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 International maize prices have continued to move upward in recent weeks, climbing to record high levels. The main driving factor for the surge has been the devastating impact of recent floods on this year’s maize crops in the United States, the world’s largest producer and exporter. In the first week of July, the US maize (No. 2 Yellow, Gulf) price averaged USD 298 per tonne, USD 17 per tonne up from the June average and more than double the average in July 2007. The weaker US dollar and the rising crude oil prices have also contributed to the increase in maize prices. On the futures market, prices in the past week were volatile. September maize futures on the Chicago Board of Trade (CBOT) fell sharply at the start of the week in reaction to news of higher ending stocks and larger plantings than earlier forecast in the United States but, by the end of the week, had regained most of the loss, climbing back to USD 298 per tonne.
International wheat prices weakened modestly in early July with seasonal harvest pressure from good crops being gathered in the northern hemisphere starting to influence markets, as well as improved prospects in Argentina, a major southern hemisphere producer where recent rains were beneficial for developing crops. In addition, the reopened of Argentina’s export registry also contributed to the decline in prices. In the first week of July, the export price of US wheat (No.2 Hard Red Winter, f.o.b. Gulf) averaged USD 352 per tonne, down USD 6 per tonne from the June average. However, this level is still about USD 100 per tonne up from the July 2007 price, with wheat prices remaining strongly underpinned by the maize market. Strong early season demand for feed wheat, driven by the high cost of coarse grains is providing support to wheat markets. As for maize, and partly influenced by the maize market, wheat futures have been volatile in the past few weeks. A sharp drop at the start of July cancelled a large part of the overall gain made in June.
After reaching a peak in May, rice prices fell in June, reflecting greater export availabilities in countries such as Thailand and Viet Nam and a relatively weak import demand. The Thai white rice 100% B quotation, the world’s benchmark grade for rice, averaged USD 870 per tonne, down 10 percent, or almost USD 100 per tonne, from the previous month. Until end of September 2008, Thailand will be operating a new government rice procurement programme at exceptionally high purchase price levels of around USD 425 per tonne for paddy rice, corresponding to some USD 650 per tonne on a milled basis. This measure is expected to sustain world prices in the next few months. Likewise, although Viet Nam has announced it would allow private contract sales to resume in July, the imposition of a minimum export price of USD 780 per tonne (lowered from a previous USD 800 per tonne) should also keep world prices from dropping much below those levels.
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