February 13, 2009

The current weakness in wheat prices is likely to persist as the global export surplus continues to rise.

 

Argentina this week allowed 520,000 metric tonnes of wheat to be exported, while India may be close to allowing wheat exports.

 

India's wheat output is likely to fall to 77.8 million tonnes in 2009, from 78.6 million tonnes in 2008, but even this level is considered excellent and will exceed domestic demand, leaving sufficient room for exports.

 

However, some scientists have said the wheat crop may drop to 75 million tonnes if adequate rains aren't received over the next few weeks, as harvest approaches.

 

Meantime, Pakistan, a major wheat importer in 2008, is also preparing to harvest a bumper crop of 24 million tonnes, which traders said could keep it out of the international market at least until the end of this year.

 

The world's attention is now focused on China's evolving drought situation, which is threatening the country's winter wheat crop.

 

While government officials are confident irrigation will minimize the damage, agribusiness officials said wheat crop output may fall by 5% on year.

 

However, they added the wheat stocks of 52 million tonnes will help meet any shortfall, averting the need for high imports.

 

In wheat deals this week, Japan's Ministry of Agriculture continued its heavy buying so far this year, buying a total of 132,000 tonnes from the U.S., Canada and Australia in a tender Thursday.

 

In other major deals, the Korea Feed Association continued its purchase of grains for the second quarter of 2009.

 

It bought 165,000 tonnes of corn and 110,000 tonnes of soybean meal for mostly May and June delivery.

 

While it paid around US$201.95-US$202.90 a tonne, cost and freight for the corn, the soy meal was bought at US$379.90-US$390.73/tonne.