By Joanna Newman
US wheat prices have dropped to their lowest level since late September in recent days. There was, however, little change in the market to account for the slide.
Analysts point out that prices are partly under pressure because of the good weather conditions for the winter wheat crop. So far, winter wheat is right on track with 88% of the crop emerged compared with a five-year average of 89%.
With the nations grain elevators already overflowing, a strong winter harvest will exacerbate the severe oversupply. Much of this years summer crop is still unsold.
The Governments Loan Deficiency Payment (LDP) subsidies have helped grain producers to buy time with their cashflow. Given the low wheat prices, farmers are in no hurry to move their product to the market.
Recent wheat exports – 11.3 million bushels in the week to 12 November – have been somewhat disappointing, and this has also dampened the market. On the positive side, the US Department of Agriculture has talked recently of offering export credits to Asia, especially South Korea, to buy US grain next year.
Ahead of the Thanksgiving holiday, the Chicago December futures contract closed on Wednesday 25 November at 278.0¢/bushel. This is down from 288.0¢ a week earlier.