USDA inventory report hits grain prices

By Joanna Newman

US WHEAT prices have plummeted in continued worries of the amount of wheat in store.

The Chicago March futures contract closed on Wednesday (13 January) at 274.25¢/bushel, compared with 287.5¢ a week ago.

An estimated 1.89 billion bushels of wheat was in store on the 1 December 1998 – more than in any previous December since 1990.

The quantity stored represents an annual increase of 17%, according to figures from the United States Department of Agriculture.

Fears of low prices have resulted in farmers planting a smaller winter wheat crop this year but even that has failed to restore market optimism.

This winters wheat acreage has shrunk to a mere 43.35 million acres, the smallest planting since the early 1970s.

Many analysts warn that the drop in acreage is insufficient to restore a supply equilibrium.

Despite the market collapse, US domestic prices are still at a premium to world levels.

But this weeks devaluation of the Brazilian Real is seen as further hurting US export competitiveness for all grains.

Unless there is a major weather scare for the US winter wheat crop, prices are expected to remain depressed.