– McClatchy Newspapers

SAN FRANCISCO – Wheat futures rose Thursday as the U.S. Department of Agriculture cut its world crop forecast for the grain because of the Russian drought, but the USDA also said it expects more production in the United States.

Wheat has fetched higher prices as top exporter Russia, along with other neighboring former Soviet republics, have suffered from a drought this summer.

Nearby wheat for September delivery added 18 cents, or 2.6 percent, to settle at $7.13 a bushel on the Chicago Board of Trade. The most-active December contract rose 19 cents, or 2.6 percent, to end at $7.44 a bushel.

Prices have rallied nearly 70 percent since hitting a three-year low June 9. Russia last week imposed a temporary ban on wheat exports, sending prices to their highest levels in nearly two years.

Wheat futures rose nearly 40 percent in July as conditions in Russia and neighboring wheat-producing countries deteriorated.

Ukraine reportedly is mulling a similar ban on wheat exports, which would apply even more pressure on the commodity.

“The market remains very nervous,” said Jerry Gidel, an analyst with North America Risk Management Services in Chicago.

The USDA on Thursday released its monthly report on agricultural supply and demand, estimating world wheat production at 645.7 million metric tons, down 2.3 percent from its July estimate.

The agency forecast wheat stocks at the end of the 2010-11 crop year would total 174.8 million metric tons, down 6.6 percent from its July forecast. World wheat production last year was estimated at 680.3 million metric tons, with 2009-10 ending stocks of 194 million metric tons.

U.S. production was forecast to be 49 million bushels higher, reflecting better yields for spring wheat. Winter wheat production was also raised slightly due to better yields in parts of the United States.

Exports are projected to be 200 million bushels higher, to 1.2 billion bushels.