Almost complete US wheat harvest faces slack demand

By Joanna Newman

DOMESTIC wheat prices in the US have continued to stagnate at extremely low levels over the past week.

The Chicago September futures contract closed on Monday (19 July) at 245.25¢/bushel (approximately £55/t), little changed from a week ago and down substantially from the 320¢/bush (£72/t) l level seen at the start of the year.

The winter wheat harvest is 81% complete, according to the United States Department of Agriculture (USDA), and the reality of yet more grain in storage rather than in the fields is depressing the market.

Despite weather scares in June, farmers have actually managed to gather their crop ahead of time. At this point in the season, the typical completion rate is only 76%.

Overflowing grain bins and favourable weather conditions for spring wheat are putting a cap on wheat prices.

In an effort to shift wheat inventories before the next wheat harvest this autumn, the USDA has announced that it plans to purchase 17.4 million bushels of wheat at the end of the month and export it to needy countries to free up space in the elevators.

On the bright side, low prices finally appear to be encouraging export demand.

A total of 661,000t was sold in the week ended 8 July, well ahead of expectations. However, analysts warn that the USA is still uncompetitive against European wheat in world markets.