Global wheat rises on demand speculation

Bloomberg.com reports that wheat futures have risen on speculation that demand for US supplies will increase after a 21% price decline in October. As a deepening global financial crisis curbed commodity demand, analysts say, lower prices may encourage overseas buyers to purchase US inventories. Wheat is the fourth-biggest US crop, valued at $13.7 billion in 2007, behind corn, soybeans, and hay.

Global wheat consumption is expected to rise to 655.6 million metric tons in the year that ends on May 31, up 6.1% from the previous year, said the US Department of Agriculture (USDA), which also reported that production may jump 11% to a record 680.2 million tons. As of Oct. 23, overseas buyers committed to purchase 18.9 million tons of US supplies since June 1, down 29%.?

Wheat also climbed on speculation dry weather in the Southern Hemisphere will hurt production. Australian farmers may collect 19.5 million tons this season, Commonwealth Bank of Australia said. USDA forecasts 21.5 million for Australia.?

Argentine production may drop to 9.5 million tons, the lowest since 1995, after dry weather and lower fertilizer use hurt crops, said the country’s Agriculture Secretariat. Last year’s harvest was 16 million tons.