Wheat prices expected to rise on growing feed demand

With Chinese feed demand likely to increase, wheat prices should remain high.

Rabobank indicated northern hemisphere harvest pressure could “bring prices to a low before they are likely to rise again.

GLOBAL wheat prices are expected to lift going forward, as feed demand heightens.

Elevated corn and soyabean prices are expected to lift wheat as a feed grain, Rabo­bank’s March Agri Commodity Markets report showed, especially with the low wheat-corn ratio.

“United States Department of Agriculture estimates Chinese feed demand to increase with demand at 35 million tonnes for 202-21,” Rabobank said.

The bank said wheat markets sold off this month, with Chicago Board of Trade prices falling below levels reached in quarter one 2021 range.

According to a Commonwealth Bank market report, Chicago Board of Trade May 2021 prices were sitting at $297 a tonne late last week. Prices were at $299 a tonne about the same time the previous week.

Report author Tobin Gorey said wheat futures prices continued their sharp falls as a variety of investors were selling.

For Australian wheat future prices, Mr Gorey said they were “mixed” last week.

“ASX East wheat futures were mixed, with old crop May ’21 falling sharply, while new‑crop January ’22 was steady,” Mr Gorey said.

Late last week, ASX wheat prices were at $282 a tonne, compared to $283 a tonne at the same time the previous week.

January 2022 prices reached $295 a tonne.

Rabobank also expects export demand to put pressure on Europe ahead of harvest and it predicts low stock will result in “high volatility”.

However, the bank indicated northern hemisphere harvest pressure could “bring prices to a low before they are likely to rise again”.

And weather will be crucial going forward.

“The current weather outlook includes some localised dryness in Europe that skews risks slightly to the upside,” Rabobank said.

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