December wheat futures hit a new contract high on Thursday at $ 8.43 a bushel. Among the reasons were weather problems in Australia and Canada, including a cut-off from rail service to Vancouver and general inflationary concerns. In addition, record stocks by world exporters pushed up prices in Russia and Egypt faced shortages just as the International Grains Council cut its forecast for world wheat production.
The United States is a large wheat producing country, second only to China, the European Union and India. Wheat is the third largest US field crop in terms of area planted and gross farm receipts, behind corn and soybeans. It is the best grain produced for human consumption in America, grown in over 40 states. Kansas and North Dakota are generally the largest producers.
Wheat is a type of grass that humans have eaten since the dawn of civilization. George Washington was one of the first Americans to plant wheat in the late 1700s. Chicago wheat for December delivery was trading at $ 8.21 a bushel Friday at noon. December corn brought in $ 5.70, while January beans traded at $ 12.62.
Where’s the beef?
Meat packers sold record amounts of beef to China last week, while Japan was also a big buyer. China typically buys from Brazil, but has banned Brazilian beef due to detection of mad cow disease. So now the demand from China has shifted to the United States. The USDA planned to release a Cattle on Feed report on Friday after the close, which should contain clues about future livestock supply. Trade estimates are expected to be about 2% more cattle in US feedlots compared to the same time last year. December cattle closed at nearly $ 1.3350 per hundred pounds on Friday, up about a cent and a half on the week.
Inflation is a global concern
Recent surges in inflation are by no means unique to the United States; Britain and Japan both announced record price hikes this week, with the UK’s consumer price index jumping 4.2% in October, the biggest increase in 10 years. Fuel and energy costs contributed to the sharp increase. Japan’s wholesale inflation rate was at a 40-year high in October, and retail consumer prices are also heating up. Last week, news broke that the U.S. consumer price index hit 6.2% in October. February gold was trading at $ 1,852 an ounce Friday at noon.
Opinions are solely those of the writer. Walt Breitinger is a commodity futures broker at Paragon Investments in Silver Lake, KS. He can be contacted at (800) 411-3888 or at www.paragoninvestments.com. This is not a solicitation of an order to buy or sell on a market.