Nope the first round of wheat crops were above average and the second round is looking good.
By Mike Caggeso
Staff Writer, Money Morning
“The doubling of wheat’s price in the past year – combined with recent forecasts for price declines – have turned wheat’s wholesome image into a volatile one. And depending on where you live, you’ll hear a different story.
“In Australia, the world’s second-largest wheat exporter, droughts have cramped the yearly harvest so much that its Bureau of Agriculture and Resource Economics said the country would produce 31% less wheat (15.5 million tons) than it estimated back in June.
“Some of the estimates I’ve seen suggest if it doesn’t rain by harvest time the crop could be as low as 12 million tons,” Justin Smirk, a senior economist at Westpac Banking Corp., told Bloomberg News. “We have got a serious problem unfolding in the wheat regions in New South Wales.”
“Drought also took a chunk from the harvests of Canada (the world’s largest wheat producer) and also the Ukraine. In Syria, the Middle East’s lone grain exporter, drought swiped 4 million tons from this year’s harvest. Meanwhile, its neighboring importers (and Japan) want to import more than 1.1 million tons of wheat.
“In the United States, the U.S. Department of Agriculture is expected to estimate our biggest wheat harvest in three years, even though excessive rain damaged a portion of the harvest. Wheat’s $7.7 billion annual value ranks it fourth among crops produced in the United States – behind corn, soybeans and hay. And half of the wheat grown in the U.S. market is exported, according to the USDA.
“But taken together, global inventories of wheat are at a 26-year low. And that’s why wheat prices peaked Wednesday at $9.1725 a bushel.”
“We can not rule out $10 for wheat,” Takaki Shigemoto, an analyst at Okachi & Co. in Tokyo who has been researching grain markets for 25 years, told Bloomberg. “Exporters are reducing the amount to curb domestic food prices, while importers are trying to secure as much grain as possible.”