Global Grain Prices Improving

Avatar for Matt Hopkins By Scott C. Lucas|6 June 2006

Grain consumption continues to outpace production, leading to 25-year lows for ending stocks and boosts to global prices. The US Department of Agriculture’s Foreign Agriculture Service (USDA-FAS) reports that several grain crops are in tight supply this year:

  • Maize – the maize market has been affected most by supply and demand changes in the US, where lower production paired with strong demand (boosted by the need for maize by ethanol producers).
  • Wheat – poor crops in the Black Sea region are the main cause for the reduction in the wheat supply. US production is also expected to see a sharp reduction, cutting ending stocks to a decade-low level and boosting hard wheat prices. These wheat supply shortfalls will be partially offset by large stocks and expected good crops in Argentina, Australia, Canada, and the European Union.
  • Rice – while not as greatly affected as maize and wheat, the rice crop is benefiting from solid prices despite some increases in production in key markets in South East Asia.