Saturday, January 8, 2011

Wheat market still strong

Wheat Exports Climbing to Record Levels

Soda Springs-The 2010 grain season could be remembered as one of the greatest of the decade.

A drought in Europe bolstered the export market and at the Soda Springs Elevator. Manager John Thielman says they’re still moving grain, prices are good and many are banking on even better prices in March.

“It’s to the point that bad events overseas like droughts are good for us,” said Thielman. “Russia had their challenge this year with their crop and decided not to export, that’s a big plus for us.”

USAgNet reports the 2010 crop has turned out better than expected due to expanding worldwide demand for U.S. wheat and that’s pushed prices higher. USDA projects exports to reach 1.25 billion bushels, up more than 40 percent from the low 2009 level but similar to 2007 when exports reached 1.26 billion. But other analysts think this estimate is conservative saying final exports could top the 1992 level of 1.35 billion bushels.

This fall U.S. wheat sales topped 570 million bushels, up nearly 60 percent from the same time last year, and ahead of the expected pace. Hard red winter and hard red spring have been the biggest benefactors so far. Hard red winter sales reached 265 million bushels earlier this month, compared to only 125 million a year ago, and gained the most by the shift in demand from the Russian export ban.

But the new year has seen more competitive prices from French wheat into North Africa and some pullback in other markets, that’s slowed the weekly sales pace for the U.S., yet demand is expected to remain as strong as our rail and shipping capacity allows.

Still, speculation is anyone’s guess on commodity markets. “The price is up but they can drop, it’s far more volatile out there than it used to be. “Now our markets are also driven by investment. Investor and market reaction seems to be greater now; it used to be demand-driven without the swings we’re seeing now. It’s all demand and speculation; the swings are much more dramatic these days,” said Thielman.

Dennis Gartman, an economist and editor of the Gartman Letter says this could be the best year for American Farmers in two and a half decades. Gartman writes that a lot of the export money will roll-over into local economies with the big winners will obviously be the fertilizer companies, car dealerships and farm-equipment manufacturers.

"I think that it's good news that we're in a global market, people have adjusted and are looking for different areas and different countries to sell," said Bibiana Nertney, Idaho Chamber of Commerce administrator.

According to the recent U.S. Wheat Newsletter, world wheat trade may double or more by mid-century and the resulting pressure from rising demand will likely increase prices and volatility. World wheat trade has been fairly stable,” said US Wheat President Alan Tracy, “But a closer look shows trade is actually up by 250 percent since 1982 in less developed countries and the global trend is now moving up."

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