The Hindu Business Line : Wheat prices likely to be steady

, WORLD wheat market fundamentals have undergone subtle changes over the last four weeks. This follows expectation of slightly improved global prospects vis-à-vis a month earlier, emerging quality concerns in the US spring crop, unchanged world trade and lower import requirement for China.

These developments have all combined to keep international wheat prices on leash.

With current production and consumption well-balanced, there seems to be limited upside potential for prices, but a clear downside is evident.

Suppliers would be keen to open up new markets. India could be.

The latest report from the London-based International Grains Council (IGC) forecasts world wheat production for 2005-06 at 610 million tonnes (mt) , up 2 mt from last month, but down from 623 mt of 2004-05.

World consumption, on the other hand, remains unchanged from last year at 613 mt, while world trade too is projected to remain steady at 108 mt.

However, China's import requirement is projected at 4 mtfollowing improved crop outlook and subdued buying to date. In 2004-05, China imported 7 mt.

With indication that market is well supplied this year, wheat prices in China showed no signs of rising.

Indian wheat market continues to remain firm. Given the emerging situation of lower grain crops in the kharif season - decline in coarse grains, paddy and pulses output in varying degrees is not ruled out - prices of these may tend to firm up.

Maize: IGC has forecast world maize output at 661 mt, down 45 mt from previous year's record. The US corn is projected at 265 mt (down 35 mt from 2004) as the crop suffered due to hot and dry conditions in the corn belt.

World maize consumption is forecast at 665 mt, some 8 mt down from 2004-05, while world trade is projected at 77 mt, (76 mt last year) reflecting firm demand. The recent outbreaks of avian influenza are affecting feed demand and maize imports in parts of Asia, the report pointed out.

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