By MATTHEW WEAVER
Wheat prices will remain steady or possibly slip lower in the coming months, an industry expert predicts.
Vince Peterson, vice president of overseas operations for U.S. Wheat Associates, expects wheat futures to remain in the $5.50 to $6.50 per bushel range, due to large wheat supplies.
Mild weather could push U.S. wheat production higher this year, Peterson said,. Supplies could be among the five largest in the last two decades.
U.S. supplies are "frankly way more than ample," he said, noting that world supplies are also high.
Growing conditions have been hurt by drought in parts of the European Union, Ukraine and Kazakhstan and below-average precipitation in northern France, England and northern Italy.
About 35 percent of the Ukraine's crop was damaged by a severe freeze, he said.
"We don't think there may be a flood of harvest time pressure pressing prices down this year as we may have seen in previous years," he said.
U.S. wheat export prices have reached the point where they are most competitive on the world market, down to about $261 per ton for hard red winter wheat and $268 per ton for soft white wheat, he said.
Rains in Australia have created record production the last two years, but the wheat quality is low, Peterson said.
The end of the Canadian Wheat Board monopoly will give the U.S. the chance to reach into new markets like Saudi Arabia, Algeria and Morocco. Peterson said the Canadian board often undercut U.S. prices by $20 to $25 per ton in those markets.
The Canadian change "requires us to be vigilant and look for opportunities we have, defend markets that may be under attack (by) new exporters," Peterson said, calling the net result a big win for the U.S. wheat industry.
However, Egypt remains a question mark, he said.
"Until the government is settled, a new administration is in place and we have more consistent political decisions coming from the country, this is going to be a bit of a rocky road for us," Peterson said.
Peterson welcomed the U.S.-Colombia Free Trade Agreement, which goes into effect May 15. U.S. wheat exports to Colombia dropped 50 percent last year, after Canada signed a similar trade deal.
Peterson said the International Grains Council forecast for 2012-2013 calls for a decrease in world production and increase in world consumption.
Peterson spoke April 26 during a web seminar hosted by the Idaho Wheat Commission, Oregon Wheat Commission and Washington Grain Commission.