Drought-induced high corn prices have increased wheat demand but decreased U.S. exports with wheat prices currently uncompetitive in the world market, an expert told hundreds of Montana grain growers Wednesday in Great Falls, the hub of state’s top wheat growing region.
“Really the story of wheat this year is about corn,” said Mike Wong, senior vice president and merchandising manager for Columbia Grain Inc. in Portland, a leading world grain exporter.
Higher corn prices in the United States, caused by drought’s impact on the supply, has created demand for wheat, Wong said.
“The corn pulls the wheat price up with it,” he said.
At the same time, the higher price has made U.S. wheat less competitive overseas, Wong said. As a result, the United States has not been able to compete with other exporting nations for export sales.
Put another way, said Wong, using one country as an example, the Russians are taking U.S. customers.
“To really make our prices work, you have to have exports,” Wong said.
The key question facing U.S. wheat growers in the coming months, Wong said, is whether supplies of the other wheat-producing countries run out and buyers turn to U.S. markets again, Wong said.
The United States produces roughly twice as much wheat as it uses, he said.