products from fast-growing countries including China and India has exacerbated the supply crunch for wheat, which has more than doubled in price since last year.

The higher wheat prices may not immediately affect U.S. consumers since big food companies like Kellogg Co., General Mills Inc., and Kraft Foods Inc. typically protect themselves from price volatility with long-term supply contracts. But the spike could lead foreign government to implement price controls to thwart already rising food inflation, especially in developing countries, analysts say.

"People must eat so you may see governments stepping in to help citizens," Kub said. " You're already seeing problems in places like Pakistan, where they're literally running out of flour and wheat."

Other agriculture futures also rose Thursday. March soybeans climbed 7.5 cents to settle at $13.39 a bushel after earlier spiking to a record $13.745. March corn rose 8.5 cents to settle at $5.08 a bushel, while March oats added 9.25 cents to settle at $3.50 a bushel.

In metals futures, platinum hit another record on supply concerns fed by South African power cuts that have slowed mining in the world's largest platinum producer.

Platinum for April delivery surged to an all-time high of $1,890.90 an ounce in aftermarket trading on New York Mercantile Exchange. Earlier platinum settled $32.60 higher at $1,884 an ounce.

Other precious metals also gained. Gold for April delivery jumped $12.30 to settle at $922.30 an ounce, while March silver added 33.5 cents to $17.110 an ounce. March copper increased 8.55 cents to $3.5395 a pound.

In energy futures, oil prices rose Friday on renewed concerns about supply disruptions in Nigeria and worries that U.S. recession would curb demand. Light, sweet crude for March delivery jumped $3.66 to settle at $91.77 a barrel on the Nymex.

Other energy futures also traded higher. March heating oil futures jumped 9.56 cents to settle at $2.5541 a gallon, and March gasoline rose 8.94 cents to settle at $2.3572 a gallon.