By Joanna Levin
US wheat has managed to stage a creditable rally over the past week after months of decline. Traders reacted to news of better exports, with 1 million tonnes of wheat shipped in the week ending 10 September, ahead of expectations.
Lack of rain is affecting the Argentinean wheat crop, while areas of the American south-west are also suffering from dry weather.
However, market analysts warn that the US will continue to suffer from severe oversupply and lacks the storage space for all its wheat.
Much of the grain sitting in elevators and bins has not even been sold yet. Although the latest export figures are encouraging, US wheat prices are in many cases uncompetitive compared with European wheat.
The Government is trying to help wheat farmers in this election year by suggesting cash payments and giving away another 2m tonnes in aid. However, the first 2m tonnes of wheat aid announced previously have not even been shipped yet, and therefore this latest proposal has been met with scepticism.
Several market commentators are recommending that producers take advantage of any rally to sell their wheat. The Chicago December futures contract settled on Wednesday 23 September at 274.25¢/bushel, unchanged from Tuesday but up from 263.5¢/bushel a week ago.