Global wheat output to hit surplus next year
Sunday, 17 October 2010
MELBOURNE, Oct 16 (Commodity Online): Global wheat production will return to surplus next year, but not by enough to refill inventories by more than a fraction, Macquarie has said.
The Australia based banker also forecasted that Chicago prices will remain above $6 a bushel for at least two years.
The bank forecast a jump of more than 5 per cent in wheat production in 2011-12, the sowings for which have begun in northern hemisphere countries, as growers raise plantings to capitalise on firmer prices.
"European Union, US and Canadian farmers are expected to expand wheat plantings at the expense of other crops," Macquarie said.
However, with consumption also to grow, in the absence of cheap alternatives, even the world's third-biggest wheat crop looked unlikely to surpass consumption by much.
Indeed, as a proportion of consumption, inventories would actually looked set to tighten a fraction, with the stocks-to-use ratio, a key measure of pricing potential, set to edge lower to 25.1 per cent.
The bank said it saw "little downside risk" of wheat prices falling below $6 a bushel in Chicago heading into the first quarter of next year, and forecast that level holding until at least the last quarter of 2012.
The Australia based banker also forecasted that Chicago prices will remain above $6 a bushel for at least two years.
The bank forecast a jump of more than 5 per cent in wheat production in 2011-12, the sowings for which have begun in northern hemisphere countries, as growers raise plantings to capitalise on firmer prices.
"European Union, US and Canadian farmers are expected to expand wheat plantings at the expense of other crops," Macquarie said.
However, with consumption also to grow, in the absence of cheap alternatives, even the world's third-biggest wheat crop looked unlikely to surpass consumption by much.
Indeed, as a proportion of consumption, inventories would actually looked set to tighten a fraction, with the stocks-to-use ratio, a key measure of pricing potential, set to edge lower to 25.1 per cent.
The bank said it saw "little downside risk" of wheat prices falling below $6 a bushel in Chicago heading into the first quarter of next year, and forecast that level holding until at least the last quarter of 2012.