Drought conditions in the northern U.S. Plains that have propelled spring wheat prices to a three-year high worsened in the past week and there are forecasts for more hot and dry weather that could crimp the harvest.
As the world struggles with a glut of grain that has filled inventories to record-highs and cast a wet blanket over the corn and bean markets, the shortage of high-quality spring wheat has taken markets by surprise.
The weekly U.S. Drought Monitor, produced by a consortium of climatologists, on Thursday showed that 25 percent of North Dakota was classified as being in "extreme drought," up from 7.7 percent a week earlier.
MGEX spring wheat futures jumped another 5.1 percent on Thursday, hitting a peak of $7.59-3/4 a bushel.
"The top has been taken off," said North Dakota State University extension agronomist Joel Ransom, referring to the crop’s harvest potential.
"We are kind of fixed that we cannot get back to trend line for sure."
Conditions are going to be deteriorating once again across that area."
Temperatures also were expected to rise, Tapley added, and will likely be above normal for the next 10 days.
The drought has been devastating to hardest hit ranchers in the regions reeling from rising hay costs and withered grazing pastures, said experts.
(Additional reporting by Julie Ingwersen and Theopolis Waters; Editing by Marguerita Choy)