Caution in US wheat after food aid and pre-election talk

By Joanna Newman

US market talk continues to centre around possible food aid shipments to Russia.

The food aid story, coupled with promises of additional subsidies and programmes for US farmers ahead of the November elections, helped drive prices higher in mid-October.

However, caution has now set in. There are concerns that other regions such as Canada, Europe and Australia will be making their own offers to Russia to alleviate their own domestic oversupply of grain.

USDA Secretary Dan Glickman has pointed out that the Government is still awaiting a formal request from Russia, and that any aid package would include meat as well as grains.

The US wheat market has retreated again in recent days, with the Chicago December futures contract closing on Tuesday, 20 October at 286.25¢/bushel, down from 296¢ a week ago.

Meanwhile, weather conditions for winter wheat planting have suddenly improved and this is putting additional pressure on wheat prices. Farmers are catching up, with 75% of their crop in the ground, compared with a five-year average at this point in the season of 81%.