GMO wheat infiltrates supplies
The big news this week was, of course, the discovery of GMO western white wheat in Oregon. This opens up a whole range of questions. The first one: How did this happen?
Proponents of GMOs say there’s no need to worry about food safety. Opponents of GMOs say it was only a matter of time before something like this happened.
And as we discover that not only are the regulations of GMO experimental supplies inadequate but also the enforcement was lacking, it makes the situation all the more concerning. With field trials ending in 2004, the fact that experimental strains have entered the supply chain is unnerving to say the least.
No surprise, some of our customers have already slammed the door shut with Japan canceling a tender and suspending further purchases of western white and feed wheat. South Korea is also suspending U.S. wheat purchases until the government can test all cargoes. Other major buyers are either ‘monitoring’ the situation or now requiring that all shipments be tested for GMO traces.
Obviously, this is a serious matter, and the U.S. is trying to quickly reassure our customers while also trying to answer the many questions surrounding the situation. This will be primarily a cash market issue, as western white wheat does not have an actively traded futures market. Fortunately, the futures markets for the other wheats largely brushed off the issue. Bids in the spot cash markets at the PNW for white wheat appeared to be pulled and deferreds were somewhat weaker. As long as we don’t find any more tainted wheat, it would appear that the major wheat markets should be OK.
Harvest is rolling in the South, even if we don’t hear much about it. Yields are terrible, but that’s no surprise. The presumption is that yields in the eastern half of the Plains will offset much of the losses in the western half. That’s a tall order, but clearly the market just isn’t concerned about hard red winter wheat supplies.
Wheat prices continue to closely track corn prices. Last week saw a surge in corn values, which quickly prompted a surge in wheat purchases by cattle feeders in the Southwest. As long as corn holds together, wheat will, too.