August 1, 1995 in Nation/World

Wheat Export Subsidies Suspended

Bloomberg Business News
 

The Agriculture Department has temporarily suspended export subsidies for wheat for the first time in six years, a top export official said.

Chris Goldthwait, export sales manager, said in a brief interview Monday that so-called “bonus payments” to exporters aren’t likely to resume soon because of rising prices and reduced competition.

“We’ve not accepted any bids (to subsidize wheat shipments) for a good, solid week now,” Goldthwait said. “That reflects the view” that they aren’t needed to sell wheat abroad, he said.

“I think conditions may well continue for some time” where subsidies won’t be needed, he said.

Any change in export policy would be felt in the Northwest, where wheat growers export most of their crop.

Wheat for September delivery was down 1 cent to $4.58 a bushel at the Chicago Board of Trade Monday. The value of the December wheat contract has jumped 36 percent since March amid smaller reserves.

U.S. wheat export subsidies for the first half of 1995 are down 63 percent from a year earlier to $240.8 million, a USDA spokeswoman said. Last year at this time, the U.S. typically was spending between $30 and $40 per metric ton to sell wheat abroad.

With wheat prices rising this summer, the subsidy has fallen to as low as $3.80 a ton for a July 21 sale of 298,500 tons to Egypt.

Wheat is selling without subsidies in world markets because of forecasts that worldwide supplies will fall to 20-year lows by early next summer. Likewise, the U.S. wheat reserve by May 1996 could be at a 22-year low.

Northwest wheat growers stand to benefit from the higher prices because they expect higher yields than farmers in other regions.


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