June 25, 2012

World grain prices to steady in Q3 despite unfavourable weather

Based on projections of global supplies and demand, freight charges and impact of the global economy, the Korea Agro-Fisheries & Food Trade Corporation said in a report Friday (June 22) that international grain prices will not got on a volatile price hike during the third quarter this year despite extreme weather conditions in the world's key harvest zones.

Global grain output is estimated at 2.37 billion tonnes during the 2012-13 period, a 2.9% rise on-year, while the stock-to-use ratio will rise 0.2 percentage points to 20.3%, the report predicted.

Global supplies will be relatively balanced, but there are still concerns of supply shortages as dry weather hits the mid-west region of the US and southern Russia - key grain belts for corn/bean and wheat, respectively. Dry weather in these regions has been boosting grain prices as of late, while expectations of post-Greek election financial market easing also played a role in driving up prices.

Europe's debt woes are not yet fully resolved and the same uncertainties will weigh down on the market, which will keep grain prices on the edge for the foreseeable future. However, the decline in oil prices - which hold big sway over short-term grain prices - and the falling won-to-dollar exchange rates have eased the risk of a sudden price hike, said the report.