U.S. wheat prices are lower than those of competing countries, but experts say it's still a tough export market.
Market analyst Stephanie Bryant-Erdmann cites International Grains Council data, saying U.S. wheat is now a better value than that of all major competitors, with U.S. soft red winter wheat at $216 per metric ton, $10 per metric ton below Russian fourth-grade wheat.
U.S. hard red spring wheat with 14 percent protein averages $258 per metric ton, $4 per metric ton below Canadian Western Red Spring wheat, she said in the U.S. Wheat Associates newsletter.
Soft white wheat from the Pacific Northwest is now $47 per metric ton lower than Australian wheat, "which is now the most expensive wheat in the world due to the devastating drought they have suffered," according to the newsletter.
USDA recently reported U.S. export sales of 120,000 metric tons of soft red winter wheat to Egypt, following a public tender in which U.S. wheat was the lowest offer. With earlier sales, U.S. wheat export sales to Egypt now total 220,000 metric tons, almost double last year's sales and the highest since 2013-2014.
The U.S. also shipped 64,000 metric tons of hard red winter wheat to Saudi Arabia, with trade experts expecting additional purchases.
U.S. wheat futures remain at or near marketing year lows, Bryant-Erdmann writes, citing good winter wheat crop conditions and good soil moisture in the Northern Plains.
Randy Fortenbery, small grains economist at Washington State University, said the news is positive, but he wants to see U.S. wheat export shipments pick up before he becomes too optimistic.
"Sales can get canceled before they get exported," Fortenbery told the Capital Press. U.S. Wheat is "talking about an uptick in sales — that's positive. I don't get quite as optimistic until I see actual shipments leave the ports. We're still behind on export shipments."
Shipments to the European Union and Japan are up relative to a year ago and down to Mexico compared to a year ago, he said, but "not as much as we were a month or so ago."
Fortenbery doesn't see much room for price improvement for Pacific Northwest farmers until February or March. The current prices mean more opportunities for buyers than than sellers, he said.
Drought in Australia isn't hurting U.S. wheat prices, but has already been priced into the market, Fortenbery said.
Outstanding sales are stronger compared to last year, but overall sales and shipment pace are slow, agreed Omaha, Neb., market analyst Darin Newsom.
"That's probably what concerns me the most," he said. "If indeed we are seeing all this new demand, where is it? Yes, we're lower price, yes we should be seeing this upswing in demand, and there's little hints out there, but where is this groundswell for the lower-priced, higher-quality U.S. wheat?"
U.S. wheat prices have been coming down, with the rest of the world staying pretty high, Newsom said. The U.S. dollar has weakened over time, which tends to improve the outlook for U.S. sales and export demand.
If the demand starts to come in, wheat prices could increase in the latter half of the marketing year, Newsom said.
Does that mean global demand will go down?
"That's the risk," Newsom said.