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From presentation at US Department of Agriculture Outlook Forum Feb21-Feb 22, 2008 |
Wheat traded on the Chicago Board of Trade, rose by the most in more than five years on Monday, moving above $12 a bushel for the first time as global crop production isn't meeting demand. Corn and soybeans also rose close to records.
Global wheat stocks will likely fall this year to a 30-year low of 109.7 million metric tons, the US Department of Agriculture has forecast and export sales from the US, the world's largest exporter of the crop, are up 56% since June 2007, compared with the same period a year earlier.
Prices of top-quality wheat surged 25% to a record high on Monday in their largest one-day increase as Kazakhstan, one of the largest grain exporters, announced that it would impose export tariffs to reduce foreign sales.
Akhmetzhan Yesimov, Kazakhstan’s Minister of Agriculture, said the government wished to limit exports as it struggled against rising consumer inflation of nearly 20%.
Mr Yesimov said: “Whatever happens, we will soon limit exports.”
Kazakh grain, from the lush plains of Central Asia, has a high protein and gluten content, similar to top-quality North American crops.
Wheat for May delivery rose by the daily limit of 90 cents, or 8% to $12.145 a bushel in after-hours electronic trading on the Chicago Board of Trade, the biggest one-day gain since October 2002. The exchange expanded its daily limit after the contract jumped by the previous 60-cent limit yesterday.
Spring wheat at the Minneapolis Grain Exchange jumped $4.75 to a record high of $24 a bushel.
Soybeans for May delivery rose as much as 12.75 cents, or 0.9%, to $14.82 a bushel. Corn futures for May delivery rose 1.1% to $5.5275 a bushel
The US Department of Agriculture (USDA) said last week that driven by continued expansion in ethanol production capacity, corn use for ethanol is projected at 4,100 million bushels in 2008/09, up 28% from the current year projection. At this level, ethanol corn use will account for 31% of total corn use, up from a projected 25% for 2007/08.
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| Harvesting wheat in Kazakhstan |
The USDA said that persistent high feed costs will constrain expansion of poultry flocks and livestock herds next year - illustrating the knock-on impact of high gain prices on consumer inflation.
Earlier this month, the USDA said that projected US wheat ending stocks for 2007/08, at 272 million bushels, are the lowest since 1947/48.
Global ending stocks for 2007/08 were lowered 1.2 million tons. At 109.7 million tons, stocks are projected to reach their lowest level in 30 years. Lower ending stocks in Canada, FSU-12 (former Soviet States), and the United States are only partly offset by higher stocks in Australia. Ending stocks are raised 0.7 million tons for Australia based on higher production and carryout from 2006/07. Australia production for 2006/07 is raised to 10.6 million tons from 9.9 million based on the latest estimates by the Australian Bureau of Statistics.
