Market disruption? The overseas buyers of Pacific Northwest origin white wheat – Japan in particular – have suspended procurement. This interruption in market flow is due to the discovery of a patch of wheat in Oregon apparently linked to Monsanto’s once-proposed special genetically modified strain of glyphosate-resistant wheat, which was field tested from 1998 to 2005 in many regions, including the Pacific Northwest.

While there are many GE (genetically engineered) strains of other crops being marketed and used in the US and else- where, wheat is not one of them at this point. The buyers have made it clear that they will not accept it.

Monsanto gave up on “Roundup Ready” wheat several years ago, at which point the supplies of the special seed were carefully collected and destroyed. The unexpected appear- ance of this so-far-apparently isolated patch of “wheat-that- won’t-die-when-sprayed” has kicked the USDA’s Animal and Plant Health Inspection Service (APHIS) into high gear. A massive investigation of the question is underway, includ- ing field visits to producers by badge-wielding agents armed with long questionnaires.

Appropriate testing methods are also under review, so that handlers can assure themselves and their customers of the identity of their products. Until those efforts yield some an- swers that satisfy buyers, the white wheat market is in limbo. The effects on the other wheat markets, Kansas City hard red winter, Chicago soft red winter and Minneapolis hard red spring, have been pretty much undetectable so far, so it’s our local market’s turn in the ring on this one.

This is one of those times that try the patience of white wheat growers and merchandizers. Everyone wants to know what to do, but there is not enough real information to allow any real decision-making, just plenty of rumors. Since March 29, the last day of “normal” markets before the announce- ment of discovery of the “unusual” wheat patch in Oregon, white wheat prices in Portland have slumped down roughly 25 to 35 cents per bushel, but that is really just a guess, as no-one wants to speculate on what will happen next. There is plenty of potential for hot political pressure on any gov- ernment official making careless announcements. With the futures markets essentially ignoring the issue, there is no practical way for white wheat traders to hedge the risk of more surprises, so we wait…

Meanwhile, the wheat futures markets chug along qui- etly, with Chicago July contracts trading within pennies per bushel of center-point of the same old price range dating back to mid-February. It is unfortunate that this white wheat “market event” is happening at the threshold of harvest, when prices are often nega- tively biased anyway. There is a fairly strong hint that the longer-term, mildly negative bias in the futures markets would accelerate on a fail- ure to hold above the $7.30 level in Kansas City, about 20-25 cents per bushel below current trading, otherwise the definition is “steady”. Harvest is rolling in the southern and central US and will continue to expand over the next 30 days, so without stimulus from some factor not presently felt, upside ex- pectations should be limited and patient observation is required.

Information and opinions contained herein come from sources believed to be reli- able, but are not guaranteed as to accuracy or complete- ness. The risk of loss in trad- ing futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or op- tions, it is possible to lose more than the full value of your account. All funds com- mitted should be risk capital.