June 7, 2007

US, Australian wheat prices on the rise

World demand outstripping supply as well as concerns over the northern hemisphere crops has contributed a steady rise in Australian and US wheat prices, reaching up to US$200 per tonne last week-the highest price in more than a year.  

Prices of the grain in Australia have also risen but not to the same extent as US futures, largely due to the appreciating Australian dollar.

The Australian dollar has risen from US77 cents in late January to hit US83 cents in mid-April before falling back to about US82 cents during the past weeks.

According to the Commonwealth Bank's wheat market update, December wheat futures for Australia have risen from a low of $A211/tonne (US$178.47) in early April to $A243/tonne (US$205.54) early this week.

Emerald Group Australia executive director Mick Cattanach said the increase was due to escalating demand for wheat as against supply.

Cattanach said dry weather affecting crops in European Union countries, Russia and the Ukraine also helped drive the market up in recent weeks.

He said there was also concern the US hard red winter crop might not be as good as expected as harvests had jus started in Texas and Oklahoma has just started and yields were not as good as farmers had expected.

He said all factors could lead to depletion in wheat stocks this year.