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Wheat Futures Surge 1%, Buoyed by Falling US Output

November 2, 2017 at 16:25 by Andrew Moran

Wheat prices are trading higher nearing the finish line of the trading week. Wheat futures are climbing higher on a new report that US production has fallen to its lowest level in nearly two decades, and that output levels may shrink next year.

December wheat futures rose $0.0425, or 1.02%, to $4.225 per bushel at 16:12 GMT on Thursday on the Chicago Board of Trade (CBoT). Despite topping $5.50 in July, wheat prices have crashed to as low as $4 – year-to-date, prices have tumbled nearly 10%.

Wheat prices have been plunging in the second half of 2017 as investors contend with a global supply glut. However, traders are pleased that US production has slid to a 15-year low in 2017 and reports that US winter wheat acreage for harvest in 2018 is expected to further decline.

Analysts say that high-quality wheat planted and grown in certain regions of the country are vulnerable to shortages. One of the biggest hurdles for farmers to overcome is the drought that has devastated key growing areas, which accounted for the spike in wheat futures earlier this year.

Kansas and Oklahoma are the biggest wheat producers, but they are anticipated to witness their winter wheat acres dip as much as 10% from the same time a year ago.

With prices coming down, industry experts are warning that farmers in the US Plains will expand their shift to more profitable crops. Over the last year, economists have seen farmers delve into corn, cotton, and soybeans. For example, in Kansas, wheat plantings dropped to 7.6 million acres, the second-lowest acreage since 1919. Meanwhile, corn plantings reached 5.5 million acres, the largest amount since the 1930s, and soybeans hit a record 5.15 million acres.

Many warn that this will continue in 2018 if the trend in prices persists.

Other commodities are rallying towards the end of the trading week. December sugar futures dipped $0.0034, or 2.33%, to 14.27 cents per pound. December coffee futures surged $0.036, or 2.93%, to $1.265 a pound. December soybean futures climbed $0.07, or 0.71%, to $9.982 per bushel.

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