September 14, 2010

 

Seed supplies may limit US rush to sow wheat

 

 

The rush by US farmers to sow wheat, following the run up in prices, could be so strong that it will be limited only by supplies of seed, a leading academic has said.

Winter wheat sowings in the eastern part of the US Corn Belt, which collapsed to a record low in 2009, could jump by 50-75% this year, Purdue University economist Chris Hurt said.

 

The jump will be driven by a jump in wheat prices of some 60% since a late-June low which has made wheat appear the most lucrative choice on areas with modest corn yield potential, of perhaps 130-140 bushels per acre. The USDA is forecasting an average US yield of 162.5 bushels per acre.

 

For more southerly farms, where a longer growing season makes double-cropping of wheat with soy possible, such practice offers farmers strong financial incentives, according to Hurt.

 

And drier weather had helped too, offering the outlook for a successful wheat-planting season, unlike last year when late autumn harvests delayed sowings of many winter crops to spring.

 

The limit on winter sowings this year may be on the amount of seed wheat that farmers can acquire, Hurt said, advising growers to secure supplies. He noted that seed availability may be the limiting factor on how many acres of wheat get seeded this fall.

 

Meanwhile, the USDA is currently forecasting an 8.6% rise to 76 million bushels in the country's demand for seed wheat, including spring-sown crop.

 

However, the comments come as investors are increasingly focusing on a rise in corn prices, following widespread reports that the harvest in the US, the top producer, is coming up with unfavourable yields. The USDA on Friday trimmed its yield estimate from 165 bushels per acre.

 

Higher corn prices may tempt growers to opt for that grain – especially if fading worries for the southern hemisphere producers cast a cloud over US wheat prices.

 

According to reports, the International Food Policy Research Institute highlighted that the poor weather which had held back Canadian, EU and Russian crops had not hit all producers.

 

Chicago wheat for December delivery ended up 1.1% at US$7.45 a bushel, a rise attributed to America's bright export performance, which was restated on Monday (Sep 13) with upbeat weekly export inspection data. The US on Friday revealed its best week for export sales in three years.

 

In Europe, Paris milling wheat for November closed 0.7% higher at EUR232.00 a tonne, a fresh two-year high for a spot contract, with London's November feed wheat contract ending up 0.8% at GBP161.75 a tonne.

 

December corn, meanwhile, rose 1.1% to US$4.83 ½ a bushel.