Wheat Prices To Continue Under Pressure

August 17, 1999

USDA expects that summer wheat prices will continue to be pressured by the heaviest marketings of the season. In the coming months, prices will increase but probably not strongly enough to offset the poor start to the 1999-2000 season.

Wheat prices have been under "significant pressure," says USDA, with favorable yields increasing winter wheat production. Even though 1999 production should decline, large supplies will pressure cash and futures prices during the summer. The farm price in June averaged $2.50 per bushel, 27 cents less than June 1998, and the preliminary mid-month July estimate is $2.15 per bushel.

The U.S. season average price should increase only marginally from the estimated $2.65 per bushel in 1998-99. USDA's latest season average price projection is $2.45-2.95.

Last season, the average farm price peaked in November, but this season, USDA expects a more normal price pattern; seasonal lows should come June-August, the increasing to reflect carrying charges. In coming months, says USDA, the wheat price will be influenced not only by large U.S. and global wheat supplies but also by weather patterns in the corn Belt states that affect the corn and soybean crops.

Total U.S. wheat production is expected to total 2.32 billion bushels, 18 million less than produced in July. The decline reflects an acreage adjustment for durum in North Dakota and declines in forecast yields for durum and other spring wheats.