By Joanna Newman
US winter wheat farmers have enjoyed some timely rain in the southern Plains recently and look on course for a healthy harvest this spring.
But with grain elevators still full from the 1998 harvest, storage space will soon become a problem.
There has been little lead from market prices, with the Chicago May futures contract unchanged on the week at 276.5¢/bushel on 16 March.
Any significant drop in wheat prices may encourage cattle producers to substitute wheat in place of maize in their grain rations, as happened in February. Higher feed consumption will help mop up excess inventory.
Not surprisingly, spring wheat acreage will be crucial and all eyes will be on the USDA planting intentions report due out at the end of March.
Burdened with high wheat inventories at home, US producers are paying close attention to the export market as an outlet for wheat stocks.
The market was cheered this week by rumours that the government may lift the trade ban with Iran, although these reports have subsequently been downplayed.
Tender activity for aid shipments to Russia and other donation programmes (711,400 tonnes) has also helped support prices.
However, US wheat remains uncompetitive in the international arena and analysts warn prices may need to undergo a shake-out to secure significant overseas business.
In the week ended 11 March, only 12.6 million bushels of wheat were inspected for export, down from 21.2 million the previous week.