World wheat prices have hit new record highs on growing fears that the monthly update tonight, our time, from the United States Department of Agriculture will see a sharp cut in the USDA’s estimate for the 2008 Australian wheat crop.

December wheat in after hours electronic trading on the Chicago Board of Trade in Asia today saw the price top the $US9 a bushell mark in trading over night in Chicago. The crop estimate has been 22.5 million tonnes for several months now but after very dry weather in Western Australia and South Australia in the past 10 days, plus continuing drought in growing areas of Victoria and NSW, there are fears the estimate could be cut to below 20 million tonnes.

World wheat prices have been rising for the past year on concerns about crops on the US, Europe, Western and Eastern Europe, the 2007 Australian crop and lately Canada where a sharp cut in the official Government estimate of its current harvest emerged last week World wheat stocks are already at a 26 year low because of drought in Australia last year and poor growing conditions in parts of China, Europe and The Argentine.

Canadian wheat stocks have fallen 29% because of the faltering harvest and strong exports. Now US reports say the USDA will cut the 2008 harvest estimate to 18 million tonnes in its report due out overnight. It is also expected to contain lower forecasts for Canada and western European crops and will update its estimate for the current US wheat harvest which has been affecfted by cold and wet weather in some growing areas.

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