Favourable crop prospects combined with stagnant import demand continued to
put downward pressure on wheat and coarse grains prices in recent months. International
wheat prices have fallen by nearly 30 percent from the previous year
to their lowest levels since the early 1990s. By late August, the price of U.S.
wheat No. 2 (HRW, fob) was US$110 per tonne, down US$17 per tonne from May and
US$44 per tonne less than a year ago. Similarly, the Argentine Trigo Pan export
price fell to US$112 per tonne, around US$11 per tonne less than in May and
US$43 tonne lower than a year ago. In the futures market, the favourable supply
outlook in major exporting, as well as several importing countries, especially
in North Africa and in Asia, continued to weigh on the Chicago Board of Trade
(CBOT) soft red winter futures. Additional downward pressure on the wheat futures
was generated by the financial difficulties, particularly in Asia and most recently
also in the Russian Federation. Since late July the nearby September contracts
slipped to their lowest levels in seven years and, by late August, the December
contracts were quoted at US$96 per tonne, some US$47 per tonne, or 33 percent,
below the corresponding period in 1997.
Export prices of nearly all major coarse grains have also weakened considerably in recent weeks. By late August, the US maize export price fell to a 10-year low of nearly US$84 per tonne. At this level, US maize prices were US$19 per tonne lower than in May and US$31 per tonne, or 27 percent, below August 1997. Similarly, barley and sorghum export prices have also weakened substantially compared to the previous year. Several factors are behind the ongoing slide in coarse grain prices, namely the relatively large maize and barley stocks carried over from the previous season, particularly in the EC and the United States; favourable weather conditions leading to bumper crops, especially in the major exporting countries; large supplies of more competitively priced, low quality wheat which could be used for feed; and weak import demand, partly fuelled by the continuing financial difficulties facing several countries in Asia. Correspondingly, in the CBOT futures markets, maize prices have continued to decline. In August, the nearby September futures plunged to their lowest value in 10 years while December futures also continued to slide and, by late August, were quoted at US$81 per tonne, some US$26 per tonne below the value of the December 1997 contract quoted in August 1997.
|(. . . . . . US$/tonne . . . . . .)|
|Rice white 3/||332||342||273|
|Rice, broken 4/||234||194||202|
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.
contrast, international rice prices from most origins remained firm through
July and August. As a result, the FAO Export Price Index for Rice (1982-84=100),
which has been on the rise since it hit a low of 119 points in November of last
year, averaged 131 points in August and July, up from 130 points in June. The
increase in prices is attributable to concerns about the availability of exportable
supplies, particularly in light of large purchases by several countries, including
Indonesia, the Philippines and Brazil. Also, the relative strengthening of the
Thai baht against the United States dollar and floods in several Asian countries
are contributing to the upward pressure on prices expressed in US dollars.
In Thailand, the July prices for high quality rice rose to their highest levels
since the devaluation of the Thai baht in July 1997. Price quotes for Thai 100B
averaged US$340 per tonne in July, up by US$3 per tonne from the June average
and also US$3 per tonne above the July 1997 price. However, the August price
for Thai 100B declined a little as the demand shifted to the lower quality broken
rice. Prices of fully broken rice (Thai A1 Super) increased by US$14 per tonne
from their July average to US$230 per tonne in August, the highest in about
18 months. In the United States, most prices rose in June but fell back in July
and August largely due to less than expected import demand during those months,
especially from traditional customers in Latin America. Quotes for United States
No. 2/4 percent broken rice averaged US$392 per tonne in August, down from US$410
per tonne in July and US$428 per tonne in June and compared to US$447 per tonne
in July 1997. Export prices from India and Pakistan have remained firm due to
increased demand and limited availabilities for export in these countries. New
crop supplies in India and Pakistan are expected to be available around the
October-November period. In Viet Nam, supplies continue to be tight and talks
of a potential deal with Indonesia have supported prices. In the next few weeks,
rice export prices are expected to be influenced by the Asian floods as details
emerge on the extent of damage to rice in the countries affected.