Market report: Wheat pices to stay flat in 2010

Global wheat prices are likely to remain under pressure next year, according to Rabobank‘s latest report.



Although world wheat production is forecast to fall by 1.6%, to 657.5m tonnes in 2010/2011 – its lowest level in three years – this is still well above consumption, and will build stocks to their second highest level in a decade. Following recent rises in world prices, Rabobank sees the market as “overdone”, with ample supplies of exportable wheat outweighing adverse weather in Australia.

“But while wheat fundamentals remain bearish, one factor that may provide support is the forecast 9.3% year-on-year decline in rice production in the five major rice-exporting nations,” it says. The biggest declines are expected in India, where the worst monsoon in 37 years has cut production estimates to 84.5m tonnes – 14.8% down on 2008/09. “Because of a potential substitution impact, the developments in the rice market should be paid close attention to. A stronger rice market would help to lift the floor for global milling wheat prices.”

The outlook for maize markets is reasonably firm, with strengthening demand leading to a rundown in US stocks, says the report. This could lend additional support to global wheat prices in 2010.

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