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G. Chandrasekhar

Wheat and soya price movements have to a limited extent helped support the corn market too. Rice prices in Asia continue to remain firm.

Mumbai , Feb. 27

FUNDS continue to play a significant part in agricultural commodity price dynamics.

Despite record global grains and oilseeds crop output this year and early expectation of depressed conditions based on fundamentals, the world market is now showing signs of a rally, albeit tepid.

Wheat and soyabean are two good examples. Global wheat output in 2004-05 has set a new record at 621 million tonnes (555 mt) with stocks poised to rise by 12 mt to 137 mt.

Similarly, world soyabean production is projected at a record 229 mt, up a massive 39 mt from the weather-affected crop of previous year.

Wheat prices have risen in the US and Argentina by $10-12 a tonne following strong export demand.

On the other hand, on report of dry weather in Brazil (world's second largest producer) and projected cutback in soyabean production, the bean market has taken an upward turn.

Speculative buying is seen lifting the futures. Wheat and soyabean price movements have to a limited extent helped support the corn (maize) market too. Rice prices in Asia continue to remain firm because of strong global demand and restricted availability from major suppliers — Thailand and Vietnam. India has been virtually out of the rice market for several months now.

After record crops and robust demand in 2004-05, the production outlook for 2005 remains positive, but the crop size may not be as high because an exceptionally high yield is unlikely, according to London-based International Grains Council (IGC).

Tentatively, global wheat crop next year is forecast at 603 mt. Although lower than 621 mt in 2004, the crop would still be the second highest on record and significantly higher than the previous five-year average. South Asian production would be up by 4 mt, IGC said.

Maize output may also decline in the US and EU in 2005. Outlook for barley is also for a somewhat smaller outturn from 150.5 mt of 2004.

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