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Wheat prices fell in the first week of September in
anticipation of a record crop in 2008. Several factors are responsible
for the decline in wheat prices; namely, the recent weather
improvements in Australia, boosting the country's hope of a strong
recovery in production, the seasonal harvesting pressure in the
Northern Hemisphere countries, slowing down world trade activity, and
the stronger US dollar, dampening demand for imports from the United
States. US wheat (No.2 Hard Red Winter, f.o.b. Gulf) fell almost 5
percent from the average of August, to USD 326 per tonne, up only 5
percent from the corresponding period last year and now one-third
percent below its peak in March 2008. Similarly in the futures market,
prices remained under downward pressure. The December wheat futures at
the Chicago Board of Trade (CBOT) lost 4 percent this week, closing at
around USD 285 per tonne, which would even be below the same period
last year and 30 percent down from its all-time high in March 2008.
Amid continued volatility maize
prices also declined from the previous week but remained higher than
the August average. Prices were influenced by falling crude oil prices
and the expectation of very large supplies of low quality wheat this
season, which can substitute maize and other coarse grains in feed
rations. The recent retreat in soybean prices and the rise in the US
dollar also contributed to the drop in maize values. US maize (No. 2
Yellow, Gulf) averaged USD 239 per tonne in the first week of
September, 3 percent above its level of August. International maize
prices have fallen by 15 percent from their peaks in June but are over
51 percent above the same period last year. The developments in the US
futures mirror those of spot prices with CBOT maize for December
delivery falling 4 percent, to USD 221 per tonne, down nearly 30
percent from its peak in late June.
Rice prices
made some gains this week but they remained lower than their August
average. After five consecutive weeks of decline, the export price of
the benchmark Thai White rice 100% B rose slightly by the end of the
first week in September, to USD 776 per tonne, USD 26 more than in the
previous week. The increase contrasts with a situation of abundant rice
supplies and prospects for bumper paddy crops in 2008 in both exporting
and importing countries, the effects of which were partly neutralized
by a rebounding of import demand by countries in Africa and the Near
East. This week’s price strength partly reflects the recent
announcement by the Thai Government that the high minimum prices paid
under the 2007 second crop procurement programme will be maintained or
increased for the 2008 main crop.
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