Wheat prices will probably extend a slump as ample stockpiles counter a decline in world production, Australia’s agricultural commodity forecaster said.
The price at U.S. Gulf ports of hard-red winter wheat, typically the most-exported variety, may average $230 a metric ton in the year starting 1 July, the Australian Bureau of Agricultural & Resource Economics & Sciences said in a report. That compares with $265 forecast in March and $266 a year earlier. Global reserves at the end of 2014-2015 will climb 5.3 per cent, and output in the following year will retreat less than 1 per cent to 715 million tons, Abares said.
“The world indicator price has fallen significantly since the end of 2014, reflecting generally improved prospects for the 2015–16 wheat crop and limited demand for U.S. exports because of a stronger U.S. dollar and abundant exportable supplies,” Abares said. “These factors will maintain pressure on the world indicator price over the coming year.”
Global wheat output will total 721.55 million tons in 2015-2016 from 726.3 million tons a year earlier, the USDA said. Ending stockpiles will increase to 202.4 million tons at the end of the season from 200.4 million tons the previous year, it said in a monthly report.
World reserves will reach 199 million tons at the end of 2014-2015 from 189 million tons a year earlier, according to Abares. Stockpiles will increase to 200 million tons at the end of 2015-2016, it said.
The global supply of high-quality milling wheat is also set to increase in 2015-2016, with a bigger crop in the U.S., according to Abares. The bureau predicts farmers there will harvest 57 million tons from 55 million a year earlier. The USDA pegs U.S. domestic production at 57.7 million tons.
Bloomberg News, edited by ESM
