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Since the previous report international wheat prices fell by more than U.S.$ 30 per ton. By late July, wheat prices began to stabilize between U.S.$ 192-195 per ton, about the same level as during the corresponding period a year ago and by August 27, the nominal price of U.S. wheat No.2 (fob) was U.S.$ 192 per ton, which was close to the price quoted in August 1995. The easing of the wheat market after several months of rising and volatile prices can be attributed to relatively favourable harvesting conditions, particularly in the EC, but also In several major importing countries, improved and good weather helping spring wheat growing conditions in the United States and prospects for a larger wheat crops in Argentina and Australia. In the futures market, Chicago Board of Trade (CBOT) nearby (September delivery) soft red winter prices have also fallen and stabilized at around U.S.$ 167 per ton, and contracts for March 1997 are at about the same level. This is in contrast to the situation during the corresponding period last year when March futures were traded at a premium to September contracts.


(. . . . . . U.S.$/ton . . . . . .)
United States
Wheat 1/ 192 244 186
Maize 166 200 130
Sorghum 146 184 128
Wheat 170 2/ 200 2/ 195 4/
Maize 164 4/ 192 3/ 132 5/
Thailand 6/
Rice, white 7/ 344 365 352
Rice, broken 8/ 215 253 288

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

Export Prices Weekly Quotations

Maize price developments in recent weeks have been mainly influenced by demand from importing countries for maize from the United States, which is currently the only significant supplier to the world market. Export prices remained strong in June and, after attaining a new peak of U.S.$ 221 per ton on July 11, they weakened considerably during the second half of August mainly due to a slow-down in U.S. sales to several major buyers in Asia. By August 26, the price of U.S. No.2 maize (delivered Gulf ports) fell to U.S.$ 177 per ton, U.S.$ 25 per ton lower than in late May, but still some U.S.$ 50 per ton above prices of the corresponding period a year ago. In the futures market in late August, December maize was traded at about U.S.$ 135 per ton, reflecting more favourable crop prospects and pointing to the market’s expectation of a generally improved supply situation this season.

International rice prices generally weakened in August after the initial preoccupation over possible effects of floods in China subsided. News that Japan may exercise its commitment to import later than earlier anticipated, further dampened exporters' expectations. As a result, in August the FAO Export Price Index for Rice (1982-84=100) averaged 4 points lower at 135.

Prices of lower quality rice fell the most with virtually all the major exporters reducing their prices for broken rice substantially. The price for Thai fully broken rice A1 Super was quoted at about U.S.$ 210 per ton in the third week of August, about U.S.$ 25 below the same period last month, before recovering somewhat to U.S.$ 215 per ton at the end of the month. In Viet Nam, the export price for broken rice, which had been steadily cut since the start of the year, fell further. India, which had earlier raised its export prices for rice, also reduced them sharply in August. As a result, FAO's Rice Export Price sub-index for lower qualities plunged 6 points to 129 or 27 points down from the level in January.

The prices for some higher qualities also declined in August. Thai 100B was quoted at U.S.$ 344 per ton, U.S.$ 21 lower than in the previous month. In contrast to the decline in the prices of higher quality rice from Thailand, however, rice export prices for long grains in the United States proved firm because of reduced supplies of these types in the United States. As a result, the price premium paid for US No 2, 4 percent long grain rice over Thai 100B increased averaging U.S.$ 109 per ton in August compared to the average price differential of U.S.$ 86 in July.

(Contributed by the International Grains Council)

Ocean Freight Rates Graphic

Freight rates remained weak in late June and July, with excess tonnage competing for the limitednumber of cargoes on offer. As prospects for new-crop grain and soyabeans improved markedly in the United States, prices dropped, and buyers in Far East Asia then entered the market to cover their forward requirements. Elsewhere in the dry bulk sector, improved demand from steel manufacturers in Europe and Japan stimulated bookings of Capesize vessels to load iron ore in Brazil.

Few grain fixtures were reported in the first half of August. Rates to Japan and the Republic of Korea weakened in response to reports that feed compounders in those countries had covered their requirements for several weeks ahead. Large domestic harvests of both wheat and coarse grains led most traders to reduce forecasts for China’s imports.

By mid-August, the Baltic Freight Index (BFI) had declined to around 1060, the lowest since October 1995, but recovered slightly over the next fortnight. However rates on most routes remained considerably down on those of a year earlier. The major heavy grain route from the US Gulf to Japan had dropped below U.S.$20 per ton compared with U.S.$ 33.50 per ton in August 1995. Rates to developing countries were also weaker, with that from the EC to Morocco declining by U.S.$ 4.25 to U.S.$ 11.25 per ton.

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