WASHINGTON – U.S. wheat prices will soar to their highest level in a quarter century due to crop downturns in the former Soviet Union, the government said on Monday, estimating an average farm-gate price of $4.80 a bushel.
The Agriculture Department also said higher soybean oil prices would mean smaller biodiesel output. It cut its forecast for this marketing year by 150 million lbs, down 6 percent, and by 300 million lbs for 2007/08, down 8 percent.
USDA pegged this year's wheat crop at 2.168 billion bushels, including 1.61 billion bushels of winter wheat, which is now being harvested. Exports are forecast for 1 billion bushels, up 25 million bushels from the May forecast "as production shortfalls in key exporting countries lower world supplies."
The season-average price, projected for $4.80 a bushel, is up 15 cents from USDA's May estimate, "reflecting tighter world supplies." It would be the highest since at least 1980/81.
Dry, hot weather in the former Soviet Union will reduce the harvest by 7.3 million tonnes. Exports will fall by 3 million tonnes from Ukraine and by 2 million tonnes from Russia, USDA said.
"The most adverse conditions coincided with key reproductive stages of winter wheat development in both countries," it said.
Farmers will get an average $7.15 a bushel for this year's U.S. soybean crop as demand will outrun the harvest by nearly 300 million bushels and cut the stockpile in half, USDA said.