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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (946)	11/25/2001 8:17:56 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Wheatganistan Grain donations lead to modest price rise interactive.wsj.com By Daniel Rosenberg The U.S. began donating wheat to Afghanistan in June, long before war broke out. Now, with winter setting in and millions of people in danger of starvation, it appears food-aid programs will continue to ship hefty amounts. Even so, the wheat market at the Chicago Board of Trade remains quite cheap at under $3 a bushel. And traders and analysts don't believe food aid to Afghanistan will be a magic bullet to lift prices. The U.S. wheat reaching Afghanistan now was purchased prior to September 11, says Bob Riemenschneider, director of the grain division at the U.S. Department of Agriculture's Foreign Agricultural Service. "Whatever impact there's been on prices has already been felt in the market," Riemenschneider says. "You're talking pennies a bushel." ..................................................................................................................................... For the near-term, however, there isn't much hope that the food-aid program alone can lift prices, analysts say. So far this year, America has sent about 300,000 metric tons of wheat to feed people in Afghanistan and Afghani refugees elsewhere. That makes the Afghans the 18th biggest world market for U.S. wheat. The U.S. sells similar amounts of wheat to countries such as Bangladesh, Thailand and the former Soviet Union, says Dave Frey, of the Kansas Wheat Commission. But 300,000 tons isn't much considering the U.S. produces around 60 million tons of wheat each year. At the USDA, it's common wisdom that there's a 3-cent to 5-cent a bushel price impact for every million tons of wheat sent out of the country. That's less than 2% of the current price for a bushel of wheat. Wheat futures at the Chicago Board of Trade have been under $3 a bushel since October 1998. In that year, they failed to get much lift from a food-aid program to Russia. In the mid 1990s, wheat prices stayed above $3 a bushel for several years. But heavy production around the world, and the resulting tough competition for export demand, has kept wheat in a bear market. It would take another huge injection of U.S. wheat aid to Afghanistan to pump optimism into CBOT wheat futures. "Unless it's hundreds of thousands of tons, it won't make much difference," says Victor Lespinasse, an analyst with A.G. Edwards & Sons, who suggests that five-hundred thousand tons would be "meaningful." That doesn't seem very likely, considering annual U.S. food aid around the world the last few years has averaged only 2 million metric tons, Riemenschneider says