After a sharp rise in international grain prices in 1995/96, wheat and maize prices have dropped by 30 and 40 percent, respectively, from their peak monthly levels a year ago in May 1996. However, because of the closely balanced wheat market, prices have been very sensitive to weather and crop developments in recent months, and the situation has remained volatile. Wheat export quotations reached U.S. $ 200 per ton in mid-April compared to a range of U.S. $ 170-180 in January, due to sustained demand and concern about 1997 production prospects, particularly in the United States and western Europe. However, subsequently prices came under pressure as crop conditions improved and, by the fourth week in May, they had fallen back to about U.S. $ 162 per ton. Also in the CBOT futures market, prices weakened in recent weeks and July and September prices lost about U.S. $ 14 per ton of their value compared to the beginning of May.
Looking into the next season, one fundamental difference with the 1996/97 marketing year is that several countries besides the United States are likely to have large exportable supplies during the first half of the season. In the absence of any significant increase in import demand, this situation could result in prices remaining under some downward pressure and below the corresponding period in 1996. However, in view of the relatively small size of global wheat stocks, prices could become more volatile in the second half of the next season (Jan-June 1998) with their development closely linked to the outlook for 1998 crops.
LATEST CEREAL EXPORT PRICES *
|(. . . . . . U.S.$/ton . . . . . .)|
|Rice white 3/||335||320||365|
|Rice, broken 4/||217||233||253|
SOURCE: FAO, see Appendix Table A.9
* Prices refer to the fourth 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.
after moving within a U.S. $ 120-125 per ton range since March, began to weaken
since the beginning of May and by the end of the month they stood at U.S. $
116 per ton as a result of generally weak international demand. Futures prices
have also come under downward pressure in recent weeks. Influenced by widespread
favourable planting conditions and weak trade prospects for the next season,
December futures fell since early April, and by the third week in May they stood
at around U.S. $ 103 per ton, some U.S. $ 10 per ton below the December values
quoted in the previous month. Price developments in the futures market suggest
that the projected ample supplies among the major exporters, supplemented by
larger export availabilities from China may increase competition for market
shares, particularly in Asia, and contribute to lower prices in the coming season.
International rice prices generally recovered during most of May, weakening mainly in the fourth week. As a result, the FAO Export Price Index for Rice (1982-84=100) averaged 128 in May, 2 points up from its April level, but still 8 points below May last year. The recovery of the Index was supported mainly by an initial strong rise in the price of Thai rice, following substantial sales to the Islamic Republic of Iran. The price for Thai 100B rose during the course of the month to U.S.$ 345 per ton before falling back to U.S.$ 335 in late May. Prices of fully broken rice (Thai A1 Super), however, were only marginally higher, at U.S.$ 217 per ton compared to U.S.$ 215 per ton in late April. In Viet Nam, export prices for rice fluctuated considerably rising in early May from the low levels reached in late April and falling back mid-month, before rebounding in the fourth week following increased export activity.
The prices of rice from other origins, however, made few gains. Export prices of long grain rice in the United States held steady, but the prices of Californian medium grain No 1 4 percent brokens fell further to U.S.$ 354 per ton reflecting a lack of substantial demand relative to the large supplies available following California's increased production of this type of rice in 1996. In Pakistan, export prices of 15-20 percent broken rice averaged higher than in April but lower qualities declined. In India, export prices for rice fell.