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The sustained boost to wheat prices that many expected last year might
be developing now.
Last winter, many analysts said the weak global economy and strong U.S.
dollar together weakened demand and mitigated what should have been a
stronger wheat market driven by tight supplies.
What a difference a few months make.
This summer, rather than rebuilding wheat stocks, it seems they will
tighten even more with bad weather hurting yields in Canada, the United
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States, Australia and China, and fiscal havoc in Argentina reducing
seeded acreage.
Last week, the U.S. Department of Agriculture slashed its global wheat
stocks forecast for the end of the 2002-03 crop year by nine million
tonnes to 147.08 million tonnes.
That is down a whopping 13.6 million tonnes from the ending stocks in
2001-02.
Estimates of North American production of wheat, soybeans and corn will
probably be scaled back more in future reports after the damage caused
by recent searing temperatures and rainless skies.
The other side of the equation, the mighty American dollar, is on the
ropes as foreign investors pull money out of the troubled U.S. stock
market.
The euro regained parity with the U.S. dollar on July 15, a point it
hadn’t seen for about two years.
A weak U.S. buck means grain sold in that currency is more affordable
and, theoretically, exports should increase.
In fact, U.S. wheat exports recently have been better than expected.
All this is conspiring to push wheat prices higher.
By July 15, the July Minneapolis spring wheat contract had risen about
50 cents US per bushel, or about 17 percent from its level at the end
of May.
Americans plant peas
The July 11 USDA crop production report showed a big jump in U.S. pea
acreage.
Planted acreage of dry edible peas in the U.S. for 2002 is estimated at
271,500 acres, up 28 percent from 2001 and 44 percent higher than 2000.
That is still small compared to Canada’s 3.2 million acres, but
producers here are watching American developments closely, since they
include several pulse crops in the farm bill.
North Dakota acreage is almost half the total, up 44 percent from last
year. Other states with substantial area are Washington, Idaho and
Montana.
