April 21, 2008

Global '08 wheat output seen at record 6 percent

Wheat harvest worldwide this year is projected to reach an all-time high of 6 percent, as record prices spur farmers to grow more, according to Utrecht-based Rabobank Group.

Production will expand by 37 million tonnes to 640 million tonnes, as plantings will gain 5 percent and global stockpiles will rise 9 percent.

In the report, a team of analysts led by Luke Chandler in Sydney, Australia, said "wheat output forecast to rebound strongly, resulting in a partial recovery in world inventory levels and taking some pressure off world prices".

Wheat, corn, rice and soy have risen to records this year on shrinking global stocks and rising demand from the food, feed and biofuel industries. The rally has spurred higher costs for everything from Italian pasta to Japanese noodles, and created street protests from Haiti to Ivory Coast.

Wheat for July delivery was up 1 cent, or 0.1 percent, to US$9.29 a bushel in after-hours electronic trading on the Chicago Board of Trade. Prices have gained 96 percent in a year.

Rabobank expects wheat prices to drop in the second half of this season, compared with the first half, as production exceeds demand by 12 million tonnes.

"Prices for corn, soy and other oilseeds including canola are expected to outperform wheat prices over the coming 12 months' because of  tight supply and demand fundamentals and the increased link to biofuel markets,"' the report said.

Soy plantings are expected to jump 8 percent in 2008, buoying production by 12 percent, Rabobank said.

Corn acreage is forecast to drop "slightly," while cotton plantings in the US may fall by as much as 15 percent this year, the bank said.