Food Outlook 10/96

EXPORT PRICES

Following a sharp drop in July and August, international wheat prices stabilized at around U.S. $ 180 per ton in September and early October (Table A. 9). By October 10, U.S. wheat No. 2 was traded at U.S. $ 182 per ton (fob). This was down U.S. $ 115 per ton, or almost 40 percent, from the peak of U.S. $ 279 per ton reached in April and U.S. $ 19 per ton lower than the corresponding period last year. The decline in wheat prices has slowed down considerably in recent weeks due to large export sales from the United States and the EC and to concerns over the low level of wheat stocks in the United States. Looking further ahead, nearby December wheat futures at the Chicago Board of Trade (CBOT) have been traded some U.S. $ 20 per ton lower than during the same period last year and current indications for March contracts point to an even larger difference, of about U.S. $ 30 per ton (Table A.11). Assuming a normal development of winter wheat plantings in the northern hemisphere, spot wheat prices are likely to weaken further in the coming months, especially after November, when the anticipated bumper crop in Argentina could put more pressure on prices. Sales from the EC have already started to be made with export subsidies and this, combined with larger exports from Canada and Australia, may result in keener competition among the major exporting countries this season.

Maize prices fell further since the beginning of September and by 10 October, the price of U.S. No.2 maize (delivered Gulf ports) reached U.S. $ 131 per ton, about U.S. $ 15 per ton below last year, and U.S. $ 90, or 60 percent, below the peak of U.S. $ 221 per ton reached in July. The decline in prices of maize started later than that for wheat, mainly because the maize crop development in the United States, by far the largest coarse grain exporter, remained uncertain for longer. However, a slow-down of demand as the harvest approaches and prospects for a significant increase in production has started to put additional pressure on maize prices. In the futures market, maize prices also retreated further in recent weeks, and by October 10, maize prices for nearby delivery in December was quoted at U.S. $ 114 per ton, almost U.S. $ 10 per ton less than during the same period last year and the lowest level since February 1995. The downward trend, as reflected by the continuing drift of maize prices on futures markets, results from the market's perception of smaller import demand in prospect, and thus, of more competition among the exporters. Moreover, this year's likely increase in supplies of feed-quality wheat, especially in Canada and the EC, along with ample supplies of barley and sorghum could add further pressure on maize prices in the coming months.

International rice prices remained depressed through most of September and October. By mid October, the FAO Export Price Index (1982-84=100) averaged 129 points, 5 points down from September and about 13 points below its January level. The prices of both high and low quality rice from almost all origins declined under the pressure of a large harvest coming into the market and limited new demand for rice. Thai 100 B was quoted at U.S.$ 310 per ton, down U.S.$ 30 from the previous month and some U.S.$ 100 less than at the same time last year. In the United States, the comparable grade, US No. 2, 4 percent brokens, was quoted at U.S.$ 429 per ton, down U.S.$ 27 from last month.

LATEST CEREAL EXPORT PRICES *

	1996		1995
	October	August	October
	(. . . . . . U.S.$/ton . . . . . .)
United States
Wheat 1/	182	195	201
Maize	131	184	138
Sorghum	121	145	122
Argentina 2/
Wheat	150	168	210
Maize	144	180	145
Thailand 2/
Rice, white 3/	310	348	410
Rice, broken 4/	207	223	301

SOURCE: FAO, see Appendix Table A.9
* Prices relate to the second week of the month.
1/ No. 2 Hard Winter (Ordinary Protein).
2/ Indicative traded prices.
3/ 100% second grade, f.o.b. Bangkok.
4/ A1 super, f.o.b. Bangkok.

Lower quality rice prices, which had taken the brunt of the year's price decline, also fell further. The price for Thai A 1 Super, which had rebounded slightly in early September fell during the remainder of the month. At U.S.$ 210 per ton, it is now some U.S.$ 88 lower than during the same period last year. In Viet Nam, the export price for 35 percent broken rice, which had declined steadily since the start of the year, fell further to about U.S.$ 203 per ton. India reduced its export price for the second successive month. Indian 25 percent broken rice is now quoted at around U.S.$ 240 per ton, U.S.$ 5 less than their September level. In Pakistan, prices took a steep fall with IRRI 15-20 percent broken rice now quoted at U.S.$ 230 per ton, sharply down from the previous month.