FAO/GIEWS - Food Outlook No.5, November 1998

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A spate of contracts since late August have led to some recovery in grain prices. The gain in international wheat prices has been more significant than for other grains with quotations up by 15 percent in the past weeks. By late October, U.S. wheat No. 2 (HRW, fob) was quoted at US$133 per tonne, up US$23 per tonne since August but still about US$25 per tonne below the corresponding period last year. Less favourable prospects for the Argentine wheat crop helped the Argentine Trigo Pan prices to register a similar gain of about US$16 per tonne. Price developments in the futures market have been supported by the recent rally in the equity markets and a faster pace in sales. By late October, the Chicago Board of Trade (CBOT) December contracts for soft red winter wheat were quoted at US $ 108 per tonne, a gain of around US$12 per tonne since August, though still US$29 per tonne below the corresponding period in 1997. While high wheat inventories in major exporting countries continue to
Export prices  Graphic


1998 1997

October August October

(. . . . . . US$/tonne . . . . . .)
United States

Wheat 1/ 133 110 153
Maize 98 84 123
Sorghum 93 86 115
Argentina 2/

Wheat 128 112 150
Maize 104 99 123
Thailand 2/

Rice white 3/ 300 334 270
Rice, broken 4/ 258 234 186

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.

weigh on prices, the market could be revitalised if recent reports of large imports by the Russian Federation materialize. Export prices of nearly all major coarse grains have also gained since August although the rise in prices was constrained by improved crop prospects in the United States combined with high inventories and the impact of the economic difficulties on feed demand. By late October, the U.S. maize export prices were quoted at US$98 per tonne, up US$14 per tonne from August, but still US$25 per tonne below last year’s level. Correspondingly, in the CBOT futures market, maize prices have also strengthened somewhat since August. The December U.S. maize futures, at US$87 per tonne, have gained about US$6 per tonne over the past two months.

International rice prices have been under downward pressure in recent months due to reduced import demand for the high quality grades and the arrival of new crop supplies on the market. As a result, the FAO Export Price Index for Rice (1982-84=100) fell to around 131 points in October, down from 132 points in September but still up considerably compared to 121 points in October 1997. However, the fall in the price index was limited by higher prices for the lower grades.

In Thailand, the demand shift to the lower quality rice led to a decline in the prices of the high quality Thai 100% B of US$25 per tonne from the September average to US$310 per tonne in October. By contrast, in the same period, prices of fully broken rice, (Thai A1 Super), increased by US$5 per tonne to US$254 per tonne, the highest level in over 2 years. In the United States, prices of the No. 2/4 percent broken rice averaged US$403 per tonne, up slightly from September but still much below the US$429 per tonne at the same time last year. The relative weakness of the United States’ rice prices is partly due to low import demand for higher quality rice from its traditional main customers in South and Central America during the last few months. Export prices from other origins followed the same trends depending on the quality. New crop arrivals, particularly in India and Pakistan, have led to price declines for rice from these origins. In the next few weeks, rice export prices are expected to be influenced by the extent of the crop damage inflicted by the recent floods, especially in China and Bangladesh.

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