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Global wheat prices to rise

Global wheat prices to rise article image
Lower global wheat yields will see the price of the commodity rise by 2010/11 making up for current subdued prices, according to Luke Chandler, global head of Agri Commodity Markets Research for Rabobank in London. Downward adjustment to production from the commodity price boom of last year will take effect on the market, he believes. "There are increasingly positive signs that we will see some upside for prices in 2010/11, as production around the world is adjusted downwards with growers responding to the current lower price signals, resulting in reduced supply," said Chandler. "Nothing kills high prices like high prices and this production response has contributed to the massive collapse we have seen in prices since then." He added that an increased demand for biofuels will also have some effect, although current levels of supply are adequate. Chandler also predicted that China and India would drive future global demand for overall agricultural commodities. "The economic growth in these countries - along with their enormous and growing populations - is fuelling the growing demand for agricultural commodities," he said. "While the Chinese are self-sufficient in wheat and corn for example, they are a significant net importer of soybeans from the US and South America."

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