Severe flooding in the upper reaches of the United States cutting spring wheat plantings by 500,000 acres will be overwhelmed by plentiful global supplies that will keep the pressure on prices.
The Red River Valley, a top spring wheat-growing area stretching from western Minnesota to eastern North Dakota and north into Manitoba, Canada, is braced for flooding as the Red River rose to its highest level in 112 years.
“Wheat is a world product ion,” said Shawn McCambridge, grain market analyst with Prudential Bache Commodities. “There are a lot of places that grow wheat. You have to have (problems in) more than one region to really affect the balance sheet. There is a good production elsewhere.”
The benchmark Chicago Board of Trade Hard Red Winter wheat futures contract has fallen about eight per cent this week. Minneapolis Grain Exchange’s nearby spring wheat contract was down five per cent for the week.
Wheat prices continued to fall on March 27 even as residents in Fargo, North Dakota, were forced to evacuate their homes.
Storms around the U. S. Plains region would likely boost prospects for the total wheat crop by improving conditions for the Hard Red Winter wheat crop. Winter wheat accounts for about three-fourths of total U. S. wheat production and has suffered from dry conditions during the past few months.
“Any wheat they lose in the spring wheat belt they are going to more than make up in the Hard Red Winter wheat belt,” said Vic Lespinasse of GrainAnalyst.com.“We grow a lot more wheat in the southwest than we do up in the northern Plains.”
The rains were coming at a crucial time for the winter wheat crop, most of which has emerged from dormancy during the past few weeks.
Light demand around the world for U. S. wheat also was allowing traders to shrug off expectations of damage to cropland in key areas of the spring wheat-growing region.