Wheat prices will gradually decline in 2014

2014-01-29 Developments

2014-01-21 10:44 |
source: China Grain Network |

agronomists and analysts say wheat prices are likely to fall in 2014 because of high global production and ending inventories.

Daniel O'Brien, an agricultural economist at Kansas State University in the United States, said the reason for the decline in wheat prices was the increase in global wheat supply. As global wheat production in 2013/14 hit an all-time high and supply was close to an all-time high, wheat ending stocks increased from the previous year's level.

Brian Bain of the Northwest Wisconsin Grain Growers Association recalls 2010, when the price of white wheat fell to $4.50 a bushel. He said it was not impossible for wheat prices to fall to that level again this year. Bain said global wheat supplies would remain plentiful if there were no weather problems in the northern hemisphere this year. The recent cold weather may have caused some winter wheat to freeze to death in the Midwest. In this regard, wheat farmers should take advantage of this opportunity to price. If the weather in the central part of the United States continues to dry and production declines, the market will stabilize.

In recent years, the price of white wheat is generally high, because the price of corn is at the highest in history, and white wheat can replace corn as a diet. But the United States has struggled to absorb excess wheat supplies this year. In export markets, U.S. wheat also faces strong challenges from Canada and Australia.

Grain broker Dan Steiner said corn prices are now nearly 1/3 below their recent highs, falling from more than $300 to nearly $185 to $190. Wheat prices also fell sharply.

U.S. Department of Agriculture data show that the price of soft white wheat in the Portland area 6.685 to $6.835 a bushel on Friday, compared with about $8.33 a bushel a year ago.

Dan Steiner said that soft white wheat is mainly grown in the Pacific region and is a niche crop. If the chance of freezing to death or damage increases, the price of soft white wheat may rise. But the main negative factor is still the global wheat supply is abundant. He said that at present, what the wheat market really needs is good news and strong demand.

Darin Nusan, a senior analyst at Data Transmission Network (DTN), believes that the spot price of corn may fall to the government loan rate, about $1.95 per bushel. He said that if the price of corn does fall to this level, it will trigger a domino effect, and the prices of wheat and soybeans, and even cotton, rice, live cattle and live pigs will be affected and fall. He said that if the corn spot market trend continues, the CBOT soybean spot contract price may fall to 6 to 6.50 US dollars/bushel. Although he believes that this may not happen in 2014, if global production continues to grow and demand remains stable, agricultural prices may fall sharply by mid -2015.

In addition: according to a report released by Merrill Lynch, a subsidiary of Bank of America, due to the expected improvement of global wheat production and the relatively low growth of wheat demand, it means that the final inventory of wheat in 2013/14 will increase and wheat prices will continue to fall.

So far, the prospects for wheat production in the United States in 2014/15 are good; in Europe, wheat planting conditions in the northern region are good, while planting in the southern region is delayed because of the late harvest of corn, which restricts the planting of winter wheat.

This report shows that the normalization of global wheat production has led to the normalization of market capital flows. U.S. wheat export sales have been relatively strong since August. Imports from China and other emerging markets were held back last year because of poor harvests in exporting countries, but imports from these countries will recover this year, helping them replenish their inventories.

As U.S. wheat has to compete with wheat from other countries, especially Europe and Russia, wheat prices must remain competitive, which will constrain the upside of U.S. wheat prices.

Berlin, January 20: According to the latest report released by Commerzbank, wheat prices may gradually decline in 2014 due to the expected increase in wheat planting area in the United States.

S. wheat acreage in 2014 is likely to be higher than it was in 2013, the report said. The bank expects the average price of wheat on the Chicago Board of Trade (CBOT) to be $6.80/bushel in the first quarter of 2014, $6.90/bushel in the second quarter, $6.70/bushel in the third quarter and $6.50/bushel in the fourth quarter.

On January 17, CBOT's March 2014 wheat futures price was $563.5 per bushel, July wheat price was $5.77, September wheat price was $5.8575, and December wheat price was $598.5.

Commerzbank reports that in the European Union, only French winter wheat planting has encountered some problems. Overall, EU wheat production is likely to increase significantly in 2014, provided that weather conditions are normal.

In Russia, the outlook for the winter wheat harvest in 2014 is better than earlier expectations. In Ukraine, the situation has also improved.

WASHINGTON, Jan. 20: According to an investment report released by Philip Futures, the final inventory-to-inventory ratio of wheat in 2013/14 is still at a relatively appropriate level, about 23.6 percent. Although the end-of-term stocks of wheat in the United States will decline, there is sufficient or excess supply of wheat in other parts of the world, which will lead to a decline in the price of wheat in the United States, because the price of wheat in the United States must remain competitive.

The company said that because the global wheat supply is too abundant, the increase in wheat consumption will not significantly support wheat prices, especially considering the global wheat supply is so large.

The report added that U.S. wheat must remain competitive in the international market, especially when wheat from other exporting countries is abundant, otherwise U.S. wheat will lose its traditional market share.