The Hindu Business Line : World wheat trade expected to be lower

Mumbai, Nov. 23 Although considerably below the record 2004-05 crop of 628 million tonnes (mt), world wheat output in 2007-08 will bounce back from the previous year by some 12 mt to 603 mt, while consumption will rise by a modest 2 mt to 611 mt and ending stocks will reach a recent low of 110 mt, according to the latest assessment of London-based International Grains Council (IGC).

Wheat Trade

In anticipation of easing supplies and therefore prices, international demand fell back somewhat, especially in the US, in recent weeks. New crop supplies from Argentina have now become available. Despite export taxes, demand for Russian wheat stays strong, IGC said. World wheat trade in 2007-08 is expected to be lower because of lower imports anticipated from India, Bangladesh and Algeria. IGC has projected the trade at 104 mt, down from 111 mt in 2006-07.

World wheat area in 2008 is forecast to total 222 million hectares, a 4 per cent increase from 2007. Reporting on wheat planting for 2008, IGC said Northern hemisphere planting was nearly complete, with significant area increases in the US (at the cost of corn/maize), Europe and CIS.

Conditions in most of European Union have been favourable and wheat is entering dormancy in the CIS in good shape, although parts of Ukraine are too dry. The report pointed out that the US winter crop was in less good condition than last year because of dry weather in the Southwest, while Government support was expected to maintain a high level of planting in China and India.

Crude Market

Given these emerging conditions that are expected to ease the tightness, no wonder, on Chicago Board of Trade forward prices for wheat have considerably eased for months beginning second quarter of 2008. However, high ocean freight rates in the wake of surging crude market may impart firmness to grain prices.

Rice: In 2008, world rice trade may rise marginally to 29.6 mt (29.3 mt). Indonesia’s import purchases next year may be down to one mt (1.4 mt) following build up of stocks.