Wheat glut looms

[pscot]

http://www.businessweek.com/news/2010-04-12/biggest-wheat-glut-in-eight-years-means-bear-market-worsening.html

April 12 (Bloomberg) -- The world will have so much wheat this year that U.S. farmers could leave every acre unplanted and still have a surplus, a sign of more losses after futures had their worst first quarter in 15 years. A 34 percent jump in the combined harvests of Australia and Russia over two years is creating the biggest wheat glut since 2002, even as American growers sow the fewest acres in 39 years and the U.S. Department of Agriculture raises its estimate of world output each month since June. Analysts surveyed by Bloomberg expect an 8.8 percent price drop by July.

Two years after prices doubled, sparking food riots from Haiti to Indonesia, the U.S., Canada and Russia are battling for export markets. The 14 percent drop in the first quarter means lower costs for Premier Foods Plc, the U.K. maker of Hovis breads, and slower growth for grain processors including Archer Daniels Midland Co.

“It’s a mammoth surplus and we have to get rid of it before prices have any hope of rallying,” said Bill Gary, the president of Commodity Information Systems Inc. in Oklahoma City. Gary, who began trading grain in 1961, predicts $4 a bushel by August, a 17 percent decline. “If we have another financial crisis, which I don’t believe is likely to happen, we could see wheat prices fall to $3.50 a bushel.”

Wheat futures for July delivery rose 1.25 cents, or 0.3 percent, to $4.805 today in Chicago. Prices will fall to $4.38 by the end of July, according to the average of 15 estimates in a Bloomberg survey last week. U.S. farmers, the biggest exporters, will see their share of the world market plunge to 19 percent this year, the lowest in at least five decades, down from 29 percent in 2008, government data show. Russia will supply 14 percent, up from 3 percent in 2004. Australia’s 12 percent share has almost doubled since drought damage two years ago

[gmoney]

1. would this be a "gluten glut"?

How about everyone just agrees to ship all the surplus to the REALLY poor countries for free, then it can prop up the price in the developed world?

[kestrel91316]

2. We would do well to store up what we can. We have no guarantee that

climate change won't cause years of inadequate harvests at any point in the future.

I'll take the opportunity to stock up on wheat berries (I have a state-of-the-art manual grain mill at home).

[villager]

3. +1

n/t

[pscot]

5. Our model seems to be the grasshopper

rather than the ant. What the fable doesn't mention, is that when the ants took the grasshopper in, they ate him.

[AnneD]

7. My thoughts exactly....

remembering the Story of Joseph in the bible. I would also be generous with poor nations too.

[Tunkamerica]

4. So all the whitbiers should be on special.

[Kat45]

6. Then there's no reason for any people to be starving.

(Yes, I know it's not that simple--but it should be.)