By Joanna Newman
US wheat prices have bounced back after a volatile week.
Late last week, futures prices nose-dived 4% only to surge back in recent trading activity.
The Chicago March futures contract, which has closed at 251.75¢/bushel a week ago, dipped briefly below the 240¢/bushel level, before rebounding to 253.25¢ on Tuesday, 2 March.
There is nervousness surrounding the winter wheat crop. The imminent harvest is likely to add substantially to the already high inventory levels of 722 million bushels, due to good weather conditions this winter.
While most producers expect a high yield, there are some reports that crop conditions in the south may be less than ideal. Grain elevators are overflowing and this may encourage farmers to sell their stocks, driving prices lower.
On the domestic demand side, animal feed usage of wheat to replace maize is not enough of a trend to redress the balance. Hoped-for federal wheat purchasing for the food-aid programme to Russia has yet to materialise.
However, the market has managed to stage a recovery over the past couple of days thanks to a further US sale to Egypt last weekend.
This time 240,000t of soft red winter wheat and 110,000t of the hard red winter variety. Next week the USA may win a tender from Pakistan, which is also fuelling some market optimism.