US wheat hits five-month low

By Joanna Newman

THIS has been another poor week for US wheat farmers, with prices slipping below the lows of last September. Despite these latest declines, American wheat remains uncompetitive on the export market.

Analysts point to subsidised exports from eastern Europe and aggressive pricing from western Europe. Cushioned by federal aid (the Loan Deficiency Payment programme), farmers here are reluctant to meet the market and this is resulting in lost export volumes and high stocks at home.

The USA is burdened by large inventories and the imminent winter wheat harvest will exacerbate the problem. Meanwhile, 12-year lows in soya beans are adding to the gloom in the wheat market.

The Chicago March futures contract closed at 264.5¢/bushel on Tuesday (9 February), down from 270.25¢ a week ago.

There has been some talk of possible frost damage to the winter wheat crop in the southern plains. So far, these concerns are not proving sufficient to turn sentiment around.

Looking ahead, there are signs that the glut could diminish, with spring wheat plantings expected to decline sharply this year, according to a report by the US Grains Council this week.