What is in this article?:
- Russia and Australia in wheat war with reluctant U.S.
- U.S. advantage
- Russia and Australia are exporting more wheat than was projected last May and selling below U.S. wheat export prices.
- Russia will set its wheat price below the U.S. price irrespective of how low the U.S. price goes. U.S. exporters don’t appear to want to get into a price war.
World 2011/12 wheat ending stocks are projected to be 7.44 billion bushels compared to a five-year average of 6.56 billion bushels. Allendale Inc. describes the wheat stocks situation as “comfortable.” With comfortable stocks, wheat prices are expected to trade sideways to lower.
Some analysts predict that U.S. 2012 wheat planted acres will be 4 million acres higher than in 2011. Relatively high world wheat prices are also expected to cause an increase in world wheat planted acres.
Barring weather problems, 2012/13 marketing year world wheat production will be greater than 2012/13 use. World wheat ending stocks are expected to increase and export competition will continue. With this scenario, wheat prices will continue to work lower.
The FSU and other exporting countries are expected to continue to sell wheat under world market prices. United States wheat stocks are expected to increase, and U.S. wheat prices are expected to trend lower.
The advantage the United States has is the ability to consistently deliver a high-quality milling wheat. Thus, it is important that wheat producers continue to produce a low dockage/foreign material wheat with good protein.
As prices trend lower, now is not the time to scrimp on inputs. A quality product is essential to maintaining the U.S. export market and price.