Steep drop in world wheat crop forecast By Javier Blas in London
Published: January 29 2009 18:10 | Last updated: January 29 2009 18:10
The world’s wheat harvest is likely to “fall sharply” in 2009-10 as farmers cut the acreage devoted to the cereal, the International Grains Council said yesterday in its first forecast for the incoming crop.
The London intergovernmental body said the 2009-10 season wheat crop would fall to 650m tonnes – down about 5 per cent from a record 687m tonnes last season
The lower output is likely to support forward cereal prices. But traders warned that near-term prices would remain under pressure from the large stock build from the 2008-09 harvest.
Further damaging the immediate price outlook, traders said a lack of access to credit was forcing wheat-importing countries to buy on a hand-to-mouth basis, reducing immediate demand.
Food aid organisations have warned that the world’s poorest countries are facing difficulties in obtaining credit lines to buy agricultural commodities.
Wheat prices have risen about 25 per cent from December’s low of $4.55 on concerns about the impact of a severe drought in Argentina, the world’s fourth largest exporter. But wheat prices remain higher than they were 18 months ago.
“While the immediate supply and demand outlook for grains remained generally bearish, with global stock forecasts mostly adjusted upwards, increasing concerns about South America’s crops and continued firm international demand for wheat attracted buying interest in futures markets,” the IGC said.
The record harvest last season came as farmers, encouraged by record high prices, increased planting.
The IGC said the steep decline in prices from last year’s peak, when soft wheat hit an all-time high of $13.34½ a bushel, as well as the high costs of inputs such as fertilisers, prompted farmers to cut the world’s planted area by about 1 per cent. Regards Buffett
