July 15, 2010

Global wheat prices soar amid unfavourable weather

The world's wheat market is suffering from the crop's skyrocketing prices caused by poor weather conditions in Russia, Kazakhstan and Canada.

The price of grain has been edging towards the maximum, following a crop reduction forecast in the main producing countries in the last six months.

In Russian provinces, severe drought will irreversibly affect crop yields, which is expected to fall by 14, 18 and 19% in Russia, Kazakhstan and Canada, respectively, as compared with the previous year.

September wheat rose US$0.975 to settle at US$5.59 a bushel Thursday (July 15) after rising to US$5.64 a bushel earlier in the day. The price is about US$1 a bushel more than it was June 29 and at the highest level since reaching US$5.7050 a bushel during trading on January 12.

The rally has been triggered by lower expectations in key wheat-producing regions whereas the US crop is forecasted in good-to-excellent condition.

According to the USDA's July figures, Russia's wheat production will be cut by at least 14% from last year's harvest and Kazakhstan's production by about 18% due to a severe drought.

September corn benefited from the rally in wheat prices, rising US$0.9 to US$3.8425 a bushel. August soy gained US$0.25 to US$9.9750 a bushel.