THE US Department of Agriculture last week released its March planting intentions report, a survey of more than 86,000 farmers.

The US farmers indicated they would expand corn area by 3 per cent, soybean area about 1 per cent but decrease the area sown to wheat by more than 5 per cent compared to last year.

Corn and soybeans are planted over the next 10 weeks and the weather conditions are generally thought to be favourable for planting.

If these intentions are realised, this year could see the largest corn production in the US for 23 years.

While lower wheat area may appear good news for Australian wheat farmers, the current stocks of wheat in the US are 30 per cent higher than last year.

These stocks will increase the wheat carried over to next season.

Forecasts of US wheat supply for next season suggest that supply will be only slightly smaller than at present.

The impact on grain markets has been negative. Wheat prices in the US and Australia have pulled back further. In the past two weeks, the NSW milling wheat futures price has fallen 3 per cent, while the Chicago wheat futures price has fallen 7 per cent.

Domestic wheat prices, as measured by the Melbourne stockfeed market, have now fallen $34 a tonne since the seasonal peak of last November.

Export based APW prices delivered to Geelong also peaked at this time and have fallen $30 a tonne to $188 a tonne.

At this stage of the grain marketing cycle, there would appear to be few factors that could cause a spike in wheat prices prior to the influx of new-season grain from northern hemisphere producers.

Grain container packers are continuing their shipping programs. Containerisation capacity has been filled with wheat and pulses this season.

So far this season, the national average rate of wheat shipments in containers stands at about 200,000 tonnes a month.

These wheat exports have been accounting for around 16 per cent of total Australian wheat exports. Key markets for this trade are the Asian markets of Vietnam, Indonesia and Malaysia. This trade has expanded since deregulation of the export wheat market.

Overseas buyers eager to purchase Australian wheat cheaply have been sourcing wheat of lower grades. Some in the Australian grain industry have been questioning how this wheat is represented in the market. They query the safeguards in place to protect the quality image of wheat grades such as Australian Premium White and Australian Hard.

Container packers have also been busy exporting pulses. While there are very few number-one grade lentils available for sale, some packers are continuing to market lentils with a high portion of green kernels.

Lentils with green kernels such as those grown between Horsham and Donald have been trading at discounts of about $100 to $150 a tonne. Defective lentils are estimated to represent 70 per cent of this year's lentil production.



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