February 22, 2013

US drought may push world wheat prices

International wheat prices may increase in the coming months as the US continues to be affected by a local drought crisis.

Higher prices would result in costlier imports by Asian countries, higher returns to growers and switching by animal-feed millers to relatively cheaper corn instead of wheat.

Benchmark wheat prices rose to a multi-year high of US$9.4725 per bushel on July 23 but have since eased. CBOT March wheat settled at a seven-month low of US$7.32 per bushel in response to rain and snow slightly easing drought conditions in parts of the US

The United Nations Food and Agriculture Organisation said that global wheat inventories will decline 10% in the year ending June 30.