By Joanna Levin
THE skies have opened over Americas Midwest grain belt and farmers are enjoying ideal weather conditions for their newly planted spring wheat crop.
But once again, expectations of a bumper crop at home and poor export demand overseas have combined to drive wheat prices lower.
According to early reports from Texas, the winter wheat harvest is showing better-than-expected yields, which will exacerbate the oversupply situation.
The US Department of Agriculture (USDA) has raised its estimate of the winter wheat crop by 37 million bushels to 1.74bn bushels.
About 93% of the winter wheat crop has headed, compared with a five-year average of 85% for this time of year. Farmers have already harvested 9% of their winter wheat, ahead of the normal 4%.
Thanks to the ideal weather conditions, the carry-out of wheat stocks from the 1997/98 season is estimated at 764m bushels and the oversupply is expected to worsen.
Next spring, the carry-out wheat stocks will climb to 827m bushels, the highest since 1990/91, according to revised forecasts from the USDA.
Previously forecasts were only 766m bushels for spring 1999, but these were raised this due to lower Pakistani imports and higher Australian production. Australia is expecting a 10% jump in its new wheat crop yield, which is currently being planted.
The Chicago July futures contract closed on Friday (12 June) at $2.793¢/bushel, down 1¢. Many analysts expect wheat to drop another 20¢ from here.