Wheat price to stay low

16 October 1998

Wheat price to stay low

WORLD wheat prices will remain low for the rest of the year because of competitive pressures, forecasts the Economist Intelligence Unit (EIU).

But EIU economists expect prices to recover next year when cuts in production will mean smaller wheat stocks.

The forecast is for world prices to remain at or below $120/ tonne (£71/ t) until the end of 1998, but then rise gradually to $140/ tonne (£83/ t) by the end of 1999. Wheat prices could be as high as $160/ tonne (£95/ t) by mid-2000.

Total wheat production is estimated at 593m tonnes for 1998-99, and will fall short of consumption by about 10m tonnes. Production is estimated at 588m tonnes for 1998-2000, against consumption of 611m tonnes.

The EIU expects maize consumption to outstrip production in 1999-2000. As a result, prices will rise, despite predictions that production will be 3m tonnes higher than consumption in 1998-99.

Trade in rice will reach a record 24m tonnes this year, largely as a result of the economic recession in Indonesia, which has boosted its rice imports. The EIU forecasts stronger prices in 2000, reflecting the tighter market for wheat.