International organizations expect that grain harvest hits record. The price of wheat has fallen from 240 euros per ton last season to 190 euros this season.
One year ago, due to the drought that affected producing countries, cereal crops came down prompting market tensions. The price hikes damaged the poorest countries and the livestock population.
This campaign is different. The drought is history and forecasts of international organizations such as FAO, the International Grains Council (IGC) and the Department of Agriculture (USDA) points to a significant 7% increase in 2013 compared with an increase of 3% in demand. Analysts believe that there will be a reduction in prices and restocking worldwide.
“Due to its great dependence on climatic factors, the current situation could change anytime, but for the moment, the reality is that we are facing a new scenario” says Jose Murillo, Infomarket Group. The averages prices for corn and wheat would have passed from 240 € per ton the previous season to an average below 190 € this year.
Latest information continues to point to a significant 7.2 percent increase in 2013 world cereal production to 2 479 million tonnes, a new record. FAO now puts world wheat output in 2013 at 704 million tonnes, an increase of 6.8 percent, which would imply more than full recovery from the previous year’s reduction and bring world production to its highest level in history.
By far, the bulk of the increase this year is expected to originate in Europe, as prospects remain favourable overall in the EU and outputs in the major producing CIS countries are forecast to rebound sharply from drought-reduced levels in 2012. The outlook is also positive in Canada, Australia and Argentina – other major exporters – and in most other wheat producing and consuming countries.
The main exception is the United States, where wheat crop growth has been hindered by adverse weather conditions – drought in particular – this season.