By Joanna Newman
AFTER months of decline, wheat prices have managed to stabilise in recent days, bolstered by evidence that a cold snap could inflict limited damage on the winter wheat crop.
Forecasts of freezing weather in the corn belt have helped to push wheat futures prices higher. However, it is too early in the season for lasting harm to winter wheat, and only extended freezing temperatures could impact crop yields.
The Chicago March contract closed on 22 December at 276.75¢/bushel, up slightly from 276.25¢ late last week.
Export demand is running at healthy levels, which is lending further support to the market. In the week ended 17 December, 25 million bushels of wheat were inspected for overseas shipment, ahead of estimates of 18-24 million bushels.
On the other hand, the hoped-for aid shipments to Russia have still failed to materialise, due to diplomatic roadblocks and bureaucracy. After months of delay, most market commentators do not expect wheat to head for Russia until January at the earliest.
This has been a year of grim records for grain farmers. At the start of 1998, wheat prices were already considered low at around 350¢/bushel, having halved from a peak of 700¢/bushel in early 1996.
Since then the slide has continued inexorably, pushing wheat to twenty-year lows of around 250¢/bushel in August, a 28% drop in the first eight months of the year. A tentative recovery has lifted the market to Junes level of 275¢/bushel today.
Thanks to El Niño, the 1997-1998 winter wheat yield was the highest ever at 46.9 bushels/acre, while the 1998 spring wheat crop enjoyed the third highest yield on record.
Overall, American wheat farmers have produced 2.56 billion bushels, up from 2.53 billion in 1997 and the largest crop this decade.
This comes at a time of recession in the livestock industry, high world-wide wheat inventories and struggling exports. During the 1997-98 season, America exported only 1.04 billion bushels according to some estimates, compared with 1.6 billion bushels 10 years ago.