Wheat prices returned above $9 a bushel in Chicago for the first time in more than a month, and set new highs in Europe, as hopes for world supplies took further dents in Australia, China and Europe.
Wheat for December delivery hit $9.03 ¼ a bushel in Chicago, the highest for a spot contract since October 1, while reaching E279.25 a tonne in Paris for the best-traded January lot, a record high for a nearest-but-one contract.
In London, wheat prices rose, with the best-traded May lot hitting £229.00 a tonne, the highest for a contract at its stage in the futures curve.
The gains came ahead of a US Department of Agriculture Wasde crop report on Friday, a key agricultural commodity market report, which investors believe will cut further the estimate for world wheat inventories at the close of 2012-13.
"Wheat is poised for further upside strength, with trade looking for another 2m-3 m tonne decline in global wheat stocks," Richard Feltes at RJ O'Brien said.
Prospects for a downgrade gained credence when the USDA's London bureau overnight trimmed its estimate for European Union wheat production this year, to a level 600,000 tonnes below the department's official figure, citing further downgrades to numbers for Czech and UK harvests.
"The UK crop is revised lower following very challenging conditions," the bureau said.
Separately, the United Nations Food & Agriculture Organization pegged wheat inventories in China closing 2012-13 at 39m tonnes – 16m tonnes below the current USDA estimate - citing a "surge" in feed use last year.
China's wheat imports have proved stronger than many commentators predicted so far in 2012-13, firmness which the likes of Rabobank have attributed to the Chinese harvest this year falling far short of official estimates.
Meanwhile, in Australia, farm officials in New South Wales cut their estimate for the state's wheat crop by 570,000 tonnes to 6.31m tonnes, citing "dry conditions and some losses due to frosting at flowering from late September to mid-October".
The estimate is 200,000 tonnes below a number last week from National Australia Bank, which pegged the national Australian crop of 20.6m tonnes, a figure itself below the 23.0m tonnes the USDA is factoring in.
And on demand, while data on Thursday for US weekly export sales data were, at 209,000 tonnes, at the low end of market expectations, the European Union shipped a robust 421,000 tonnes this week.
The EU figure took the bloc's total in 2012-13 to 5.75m tonnes, some 250,000 tonnes higher than at this stage last season despite a smaller harvest this year.
However, many commentators voiced concerns nonetheless at the extent of price rises, and the potential for "buy the rumour sell the fact" liquidation when the USDA Wasde report is revealed on Friday.
Traders at a major European commodities house said that "the danger is when markets get built up before a USDA report they have a nasty habit of going the other way on report day".
UK wheat prices in particular "seem firm in relation to competing grains and approaching import levels.
"At these high levels demand may begin to decline, and the supportive news that has led us here has already been traded."
At FCStone's Dublin office, commodity risk manager Jaime Nolan Miralles told Agrimoney.com: "The market seems quite intent on going higher for now.
"But I would be quite wary at these levels."