By Joanna Newman
AFTER hitting 22-year lows earlier this month, US wheat prices have managed to extend their tentative recovery for another week, helped by a blistering heatwave across key growing regions.
Trading in futures has been volatile and dominated by the short-term weather forecasts.
The Chicago September wheat contract has climbed to 272¢/bushel as at Tuesday, 3 August, up from about 258¢ a week earlier.
In recent weeks, temperatures have hovered above 100°F in many wheat areas, raising fears of crop damage and lower protein content for spring wheat.
Any such damage would come on top of a mixed-quality winter wheat harvest.
With most of the winter wheat crop now gathered, farmers are reporting above average yields but disappointing protein content.
Producers will probably find themselves obliged to start selling more wheat into the cash market to free up storage space for the spring wheat crop.
The spring wheat harvest has already commenced in some areas and the unusually high inventories across the USA are starting to present a serious logistical problem.
Domestic demand will struggle to keep pace with the extra wheat hitting the market, while US exports are unlikely to pick up substantially from current levels given the availability of competitive wheat from other sources.
On a positive note, the US Department of Agriculture has tendered for over 275,000 tonnes of wheat for export donations.