April 5, 2006

Global wheat shortage likely this year

World wheat production for this year is forecast at 594 million tonnes, 4.5 percent down from the 616 million tonnes of 2005, according to the International Grains Council.

The council also predicts that wheat consumption in 2006 would hit 611 million tonnes, tightening the margin on world stocks.

In addition, the US Department of Agriculture has reported that its area planted for wheat would be the lowest in 33 years, at 23.1 million hectares.

Floods have been reported in Germany, Hungary, the Czech Republic and Slovenia while a second year of drought is also expected in Spain and North Africa.

As for corn, US farmers' indication that they would be planting more soy but less maize has also triggered a sharp rise in maize contracts on the Chicago futures market while soy contracts remained unchanged.

Meanwhile, in the EU, lower prices for poultry may mean lower demand for grain to be used as feed as producers cut down on chick production.