US soft red winter wheat export prices are under pressure from moribund sales amid the absence of "big buyers" like China and a largely disease-free crop this year, grain traders said on Thursday. Prices in the CIF barge market, which supplies the grain to exporters at the Gulf coast, fell sharply on Wednesday and traders are expecting further declines in coming weeks.
"It fell big time," an exporter said, adding that basis values in the CIF market, which fell 5-6 cents a bushel on Wednesday, could slip another 5 to 10 cents as the flow of newly-harvested supplies into the market outstrips demand.
"We are not seeing the big buyers like China and Egypt," he said. "Many of the importing countries are having decent crops of their own, and are waiting for prices to go lower before making any purchases," he added.
Soft red winter wheat, used to make cakes, cookies and pastries, is traded at the Chicago Board of Trade and is the most liquid of wheat futures among Kansas City Board of Trade's hard red winter wheat and Minneapolis's spring wheat.
The US Agriculture Department forecast this year's SRW wheat production at 301.2 million bushels, compared with 960.3 million for hard red winter wheat.
Traders said prices have also been pressured by a crop that is largely free of diseases, especially vomitoxin, a fungal residue that can potentially sicken consumers and which was prevalent last year due to wet and cool weather.
"So far vomitoxin has not been a problem. Nobody is even talking about it," a trader said, adding that two barges of SRW wheat from Arkansas showed barely a trace of the infection.
The USDA said on Monday that 37 percent of the SRW wheat in Arkansas had been harvested by the end of last week. The harvest was just getting off the ground in Illinois.
Importers typically require SRW wheat they buy to contain no more than 2 parts per million of vomitoxin, but some buyers have been known to insist on 1 pm, traders said.
The high incidence of vomitoxin in last year's crop led to premium prices for quality wheat as grain companies scrambled for supplies that met export standards, the traders said.
"So far I have heard of nothing (about vomitoxin) in Arkansas," an exporter said. But we have to wait and see as the harvest moves up into Illinois, Indiana," he added.
He said that more than the harvest of a potentially high quality SRW wheat crop, basis values were weighed by a lack of export demand. "We are just not seeing the demand," he said.
A trader in the CIF barge market said the SRW wheat crop in the southern Indiana region was smaller this year than in 2004 due to wet weather problems during the planting season.
He said prices in his area would likely be supported by demand from domestic millers. "One miller has told us not to sell any of our wheat to anyone else," he added.