M.R. Subramani

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Chennai, July 13 Global wheat prices are likely to average at $320 a tonne during the 2008-09 crop year (July-June) against $362 during 2007-08, according to Abare, Australia’s independent agricultural research and economics body.

The prices are expected to fall as wheat supplies are forecast to increase more than the rise in consumption. However, despite increased production, low carryover stocks are expected to support the high prices, Abare said in its outlook.

“Low stocks mean any disruption to wheat supplies could quickly lead to a strong upward movement in prices,” the agency said.

Area under wheat this season was likely to be 4 per cent higher and it would be the largest in the last 10 years. “The large area under wheat is a result of the historically high wheat prices currently being experienced,” it said.

Global wheat production is expected to increase 45 million tonnes (mt) as yields are likely to be near historical averages.

“The expected increase in production, combined with opening season stocks, is forecast to lead to a 5 per cent in wheat supplies in 2008-09,” Abare said.

Production is likely to increase 17 per cent in the European Union and 13 per cent in the US, whereas in India, China and the Russian federation output is likely to remained unchanged from the high levels witnessed last year.

Wheat production in the five major exporting nations — Argentina, Australia, Canada, the European Union and the US — wheat production is forecast by Abare to increase by about 40 mt.

Abare said despite higher prices, consumption would increase by 3 per cent. While human consumption will account for 70 per cent, up 1 per cent, offtake for feed would increase 15 per cent.

Global trade is forecast to increase 4 mt on strong production recovery. Shipments from the top five exporting nations are expected to increase 2 per cent.

Abare said import demand from India was likely to decline, though imports by Algeria, Indonesia, Iraq, the Philippines and Vietnam would be higher.

India demand was likely to fall in view of production exceeding 75 mt for the second consecutive year. Wheat stocks at the end of the year were likely to be at 131 mt, 19 mt more than 2007-08. Still, the inventory levels will be lower than historical standards. And for the first time in four years, stocks of high quality milling wheat were likely to increase to around 38 mt, 11 mt higher than last season.

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