AGRI/SOFT | Signs of Stabilization
Wheat Glut
Making its first global production
forecast for wheat in 2016, the Food and
Agriculture Organization (FAO), estimates
the year’s harvest at 723 mt (million
tonnes), marginally lower than the record
hit in 2015. The European Commission
highlighted that unsold wheat inventories
within the European Union, the world’s
top wheat producer, will reach an 8-year
high as on end-June 2017. All of this
underscores the fact that the wheat
industry is seeing a glut of supply, which
is expected to continue going ahead.
Prices have remained largely range
bound for the initial part of the year and
this trend is expected to continue going
ahead with a downwards bias.
Rice Price Stabilizing
In its February 2016 released report, the
U.S. Department of Agriculture (USDA)
expects global trade in rice to continue
declining for the second consecutive
year in 2016 — a reflection of reduced
exports from India, Australia, Cambodia,
and the U.S. Added to this are the reduced
imports by Nigeria, the world’s secondlargest rice import market after China. Rice
imports by China have been at record high
levels since 2012 and are expected to grow
4% in 2016, reflecting prices that are lower
in the global market than the domestic
market. Despite the current stability in
the rice market, there are reasons for
concern about the medium-term (midto-late 2016) direction of the market. The
rice stocks of 5 major exporters including
India, Thailand, Vietnam, Pakistan, and
the U.S. continue to slide since peaking at
April 2016 | www.wealth-monitor.com
85
Bloomberg
Agriculture Index
80
75
70
65
Sources: Bloomberg Indices; Investing.com
Sources: ; Commodity Markets Outlool, World Bank; Food and Agriculture Organisation; US Department of Agriculture; International Rice Research I