Wheat futures vaulted above $12 a bushel for the first time Tuesday as investors bet that a shortage of high-quality milling wheat would keep prices high for the grain used in bread, pasta and other foods.
Other commodities traded mostly higher, with crude oil surpassing $100 a barrel and silver hitting its highest level since 1980.
Wheat prices have surged 34 percent since the start of year, pushed higher by growing world demand, tight supplies and bad weather that has pummeled crops in Canada, Argentina and India.
U.S. exporters are selling wheat at a record pace to meet demand, rapidly depleting stockpiles. The Department of Agriculture expects U.S. wheat inventories will total 272 million bushels by the end of May - the lowest level in more than five decades.
"Everybody is coming to the realization that the shortage of wheat is not going away," said Elaine Kub, a commodities market analyst at DTN. "There's no relief coming from anywhere in the world until June," when the U.S. wheat harvest begins.
Wheat for May delivery jumped the 90-cent daily trading limit to settle at $12.145 a bushel on the Chicago Board of Trade, the highest ever.
Relatively few farmers in Douglas County will be able to cash in on the record prices, at least not immediately, said Matthew Vajnar, grain merchandiser for the Ottawa Cooperative Association, which has elevators in Lawrence and throughout the area.
Most hard red winter wheat, harvested this past summer, already has been sold, he said. Those who do have wheat in the ground now will be hoping for good weather, and an early - and bountiful - harvest.
"It's not like the Kansas farmer can do a lot about it now, other than to make sure he puts top-dressing fertilizer on his wheat," Vajnar said. "He wants to maximize his yield, obviously."
Other agriculture futures traded mixed Tuesday. Soybeans for May delivery added 15 cents to settle at $14.8425 a bushel in Chicago, while March corn declined 2.75 cents to settle at $5.305 a bushel.
Unprecedented demand for agricultural products from fast-growing countries including China and India has exacerbated the supply crunch for wheat, which has more than doubled in price since last year.
The higher wheat prices may not immediately affect U.S. consumers because big food companies like Kellogg Co., General Mills Inc., and Kraft Foods Inc. typically protect themselves from price volatility with long-term supply contracts. But analysts say some consumers are already feeling the pinch - from smaller cereal boxes to having to ask for bread at restaurants - and should expect higher prices to eventually work their way into the grocery aisle.
Also affecting the cost of food is the high price of crude, which surged back above $100 Tuesday as investors ignored reports of more U.S. economic turmoil and bet that oil will extend its advance.