Wheat goes above $10 a bushel

— -- U.S. wheat prices surged to more than $10 a bushel on Chicago futures exchanges Tuesday, while hitting a record on the smaller Minneapolis Grain Exchange, as Canada reported tight stockpiles and millers scrambled for supply.

"For the near-term price, it's still heading higher," says Joe Victor, vice president of marketing at Allendale, a commodity research firm. He says prices will stay elevated until the markets get a better handle on potential production in coming months. "If we have good weather, plenty of plantings, then there's likely a price correction," Victor says. "If it's bad weather … (prices will) continue their upward trends."

The May futures contract for Chicago soft red winter wheat, used in cakes and crackers, jumped by the daily limit of 30 cents to $10.20 a bushel. The nearby March contract closed at $10.03. Wheat prices briefly jumped to more than $10 a bushel in December.

At the Minneapolis Grain Exchange, the March contract for spring wheat closed at $14.63 per bushel — an even steeper price gain. High-protein spring wheat, prized by millers and bakers for its quality, is forecast to have the smallest surplus in at least 30 years, and harvest doesn't start till August.

Trading was influenced by a Canadian government report showing the wheat supply in that nation plummeting 30% from December 2006 to December 2007. The sharp drop was mainly caused by a more than 20% dip in wheat production last year.

The U.S. Department of Agriculture expects the U.S. wheat surplus this year to be the smallest in 60 years. Despite higher prices, U.S. plantings of winter wheat rose only about 4% from last year. Farmers had been expected to increase plantings by far more.

Prices for corn, soybeans and other grains have also surged in recent months. That helped push U.S. food inflation up to 4.9% in 2007 from 2.1% in 2006. The impact has been far greater in less-affluent nations, where people spend more of their income on food.