By Joanna Newman
A SEVERE drop in exports has helped drive wheat prices down in recent days. Exports plummeted to a mere 7.9 million bushels in the week ending 5 November, a fraction of the four week average at just 48%.
In a disappointed reaction, the Chicago December futures contract dropped to a close of 288.0¢/bushel on Tuesday 17 November, compared with 292.5¢/bushel just under a week ago. US food-aid to Russia has still not translated into physical shipments of wheat.
Indeed, there is little good news for prices these days. Future exports to China could be hurt by a feared Chinese currency devaluation, and domestic oversupply will grow with the winter wheat crop. Almost all the winter wheat crop is in the ground and 67% of the emerging crop is rated good to excellent, due to good weather conditions.
As with maize, US wheat farmers have been able to delay selling their recently harvested summer wheat crop, thanks to Government subsidies which have helped their cashflow.
Loan Deficiency Payments have bought time for loss-making wheat farmers. But producers will still have to bring their product to market eventually, probably in the spring, and this will depress prices in the future, analysts warn.