US wheat prices back at Februarys lows

By Joanna Newman

US wheat prices have retreated to their February lows, in a nervous market dominated by the ripening winter wheat crop and spring planting conditions.

Wheat is very much a weather market at this point in the season, and futures prices are fluctuating wildly according to short-term forecasts.

Timely rains are helping the winter wheat crop in the south, but at the same time weather conditions are favouring spring planters.

Winter wheat is maturing slightly ahead of average, with 15% of the crop headed against a five-year average of 13%, according to the US Department of Agriculture.

Meanwhile spring planting continues at a faster rate than usual thanks to favourable weather, just over a fifth of the wheat is in the ground by now, compared with a five-year average of 16%.

Consequently the Chicago May futures contract closed on Tuesday (27 April), at 249.5¢/bushel, down from 257.25¢ a week ago and down a full 15% from the level posted in late March.

Farmers are worrying where they will store their imminent harvest, as Americas grain elevators are already overflowing with unwanted wheat.

One possible outlet is in the feed ration. Certainly, the sharp drop in wheat values will make this commodity more attractive as a livestock feed-grain compared with maize.

Meanwhile the US government is in the market for 575,000 tons of domestic wheat for the Russian aid donation programme, which is lending some further support to the demand side of the equation.