FAO sees further falls in global wheat price
Friday, 4 June 2010
ROME, June 3 (Commodity Online): UN Food and Agriculture Organisation (FAO) said global wheat prices may fall further on ample supplies and boom in exports by Black Sea countries.
In its latest report, FAO also raised its estimate for the global harvest, it said world wheat stocks are set to ease in 2010-11, as livestock farmers take advantage of low prices and utilize greater quantities of the grain in feed rations.
However, the decline in inventories will be insufficient to put a squeeze on supplies built up by strong harvests over the past two years, and with another one in the offing.
"Total wheat supply in 2010-11 will be more than adequate to meet anticipated demand," the FAO said.
"Against the backdrop of an economic slowdown in many countries, this generally favourable wheat supply outlook is likely to maintain downward pressure on international prices."
This pressure was being exacerbated by the growing presence on export markets of the Black Sea grain producers who were, bar Ukraine, which will see a decline in production, set for another year of brisk trade.
Even in the EU, whose competitiveness on export markets has been helped by the collapse in the euro, "large surpluses in the Black Sea region are dampening prospects for very strong increases" in shipments.
Furthermore, the Black Sea's performance "could contribute to a further drop in international prices".
The comments came as the FAO raised by 1.2m tonnes to 676.5m tonnes its forecast for world wheat production in calendar 2010, while failing to outline reasons for the change.
The estimate represents a fall of 5.9m tonnes year-on-year, while leaving output well above average levels. Consumption would also rise, by 12.2m tonnes to 675.0m tonnes, lifted by feed use and growing demand from bioethanol plants.
In its latest report, FAO also raised its estimate for the global harvest, it said world wheat stocks are set to ease in 2010-11, as livestock farmers take advantage of low prices and utilize greater quantities of the grain in feed rations.
However, the decline in inventories will be insufficient to put a squeeze on supplies built up by strong harvests over the past two years, and with another one in the offing.
"Total wheat supply in 2010-11 will be more than adequate to meet anticipated demand," the FAO said.
"Against the backdrop of an economic slowdown in many countries, this generally favourable wheat supply outlook is likely to maintain downward pressure on international prices."
This pressure was being exacerbated by the growing presence on export markets of the Black Sea grain producers who were, bar Ukraine, which will see a decline in production, set for another year of brisk trade.
Even in the EU, whose competitiveness on export markets has been helped by the collapse in the euro, "large surpluses in the Black Sea region are dampening prospects for very strong increases" in shipments.
Furthermore, the Black Sea's performance "could contribute to a further drop in international prices".
The comments came as the FAO raised by 1.2m tonnes to 676.5m tonnes its forecast for world wheat production in calendar 2010, while failing to outline reasons for the change.
The estimate represents a fall of 5.9m tonnes year-on-year, while leaving output well above average levels. Consumption would also rise, by 12.2m tonnes to 675.0m tonnes, lifted by feed use and growing demand from bioethanol plants.