Drought shrivels worldwide wheat supply

SINGAPORE (Reuters) – Analysis – From Australia to Argentina, erratic weather is slashing wheat crops of the major producers, which is threatening to push up prices to multi-year highs and making it difficult for countries to replenish stocks.

…Appetite for feed wheat for livestock is also likely to grow as mills cut the usage of corn because its price has soared on strong demand from ethanol makers.

“It is going to be a year of tight supplies,” said Mark Samson, vice president for South Asia of the U.S Wheat Associates. “And with expectations of high world prices, more hedge funds are increasingly paying attention to this market.” The interest of investment funds in grains is growing and helping to push up prices. The Deutsche Bank Fund now allocates 22.5 percent of its investment funds to wheat and corn trading.

Reuters