Rare Fungus Stalls Wheat Shipments

The discovery of a rare, nontoxic fungus in Arizona touched off a drop in wheat prices Tuesday and fears that China could lose faith in U.S. grain.

Wheat futures prices slipped on the Chicago Board of Trade after the U.S. Department of Agriculture halted wheat shipments to 22 leading importing nations, including China. Officials took the action to protect buyers from receiving any grain contaminated by karnal bunt fungus, which was discovered Friday for the first time in the United States.

Agriculture Secretary Dan Glickman said $120 million in wheat exports are affected by the temporary ban. But few of the 22 nations buy their wheat from the Pacific Northwest.

While harmless to humans, karnal bunt reduces wheat’s value because it emits an extremely unpleasant odor when milled.

Officials found the fungus in durum wheat seed in southwest Arizona. Durum wheat is used in making pasta.

The USDA has quarantined and burned infected seeds and 20,000 acres of land where the fungus was found. Glickman said since the fungus was in an isolated area, buyers should not have to worry about karnal bunt spores spreading to other shipments.

Chicago wheat futures Tuesday fell 7.25 cents to $5.09 a bushel for March delivery. Portland grain traders paid $5.35 a bushel for soft white wheat, down 7 cents.

Ships in the Gulf of Mexico were stalled by the USDA action, but exports continued as usual in Portland and Vancouver, Wash.

However, Northwest farmers are following the situation closely to see how China reacts. They’re concerned the fungus could give China an excuse to stop buying American grain.

China has bought 140 million bushels of U.S. wheat since May, about 7 percent of the annual American harvest. But China buys no Northwest wheat because of fears that the TCK smut, a harmless fungus found on winter wheat, might get transmitted overseas.

“If they want an excuse to cancel shipments, this is it,” said Portland commodities broker Mike Krueger.

, DataTimes