Wheat and platinum at record highs

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Wheat and platinum prices continued their record breaking runs while copper hit a near three-month high. Crude oil consolidated after falling in the previous session following a huge increase in US crude stocks.

Wheat prices in Chicago, Minneapolis and Kansas all rose by their 30 cent daily trading limit as dealers looked forward to the latest supply and demand report from the US Department of Agriculture, due on Friday.

Exceptionally strong overseas demand for high-protein spring wheat, which is used to make flour, has been a key driver of the recent rally. At the Minneapolis Grain Exchange, the March wheat contract hit a record $15.23 a bushel yesterday.

US exporters have sold 281m bushels of hard red spring wheat in the current marketing year, well above the USDA’s projection for sales of 275m bushels. An upward revision to the USDA’s projection for hard red spring wheat sales is expected, but this may be offset by downward revisions for other wheat grades.

In Chicago, CBOT March wheat reached a record $10.63 a bushel while prices in Kansas also rose by their 30 cents daily trading limit to $11.10¼ a bushel.

“We have seen a rally of epic proportions in the wheat market,” said Greg Wagner, analyst at Horizon Strategies. “The question is how other agricultural markets will respond to this price race we are currently seeing.”

US corn prices have also been supported by very strong overseas demand. In January, the USDA revised its projection for global demand in 2007/08 to 772.72m tonnes from a previous estimate of 766m tonnes. A further increase in the forecast for world demand is possible today. CBOT March corn slipped 9½ cents to $4.92 a bushel.

Gavin Maguire of Iowa Grain said corn was an appealing option for animal feed because of the large price differential with wheat. With US ethanol manufacturers almost entirely dependent on corn as their primary raw material, Mr Maguire said any upward revisions by the USDA to feed and energy requirements for corn could provide impetus for prices.

US soyabean inventories have shrunk to low levels but demand from Asia remains extremely robust as governments across the region fear supply shortages and have tried to bolster their stocks.

CBOT March soyabeans dipped 2 cents to $13.16½ a bushel after hitting a record $13.73 on Thursday. Weather conditions in South America remain critically important for the soyabean market, with mixed reports from both Argentina and Brazil producing uncertainty about the outlook for their harvests.

Copper rose 2.9 per cent to $7,540 a tonne, a near three-month high, after a hefty drop of 2,500 tonnes in LME stocks, which have shrunk to their lowest level since November. Traders say they anticipate further falls in LME stocks as copper moves from Korea to China to help repair power lines and buildings damaged by recent severe winter weather.

Platinum rose 1.3 per cent to $1,833 a troy ounce after hitting a record $1,850, while gold inched 0.5 per cent higher to $904.80 a troy ounce.

Oil prices rebounded on reports of production losses in Nigeria, with Nymex March West Texas Intermediate up 71 cents at $87.85 a barrel while ICE March Brent gained 66 cents at $88.44 a barrel.

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