December 5, 2008
Wheat prices are unlikely to recover in the next few days due to bearish fundamentals.
The Chicago Board of Trade December wheat contract hit a 20-month low Thursday, settling at US$4.67 a bushel.
The fall came as Canada hiked its wheat output estimate, while Argentina dropped a 5% export tax.
Amid falling wheat prices, U.S. wheat producers told Asian importers - on a recent trip to Asia - they may have to reduce wheat plantings next year unless wheat prices return to profitable levels or cost of inputs go down, according to the U.S. Wheat Associates newsletter.
"Next spring, I can choose to plant a number of different crops. If I can make more money on corn, soybeans, canola or another crop, I will not plant as much wheat. Not every farmer has that option, but I think there are a lot of wheat producers around the world that are going to face the same unfortunate decision," said U.S. farmer David Clough.
The farmers also said the input costs for those in the U.S. planting the spring crop in 2009 will be much higher than 2008.
They added this has given rise to more uncertainty in the minds of U.S. wheat farmers on what to plant next year, than at any other time in many years.
In deals this week, Japan's Ministry of Agriculture bought a total of 100,000 metric tonnes of U.S. and Canadian wheat in a tender concluded Thursday.
Meantime, the Iraq Grain Board bought 30,000 tonnes of 5% broken Pakistani white rice earlier this week.
Iraq paid US$375/tonne for the rice, free on board Karachi, which is expected to reach Iraq in January.
Also, the Thai commerce ministry sold 1 million tonnes white rice from its old crop stocks to Thai exporters, according to the Thai News Service.
The government sold good quality white rice at THB16,000-THB17,000/tonne and 25% broken white rice at THB8,000-THB9,000/tonne.
The sale prices of both grades were below the cost of procurement by the government.