December 14, 2009

US wheat exports still poor despite price cut

US wheat is still unable to generate interest on the export market as prices remain too high despite a 12% drop in recent weeks.

Other exporters also have very large supplies and they are looking to sell off their supplies, said Shawn McCambridge, grains analyst at Prudential Bache Commodities.

The futures market, which has dropped sharply since reaching a five-month high of US$5.83-1/2 per bushel about three weeks ago, must fall another 75 cents to bring prices for US wheat offerings in line with worldwide supplies, said a trader.

Prices for wheat rose throughout autumn amid a weakening dollar and heavy influx of money from investment funds makes US supplies relatively less expensive on the world market. But the market turned lower during the past three weeks as investors turned to the growing surplus of supplies worldwide.

Frank Cholly, a senior market strategist at brokerage Lind-Waldock in Chicago, said US wheat will continue to trend lower for the remainder of this year and into next year.

The USDA said Thursday (Dec 10) that wheat exports reached 245,200 tonnes in the latest reporting week, below analysts estimations of 350,000-450,000 tonnes.

The USDA left its forecast for 2009-10 US wheat exports at 875 million bushels, down 13.8% from the 2008-09 export volume of 1.015 billion bushels.

USDA forecast for US wheat ending stocks was raised to 900 million bushels for the 2009-10 crop year, up from its previous estimate of 885 million bushels. Analysts had expected wheat ending stocks of 887 million bushels.