SHULTZ USSR TRIP FUELS TALK OF EEP WHEAT OFFER

  Speculation the United States will
  offer subsidized wheat to the Soviet Union appears to have
  reached a new level of intensity in the run-up to Secretary of
  State George Shultz' visit later this month to Moscow.
      Rumors of an impending deal have coursed through wheat
  markets since officials from the two countries held their
  customary, semi-annual grain talks in February. Moscow's
  decision at that time to reenter the U.S. corn market
  strengthened the perception of warming farm trade prospects.
      Shultz is set to arrive in Moscow April 13.
      Shultz' statement two weeks ago that he would not stand in
  the way of a wheat subsidy offer under the Export Enhancement
  Program, EEP, coupled with the announcement of his visit to
  Moscow, was interpreted by many grain trade representatives
  here as a clear signal that the Reagan administration was
  preparing an offer.
      Administration officials -- in and out of the U.S.
  Agriculture Department -- have been extremely tight-lipped
  about the prospects of a subsidy offer.
      But USDA officials for the most part have abandoned the
  contention the proposal is dormant, suggesting that an offer,
  while not a "done deal," is a live possibility.
      Prominent U.S. grain trade representatives -- many of whom
  asked not to be identified -- continue to maintain that an
  offer to subsidize four mln tonnes of wheat is imminent.
      Others, who one month ago claimed a deal was not possible,
  are saying they would not rule one out.
      Rep. Pat Roberts, R-Kan., yesterday went so far as to
  predict a subsidy offer would be made within the next ten days
  to two weeks.
      Aides to Roberts said he had spoken to Republican leaders
  who had been in contact with administration officials.
      Richard Fritz, director of international marketing at U.S.
  Wheat Associates, said he was confident an export enhancement
  offer would be made by the middle of this month.
      Fritz also said he thought the value of the bonus would end
  up being close to the offer Washington made Peking earlier this
  year when USDA approved subsidies to China of around 36 dlrs
  per tonne on one mln tonnes of wheat.
      Some grain trade representatives say a four-mln-tonne wheat
  subsidy offer might help stimulate more Soviet purchases of
  U.S. corn and open the door to U.S. sales of soybeans.
      As ever, one of the crucial sticking points in a wheat deal
  would appear to be price.
      Last summer the administration took the controversial step
  of offering the Soviets subsidized wheat -- but were
  embarrassed when Moscow spurned the proposal on the grounds
  that the 15-dlr-per-tonne subsidy still left U.S. wheat prices
  far above world market prices.
      The administration's decision to set the subsidy level up
  front instead of accepting bids from exporters appeared to be a
  means of controlling the price while attempting to dampen
  criticism, grain trade sources said.
      Nonetheless, the pricing procedure did not prevent Shultz
  from saying the Soviets were "chortling" because Washington was
  offering Soviet housewives cheaper grain than that available to
  U.S. housewives.
      The conventional wisdom among grain trade representatives
  here is that a general warming of relations between the two
  countries since last summer, combined with continued hard times
  in the U.S. grain belt, would favor a subsidy offer.
      In addition, the USSR has made it clear it would consider
  buying U.S. wheat if it were priced more competitively.
      However, observers have not forgotten the circumstances
  surrounding the administration's announcement of the wheat
  subsidy offer last summer.
      Up until the time of the announcment, congressional and
  industry leaders were led to believe the White House had
  decided to expand the Export Enhancement Program to include not
  only the Soviets, but also a much broader list of countries.
      Instead, the administration scaled back the offer to
  include only the Soviets.
      That last-minute change of heart adds a measure of
  uncertainty even to the predictions of those most convinced
  that the administration will not now pass up the opportunity to
  sell four mln tonnes of wheat to the Soviet Union.
  

