Grain to lead world price bounce-back

By FWi staff

WORLD soft-commodity prices will bounce back over the next two years as production falls well short of rapidly rising demand, according to forecasts by the Economist Intelligence Unit.

It predicts overall softs prices will rise 8% this year and nearly double that in 2002.

But grains will lead the recovery, with values rising by 19% and 26% respectively.

The EIU predicts that wheat will be worth $173/t (120/t) in 2002, compared with $98/t (68.50)for May 2001.

Harvest problems and strong demand mean that global wheat stocks are set to fall to a near record low of below 100mt.

But the HGCAs Gerald Mason warns that these estimates should be viewed with caution, when predicting what this means for the UK farmer.

“I agree that there is a general upward trend of world prices, but I wouldnt be confident putting them up as quickly as that.

“There are many factors that could come into play, not least currency.

“At the moment the Euro is weak against the Dollar, but if the Euro strengthens the upward price effect would be diluted.”

Very much depends on stocks in the USA, the main driver of world prices, and at the moment they are still high, adds Mr Mason.

“Until forecasts turn to reality it is difficult to see where a significant increase will come from.”

Others in the trade reckon much depends on the size and quality of the UK wheat crop.

Some traders are reported to be predicting the coming harvest could be as small as 10mt.

Clive Hayward of SCATS Grain doesnt go that low, but he still reckons that UK wheat values could climb by up to 10% from todays prices.

“Our survey has shown that the UK is not going to grow enough wheat to satisfy the internal market.

“If this is accurate we will be a net importer with the potential for values to increase to near world prices,” he says.