Wheat, Corn Head for Second Weekly Gains as Stocks May Fail to Meet Demand

Wheat and corn rose in Chicago, heading for the second straight week of gains, on concern grain stocks may be too low to meet escalating demand.
The world grain markets will face a "DC" next season even though production may increase, the International Grains Council said yesterday. World cereal production will jump by 4.6 percent to 1.805 billion metric tons in the year to June 2012, while consumption will advance 1.1 percent to 1.808 billion tons, he said.
"Carryover stocks could be very tight and we are trying to have plantations near record this year states," said Gary Mead, an analyst at VM Group in London.
Wheat for May delivery rose 6 cents, or 0.8 percent, to $ 7,455 per bushel at 11:01 am London time on the Chicago Board of Trade. Prices have risen 3.1 percent this week. The grain fell the most since Aug. 15 March on concern the previous week's earthquake in Japan could jeopardize the claim.
"It's remarkable how quickly prices recovered after the selloff following the earthquake in Japan," said Mead. "I'm not surprised, because the fundamentals for most grains are very strong."
Milling wheat for May delivery traded on NYSE Liffe Paris rose 6 euros, or 2.6 percent to € 235.75 ($ 333.77) per tonne.
China buys
China, the world's largest consumer of wheat, bought 116 000 tons of U.S. grain in the week ended March 17, the largest purchase of its kind since July 2005, Agriculture Department data showed yesterday. The amount was a "surprise," said Larry Glenn, an analyst at the agricultural frontier in Quinter, Kansas.
Corn for May delivery added 7.5 cents, or 1.1 percent, to $ 7.10 a bushel in Chicago. The grain, up 3.9 percent this week, touched $ 7,105, the highest since March 9.
May soybeans rose 8.75 cents delivery, or 0.6 percent, to $ 13.6325 a bushel. The oilseed was little changed during the week.
Food prices rose to a record in February in raw material costs, the United Nations said earlier this month. The corn and wheat could increase further as the wet weather in northern U.S. Plains production curbs grains, VM Mead said.
The states of the northern plains of North Dakota, South Dakota and Minnesota are among the areas with a greater threat of flooding in the coming weeks, according to the National Oceanic and Atmospheric Administration. Too much rain can cause flooding along the Red River of the North and Mississippi and Minnesota rivers.
"It's going to delay planting, which is likely to lower yields, and farmers could get frost damage early if we exploitation," said Mead. "This is still the early stages of a bull market for corn and possibly for wheat."

(Source: http://www.bloomberg.com/news/2011-03-25/wheat-poised-for-second-weekly-gain-on-china-purchases-dry-u-s-weather.html)