World wheat prices finished the week at record levels in Chicago as continuing concerns about world stocks and falling production forced traders to cover.
It was the best week in eight for wheat, which closed at $US7.42 a bushel on the Chicago Board of Trade, after hitting an all-time intra day high of $US7.54 a bushel on Thursday.
Wheat for December delivery rose 7.8% last week and the price for the most current futures contract have almost doubled in the past year as production has fallen in the US, Canada and Australia (the three major exporters of the grain), as well as falling in Western and Eastern Europe in past months.
Even though US production has fallen because of the very wet summer in some major growing areas, US exports are running 30% ahead of last year, according to figures from the US Department of Agriculture.
That's because world stocks are sliding and tipped to hit 26-year lows later this year.
The Australian 2007 crop failed, falling to 9.9 million tonnes and although the 2008 crop is forecast to recover to 22.5 million tonnes, there are still doubts about conditions in NSW, parts of Queensland and Western Australia. European production also slid and last week Canada cut its harvest estimate.
This has seen world wheat prices boom for most of 2007, but the rise in the Australian dollar since January has cut those gains, up till the past fortnight.
Last week, AWB said the 2007-2008 wheat pool price had been raised by $30 a tonne, thanks to the easing in the dollar and the still-strong prices.
Canada's cut in its forecast, down 20% to 20.322m tonnes came the same day as the International Grains Council trimmed its forecast for this year's global wheat harvest to 607 million tonnes from a previous estimate of 614 million tonnes.
Production in the European Union is forecast to fall 38% by May 31 next year, according to forecasts from the US Department of Agriculture.
Drought and then heavy rain has hurt crops in France (the biggest grower in the EU), Germany and Britain.
And the USDA said worldwide wheat stocks could fall to 114.8 million tonnes by next May, the lowest in 26 years.
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Elsewhere, copper futures had their best week in four months, thanks to a sharp rise Friday on the back of those better than expected figures for new US home sales and durable goods production.
December copper on Comex rose 7.35 USc, or 2.2%, to $US3.35 a pound on Friday, to take the gain in New York to 6.4%, the best since April.
Figures out Friday though showed what moves copper prices.
They revealed that US copper consumption dropped 3% in the five months of 2007, after falling 6% in the year to last December.
That would have been negative for the metal, but surging demand elsewhere offset the impact of the US down-turn in demand.
So much so that The International Copper Study Group said worldwide demand exceeded production by 300,000 tonnes over the first five months of this year.
Chinese consumption surged 37% and demand in India jumped 18%.
That's why BHP Billiton was so confident about the outlook for copper and other commodities in its 2007 profit announcement.
In fact, Friday was a very mixed day for the metal: earlier in London prices fell 1.5% as stocks monitored by the London Metal Exchange rose 1,750 metric tons, or 1.4%, to 125,500 tons, the highest since June 1. (Stockpiles jumped 23% this month so far.)
But then figures emerged on Chinese stocks, which showed an 18% drop over the past week in stockpiles monitored by the Shanghai Futures Exchange.
That reversed the LME price which ended up almost 1% at $US7, 315 a tonne (or $US3.32 a pound), for three month metal.
That took the rise on the week for LME metal to 5.7%. Prices in New York kicked higher on those economic figures and the stronger consumption figures for China.
Aluminium rose 2.9%, zinc moved 2.4%, lead rose 13% (up 95.5% since January on strong Chinese demand for batteries), nickel rose 5.7% and tin rose 8.9%.
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And US oil prices settled above $US71 a barrel on Friday, thanks to a rise in demand for petrol and those surprise US economic stats. Nymex crude for October delivery closed up $US1.26 to $US71.09 a barrel.
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Gold rose as did silver.
December gold futures on Comex rose $US9.10 to $US677.50 an ounce to end the week up 1.6%. It is still down 2.2% so far this year.
December silver futures rose 30 USc to $US12.098 an ounce. While the price rose 2.5% last week, it is still down 6.5% this year.
