The worst droughts in decades are wilting wheat fields from China to the United States to Britain, overwhelming Russia's return to grain markets and driving prices to the highest levels since 2008.
Parts of China, the biggest grower, had the least rain in a century, some European regions are the driest in 50 years and almost half the winter-wheat crop in the U.S., the largest exporter, is rated poor or worse. Inventory is dropping 8.8 percent, the most in five years, Rabobank International says. Prices will advance 20 percent to as high as $9.25 a bushel by Dec. 31, a Bloomberg survey of 14 analysts and traders shows.
Ukraine and Russia to curb shipments and increasing the U.S. share of global sales by the most since 2004. Russia ending its export ban on July 1 and Ukraine lifting quotas may not be enough as crops wither elsewhere, fueling gains in food prices which the United Na! tions says are already near a record.
"In 32 years, I've never seen so many problems in so many places," said Dan Basse, the president of AgResource Co., a farm researcher in Chicago.
"We're concerned about the world story now," said Basse, who has been studying agricultural markets since 1979 and expects prices as high as $10 this year.
Higher prices will help U.S. farm income rise 20 percent to a record $94.7 billion this year, the government estimates. It also means the most profit ever for Moline, Ill.-based Deere & Co., the largest maker of agriculture equipment, analysts' estimates compiled by Bloomberg show.
Futures traders anticipate rising wheat prices through March 2013, according to data from the Chicago Board of Trade. Speculators almost tripled their bets on gains in the two weeks ended May 31, figures from the Commodity Futures Trading Commission show. The most widely held option gives the holder the right to buy wheat at $9 for July.
Demand from some of the biggest importing nations may decline as their harvests improve. Egypt, the largest buyer, will purchase 6.9 percent less in the 12 months ending in July 2012.
Rolling four-week grain exports to northern Africa from France fell 49 percent since the end of March.