Spring Wheat Crop Threatened by Disease

A relatively new, aggressive strain of black stem rust, called Ug99 for its 1999 discovery in Uganda, has spread to Kenya, Ethiopia, Yemen and Iran. Most commercial wheat grown world-wide has no resistance to the disease. The threat comes at a time when wheat stockpiles have shrunk because of bad weather and strong demand for wheat-based foods, reports the Wall Street Journal this morning.

Ug99 poses a more serious threat to commercial crops than even the U.S. black-stem-rust epidemic of 1954 that destroyed 40% of the U.S. wheat crop, experts told the Wall Street Journal.

Fears that the disease may have spread to Pakistan haven't been confirmed, experts say, but Pakistan is a concern because of its proximity to India, the world's third-largest wheat producer with over a billion mouths to feed.

The potential for crop loss in Africa, the Middle East and South Asia is higher. Based on wind patterns and the rate of spread, the United Nations Food and Agriculture Organization says countries in the immediate path of Ug99 grow 25% of global production.

While wheat traders are aware of the disease, it hasn't significantly affected wheat-futures prices yet. Friday, the July wheat contract on the Chicago Board of Trade rose 7.5 cents a bushel to $7.5250 ($276 per ton). A metric ton of wheat has 36.744 bushels.

There are also concerns about the lack of rain in Australia impacting the wheat crop this winter. Wheat futures are likely to rise sharply if the forecast rain fails to materialize in Australia’s main eastern growing state of New South Wales, leaving farmers anxiously waiting to plant their next crop. Australia is normally the second-biggest wheat exporter in the world, after the United States.

This latest news adds to the worries about much higher wheat prices driven by potential real shortages exacerbated by speculators in the world futures markets. It would hit poor countries in Africa and South Asia particularly hard with the increased probability of a serious famine.