Thursday, October 11, 2007

[PBN] Wheat prices hit record-high levels according to FAO


Posted by Giles Clark, London

Monday, 08 October 2007

International wheat prices have increased sharply since June, hitting
record highs in September in response to tightening world supplies,
historically low levels of stocks and sustained demand, according to
FAO's latest rop Prospects and Food Situation report, issued last week
(5th October).

The combination of higher export prices and soaring freight rates is
pushing up domestic prices of bread and other basic food in importing
developing countries, hitting the group of Low-Income Food-Deficit
countries (LIFDCs) particularly hard and causing social unrest in some
areas, the report said.

The total cereal import bill of the LIFDCs is forecast to increase
considerably for the second consecutive year, reaching an all-time
high of US$28 billion in 2007/08, up roughly 14 percent from last
year's already high level. Overall, developing countries are likely to
spend a record US$52 billion on cereal imports, according to the

Maize prices are also well above last year's levels, despite the
bumper crop materializing this year, mainly reflecting continued
strong demand from the biofuel industry, the report said.

In the United States, the world's largest producer of maize, output is
forecast to increase 26 percent from 2006 to an all-time high.
According to the report, record maize harvests are also expected in
South America, with production in Brazil increasing by one-quarter
from last year's good level, and in Mexico, the largest producer in
Central America.

Cereal stocks – particularly wheat – at historic lows
"On current indications, this year's cereal harvest would only just
meet expected utilization levels in the coming year, which means that
stocks will not be replenished," said Paul Racionzer from FAO's Global
Information and Early Warning System. "We anticipate cereal stocks to
remain at very low levels for the foreseeable future."

The report calls the situation of wheat stocks "worrying". Sustained
demand amid insufficient increase in production this year, especially
among the major exporting countries, which are also among the leading
stock holders, is expected to result in at least a 14 million tonne
drawdown of world inventories to 143 million tonnes, the lowest in 25

Earlier posts of Pacific Biofuels can be found at:

No comments: