Business | Markets
Channel Sponsor
Bumper crop set to keep wheat prices down
The prospect of a record world wheat crop is likely to keep prices that have already fallen sharply from all-time highs under pressure, putting a temporary brake on a key driver of global food inflation.
- Reuters
- Published: 00:35 April 26, 2008
-
India warms up to rice exports to UAE
India vows to find ways to boost basmati rice exports to UAE
-
Thai rice farmers hope to reap rare profits
Thai rice farmers hope to reap rare profits
-
UAE plans strategic food reserves
UAE plans strategic food reserves
-
US rice futures soar to record high
US rice futures soar to record high
-
Call for unrestricted food exports
EU urges WTO to ensure unrestricted food exports
-
Rice price hits West Africa in the stomach
Rice price hits West Africa in the stomach
-
Thai rice barons discover the world eats out of their hands
Thai rice barons discover the world eats out of their hands
London: The prospect of a record world wheat crop is likely to keep prices that have already fallen sharply from all-time highs under pressure, putting a temporary brake on a key driver of global food inflation.
"I really think we are going to see a bumper crop in wheat this year and I think that is going to be the underperformer of the grains," said fund manager Matthew Sena of US-based Castlestone Management.
Global wheat stocks remain low however and any recurrence of the unfavourable weather which devastated crops in several key regions last year could see prices shooting back up again.
"World wheat crops appear to be in good condition at this stage of the season, particularly in the EU-27, Black Sea and soft red winter wheat areas of the US," Rabobank analyst Luke Chandler said in a report last week.
"April/May is a key weather period for wheat production and with the current extreme tightness in the world wheat balance sheet, this season's weather will prove even more crucial than most," Chandler said.
Benchmark May soft red winter wheat futures on the Chicago Board of Trade fell to a low of $8.01 a bushel in early trade yesterday, its lowest level since November.
The contract has now fallen more than 40 per cent from a record peak of $13.49-1/2 set in late February.
Soaring wheat prices have sparked increases in the price of staples such as bread, helping spark riots in several developing countries whose populations were already struggling to cope with living cost increases linked to record high energy markets.
High prices have also, however, sparked a response from farmers with an increase in plantings.
The International Grains Council (IGC) has projected a world wheat crop of 645 million tonnes in 2008-09, down a marginal one million from its previous forecast but still well above a year earlier.
"This would still be a record, exceeding last year's total by 41 million tonnes following a 3.6 per cent rise in sowings," the IGC said in a monthly market report last week.
Others have produced similar estimates with the French arable crop office ONIGC earlier this month projecting production would reach 635 to 640 million tonnes and Rabo-bank's Chandler forecasting 635 million.
"What has been weighing on the market is the fact that every day we get closer to setting that number is stone," said Shawn McCambridge, grains analyst with Prudential Financial, referring to 2008-09 production estimates.
Plantings in the European Union had been boosted by the suspension of a rule forcing farmers to leave some land fallow, known as set-aside, in a bid to increase grain supply.
The IGC estimated that EU-27 wheat production would climb to 138.1 million tonnes this year, up 15 per cent from 119.9 million in 2007.
Share this article
Related Articles
Popular in Business
-
Budget travel
Airlines in the region
Take a pictorial look at some of the budget airlines in GCC
Business Editor's choice
-
Credit swaps... a fair trade
Would you swap an unbuilt unit at the Lagoons for an apartment at JBR?
-
In pictures: New BMW Z4
The new model is much more user-friendly and driver focused
-
Lebanon realty robust
Overseas Lebanese fuel real estate surge
