US grain sales may boom despite embargo of Soviets
Despite the embargo on grain to the Soviet Union, US grain exports this year are expected to reach record highs. By the end of the marketing year in June, the US Department of Agriculture (USDA) predicts, US farmers will have shipped about 15 percent more grain to foreign markets than they did last year.
"There's just a tremendous demand out there," concedes a USDA grain division spokesman in Washington. "Exports are leaving at a record pace."
One key reason for the jump in demand, grain watchers say, is that some countries, such as Italy and Spain which have traditionally bought much of their corn supply from Argentina, may be buying from the United States for price reasons. The Soviet Union may buy the entire Argentine crop and that speculation is sending Argentine prices up accordingly.
Another reason for the hike in orders for US grain is weather. Eastern European countries, for instance, experienced a poor harvest last year because of bad weather. They have placed larger orders for US grain than at anytime in the last five years. Poor harvests in Spain and Portugal also have spurred increased orders from those countries.
Though China's order for US grain is slightly below that of last year, bad weather may affect China's crop too. USDA officials say Chinese grain import orders could step up before June.
Exactly what will happen to the 17 million tons of grain once intended for the Soviet Union remains to be seen. Most of the wheat involved is expected to go into overseas food-aid programs. But Mexico, which had a poor grain crop last year, has put in an order for some of the embargoed grain; others may follow.
Rumors persist that Japan, long the strongest US grain customer and a country where US import orders remain steady, may also buy some of the embargoed wheat. So far the Japanese government has denied the reports.
Part of the US grain export increase is also due to a relative fall in expected production vs. demand.
"Last year we had a record winter wheat yield, but we don't think the situation is going to repeat itself -- we expect the output per acre generally to be reduced this year," says Carl Schwenson, executive vice-president of the National Associaton of Wheat Growers. He says that while it is too early to assess the scope of any winter wheat damage here, one section of the Great Plains, including western Nebraska and parts of South Dakota and Kansas, has been exposed to severe winter temperatures without the benefit of snow insulation and could be damaged.
More than half of the 103 million tons of grain that the US expects to export this year already has been shipped or contracted for.