February 26, 2010

Global wheat prices to slump on huge stocks, harvest

World wheat prices may retreat 14% in the next few months as new harvests enter the market amid high global stocks.

The average world export price could decline to US$150 per tonne from the current US$175 per tonne, said a trader. The decline could occur sooner if Russia releases three million tonnes from its stockpiles, he said.

Wheat has slumped 62 percent from a record US$13.4950 a bushel two years ago as farmers increased plantings, boosting competition between the US, Canada, Russia and Australia. Russia plans to export as much as three million tonnes of grain from its inventories, said Emmanuel Jayet, the head of agricultural research at Societe Generale SA.

Russian deputy agriculture minister Sergei Korolev said the government will ensure its release stocks will not influence global prices.

The USDA raised its global wheat output estimate to 677.4 million tonnes on February 9 from 676.1 million tonnes a month earlier as it increased its outlook for harvests in Argentina and Ukraine. The previous crop was a record 682.7 million tonnes.