Wheat futures surged to the highest price since 2008 on speculation that a drought in Russia may force the country to curb exports, squeezing global supplies and boosting demand for U.S. shipments.

The September-delivery contract jumped as much as 2.7 percent to $6.795 a bushel on the Chicago Board of Trade, the highest level since Oct. 1 that year. Today's rally extends the commodity's 38 percent jump in July, making it the best performer over the past month on the UBS Bloomberg CMCI Index.

Authorities in Russia, the third-largest wheat shipper in 2009-2010, have been battling a heat wave that has scorched farmland and ignited wildfires. Although there's no official statement about export restrictions, the market doesn't rule out such a scenario, Phillip Futures Pte. said in note today.

"It's very, very bullish and there's no sign of it really stopping," Peter McGuire, managing director at CWA Global Markets Pty., said by phone from Sydney. "I wouldn't be surprised if it reaches $7 within the next two trading sessions," said McGuire.

Wheat futures traded at $6.7925 a bushel at 1:58 p.m. in Singapore, while soybeans, rice and corn also climbed. Russia shipped 17.5 million metric tons of wheat in the 2009-2010 season, accounting for about 14 percent of global trade, according to the U.S. Department of Agriculture.

The wheat market had "exploded on fears about tightening global supplies," the report from Singapore-based Phillip Futures said. Some investors were buying on "worries that Russia, a major force on the world wheat market, would ban exports," the report said.

Eoin Treacy's view Food commodities such as wheat and corn are produced in most countries and consumed in all of them, so ascertaining accurate fundamental data for the sector is challenging to say the least. However, there are a number of certainties for an investor and one is that inclement weather conditions can have a dramatic effect on the interaction between supply and demand; often sending prices swiftly higher or lower. Just such a situation is unfolding in a number of food commodities at present where unusually hot conditions in Europe, wet conditions in Canada, floods in China and the threat of locusts in Australia are encouraging speculators to participate in food commodity markets.

Wheat is leading to the upside and hit a new 23-month high today, having broken out its base last week. Prices have rallied for the last five weeks and counting but a downward dynamic would be required to check momentum beyond a brief pause.

Oats broke out of its almost 2-year base today and a fall back below 250¢ would be required to check scope for further upside.

Sunflower Seeds have been consolidating mostly below ZAR3500 for much of the last two years but now appear to be successfully pulling away from that area. A sustained move back below ZAR3500 would be required to question potential for some further upside.

Rapeseed broke upwards from its most recent short-term range today, reasserting its consistent albeit steep advance. The progression of higher reaction lows would need to be broken, with a decline below €350, to question the consistency of the uptrend.

Maize broke upwards from its base three weeks ago and continues to improve on that performance. A sustained move back below €160 would be required to question scope for further upside.

Corn continues to rally towards the upper side of the developing base but is lagging the above food commodities. Nevertheless, a sustained move below 375¢ would be required to begin to question scope for some additional upside.

Soybeans has a relatively similar pattern to corn but has been somewhat steadier. Soybean oil on the other hand has benefitted from renewed interest in the energy sector and continues to hold a progression of higher reaction lows. It is currently testing the upper side of the developing base and a sustained move below 36.55¢ would be required to question potential for an upward break.

Rough Rice remains in a medium-term downtrend but may be in the process of bottoming. The current rally is the largest since December and while prices encountered resistance in the region of $11 today, a sustained move back below $10 would be required to question potential for some additional upside.

Just about all of the above charts show rallies, which in terms of commonality is a powerful signal that investor interest has returned to the food sector. Leaders tend to lead in both directions so when wheat and rapeseed begin to lose uptrend consistency it will likely signal a warning that the advance is entering a riskier environment.