November 8, 2006

More upside seen for US wheat and corn prices

The bull run seen in wheat and corn prices is not going to weaken anytime soon, Stephan Wrobel, chief executive of Diapason Commodities Management, said Wednesday (Nov 8).

"In the past 18 months we have really been working with grains," Wrobel told Dow Jones Newswires. "Now people are aware of them."

Wheat and corn futures recently climbed to 10-year highs on the Chicago Board of Trade.

"Wheat and corn started at a very low price," he said, adding that they are still "very cheap" and have more room to rally.

With wheat inventories low around the world, only 73 days worth, that removes the buffer between the supply and demand balance, he said.

Weather changes, a growing population increasing demand for agricultural products, the green revolution and the increased use of wheat and corn for biofuels and ethanol, water shortages and the expansion of cities and diminishing availability of good growing land will continue to pressure supply, he said.

But Wrobel added that the bull market won't go on forever. He said at some point there will be a balance between supply and demand. In the meantime, prices of agriculture commodities will continue to rise.