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Wheat Prices Rising by Scott A. Yates Capital Press, June 21, 2002

Growers got 80 percent of what they wanted, Coppock says

SPOKANE, Wash. -- No one's bold enough to predict a sustained run up in the price of wheat, but the fundamentals are beginning to look a lot like 1996, the last time it happened.

Consider some of the projections coming from the Economic Research Service of the U.S. Department of Agriculture:

• World wheat stocks are expected to decline for the fourth consecutive year, reaching their lowest level since 1996/97.
• Winter wheat production is projected at its lowest level since 1978.
• Harvested winter wheat area is the smallest since 1917.
• As of June 9, 40 percent of the U.S. winter wheat crop was rated poor to very poor.
• From initial estimates, wheat production is projected down in China, Australia and many parts of Eastern Europe.

"This week acted a lot like the beginning of something," Krueger said on June 14. "You can't ignore that stocks are declining and crops are shrinking and there's all kinds of spotty weather problems."

There's also the matter of the U.S. dollar, which has recently been weakening. That can help kickstart exports. The ERS projects U.S. exports to improve marginally from earlier reports. But Krueger said export sales are already 3 percent ahead of last year and they have until September to improve further.

Corn supply's another factor and Krueger believes the crop is in jeopardy. If the coarse grain supply is pulled down, then everything could go ballistic because it means more wheat will go into feed channels, fueling additional demand, he said.

Jon Newkirk, extension economist at Washington State University, said a lot depends on the psychology of the market. A month ago, ending U.S. stocks were projected at 619 million bushels.

This month, projections were down to 555 million bushels. That would be the lowest since 1996/97 when supplies fell to 444 million bushels and prices surged.

World stocks are tightening too. At 156 million tons, however, they are still above the 136 million ton levels that sparked the sharp run up in prices in 1995/96.