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Wheat prices continued to slide, falling to a one-year low in the second week of September, mostly driven by a record world production and large exportable supplies. The seasonal harvest pressure in the Northern Hemisphere countries, rising US dollar and falling crude oil prices also contributed to the sharp decline in wheat prices. The US wheat (No.2 Hard Red Winter, f.o.b. Gulf) averaged USD 318 in the first two weeks of September, 7 percent lower than both the average price of last month and that of September 2007. Similarly in the futures market, wheat prices fell significantly, a development that was underpinned by a notable speculative (non-commercial) liquidation of both long and short positions. The December wheat futures at the Chicago Board of Trade (CBOT) lost 7 percent since the beginning of September, reaching USD 267 per tonne, and 42 percent from its all-time high in March 2008. In addition to selling pressure from funds, the US wheat futures were also influenced by declines in values of most other agricultural crops.
Maize prices weakened in early September, reacting to favourable global crop prospects and anticipation of huge suppliers of feed wheat which could compensate for any eventual deterioration in the level of maize exportable supplies. The drop in crude oil prices, falling soybean prices and the rise in the US dollar also contributed to recent declines in international maize prices. The US maize (No. 2 Yellow, Gulf) averaged USD 227 per tonne in the first two weeks of September, representing a drop of 2 percent compared to its August average. However, maize prices are still 44 percent higher than their average in September 2007. The CBOT maize futures also fell last week following continued liquidation of long positions. The futures for December delivery fell to USD 211 per tonne, down 4 percent from the first week in September and 32 percent from its peak in late June.
The price of the benchmark Thai white rice 100% B averaged USD 776 per tonne in the first two weeks of September, marginally lower than its August average and 19 percent below the peak reached in May. At this level, however, rice prices remain 133 percent above the average in September 2007. The decline in rice prices in the past months reflects large supply availability from the 2007 secondary paddy crops and good prospects for the harvest of the 2008 main crops in Northern Hemisphere countries. Indeed, export quotations are softening in most other sources, including Pakistan, the United States and Viet Nam. The tendency for rice prices to fall has been also supported by a relaxation of export restraints in India and less stringent enforcement of minimum export prices in Viet Nam.
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