Prices to drop 30% in a year

Farmers are sowing the seeds for an end to the biggest rally in wheat since the Soviet Union cornered the US market in the 1970s.

Growers from Kansas to India are preparing the world's largest wheat crop in 10 years, overwhelming demand and refilling barren grain bins. The cereal has risen 78 per cent this year, the most of any farm commodity.

Prices would fall 30 per cent to $6 a bushel within a year, said James Gutman at the Goldman Sachs Group in London and Pierre Martin, manager of a $490 million commodity fund at DWS Investment.

Chicago futures markets show a similar drop. Hedge funds have curbed their bets on the rally, trimming net long positions in futures and options contracts by 44 per cent in the past five weeks, government data show.

"Would I buy wheat today? No,'' said Jim Rogers, the chairman of Beeland Interests, who predicted the start of a rise in commodity prices in 1999. "Wheat has been going straight up for about a year. I don't like to jump on a moving bus.''

High imports lift Chicago futures

Wheat futures gained for a third day as importers in Asia, and Africa sought supplies.

Iraq planned to buy at least 50,000 tonnes at a tender, with a deadline for offers at noon local time on September 29, the Grain Board of Iraq said today. Ethiopia, Japan and Pakistan are also seeking shipments, according to statements and reports.

Wheat for December delivery rose as much as 22.25 cents, or 2.6 per cent, to $8.9625 a bushel, and was at $8.8975 on the Chicago Board of Trade as of 10:56 am London time. The price gained 3.3 per cent last week and was up 35 per cent in the past nine weeks. The grain reached a record $9.1125 on September 12.

Ethiopia might purchase 150,000 tonnes of wheat from North America to help curb food prices, Addis Ababa-based Fortune newspaper said yesterday, citing people it didn't identify.

Japan planned to buy 64,000 tonnes of feed wheat on October 3, the government said on September 21. Pakistan may invite offers for as much as 1 million tonnes, according to the Trading Corporation of Pakistan.

Wheat for November delivery on the Euronext.liffe exchange gained 5.25 euros, or 2.1 per cent, to 260.25 euros ($367) a tonne as of 11:55 am local time in Paris. Prices have gained 85 per cent in a year.