EXPORT PRICES

International wheat prices rose by a further U.S.$ 16 per ton since the last report. In April, planting delays in the United States combined with active trade led to a surge in both spot and nearby futures to record highs. However, since the beginning of May, following an improvement in weather conditions in North America and the start of harvesting in several wheat producing regions in the northern Hemisphere, prices fell back from the record U.S.$ 297 per ton reached on 26 April. By late May, the price of U.S. wheat No. 2 (f.o.b.) was quoted at about U.S.$ 235 per ton, which was still as much as U.S.$ 66 per ton or 40 percent more than a year earlier. Similarly, soft red winter wheat prices at the Chicago Board of Trade (CBOT) for July delivery fell to U.S.$ 193 per ton compared with over U.S.$ 230 a month earlier. This was mainly a result of seasonal harvest prospects, planting improvements and large old crop selling by funds, especially those with long positions. Nevertheless, with wheat futures still sharply higher than the corresponding period in 1995 and particularly 1994, early indications point to firm prices at least throughout the first half of the 1996/97 season.

LATEST CEREAL EXPORT PRICES *

SOURCE: FAO, see Appendix Table A.9
* Prices relate to the fifth week of the month.
1/ No. 2 Hard Winter (Ordinary Protein).
2/ January-March shipments.
3/ April shipments.
4/ June shipments.
5/ Indicative traded prices; prices relate to the fourth week.
6/ 100% second grade, f.o.b. Bangkok.
7/ A1 super, f.o.b. Bangkok.

At this time of the year, the maize market is usually governed by the weather situation and the size and conditions of the new crop. Consequently, the movement of maize prices during the past weeks have remained extremely volatile. After reaching a peak in late April, they fell sharply during the first week in May and then rallied to new peaks several times before sliding to lower levels during the third week in May. The latest record was set on 17 May when the export price of the U.S. No. 2 maize (delivered Gulf ports) reached U.S.$ 214 per ton. By late May, with improved planting progress in the United States, maize prices weakened slightly and were quoted at around U.S.$ 200 per ton, still U.S.$ 87 per ton higher than at the same time last year. The CBOT maize futures also rallied to new highs several times since late March. Active trade, especially strong Asian demand for U.S. maize, resulted in a surge in July contracts to an all-time high of U.S.$ 199 per ton on 17 May. However, by late May, nearby prices fell to U.S.$ 186 per ton, responding to improved weather prospects and signs of a slowdown in demand in the domestic U.S. market.

International rice prices fell in April and most of May, but recovered strongly late in the month. As a result, the FAO Export Price Index for Rice (1982-84 = 100) in May averaged 136 points, little changed from April but 5 points lower than in March. The fall in prices during the first half of May was particularly sharp in the case of rice with a larger proportion of brokens. Thai A1 Super was quoted in mid May at U.S.$ 236 per ton, about U.S.$ 10 lower than its April level, but recovered sharply in late May to U.S.$ 253 per ton. Higher qualities, such as Thai 100 B, held fairly steady at about U.S.$ 345 for most of the month and ended up at U.S.$ 365 per ton. Prices for rice from India and the United States rose, largely reflecting internal market conditions. In the United States rice prices strengthened despite a slow-down in exports because of expectations of a smaller 1996/97 crop. In India, the Food Corporation's raising of its sales price of rice to exporters has been largely responsible for pushing up the export prices of its rice. India PR106 25 percent brokens was quoted at U.S.$ 310 per ton, substantially higher than its April level. In the next few months, export prices of rice could continue to diverge. However, price developments will remain extremely volatile as they hinge critically on growing conditions for the crops in the ground. Moreover, the extent to which Iraq would purchase rice to cover its large food deficit is also expected to have an impact on rice prices in the coming months.