By Joanna Newman
AFTER days of downward drift over the holiday period, US wheat prices have suddenly turned around and kicked off the New Year on a upward note.
The winter wheat crop is believed to be at risk from freeze damage especially in the southern plains of the United States.
With prices already depressed, these concerns have proved sufficient to trigger a rally.
The Chicago March futures contract closed on Wednesday (6 January), at 287.5¢/bushel, up 7.25¢ from the previous day. The market is now at its highest level since early December.
While weather concerns are helping to support prices in the short term, producers are pinning their long-term hopes on further wheat purchases by the US government for food aid programmes, probably to Russia.
Irrespective of the weather conditions, Americas spring harvest of winter wheat should be reduced from last years crop due to a drop in acreage.
There is much uncertainty surrounding the extent of the winter wheat crop, with conflicting assessments of winter wheat acreage for the 1998/99 season. Estimates range from a 10% to 40% reduction from year-ago levels.
The market will closely scrutinise the quarterly grain stocks and acreage report to be released next week.