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Eased wheat and corn prices set to stir again in Q1 2013, says Rabobank

By Kacey Culliney , 14-Nov-2012

Wheat, corn price spikes set for Q1 2013, says Rabobank
Wheat, corn price spikes set for Q1 2013, says Rabobank

Wheat and corn prices have eased over the fourth quarter but will spike again at the beginning of 2013 as impacts from demand rationing take hold, Rabobank says.

Rabobank’s Agri Commodity Markets Research (ACMR) team has released analysis following the United States Department of Agriculture’s (USDA) November World Agricultural Supply and Demand Estimates (WASDE) update, released last week.

“Prices for wheat and corn have eased in the fourth quarter (Q4) but we believe the demand rationing necessary as a result of the droughts in the US and Russia will impact prices as we move into the first quarter (Q1) of 2013,” a Rabobank commodities team spokesperson told BakeryandSnacks.com.

Wheat and corn will see sharp price rises at the beginning of 2013 as lower stocks are stretched, he said.

In its WASDE November report, the USDA noted that wheat supplies for 2012/2013 are projected 1.9m tons lower, with beginning stocks lowered by 0.3m tons.

Wheat trade

In September, a USDA report revealed that global wheat trade was down by 11% - a trend underpinned by tightened suppliers and price surges. See HERE .

In its latest WASDE November report, the USDA said wheat trade forecasts are raised, “reflecting the continuation of strong shipments from the Black Sea region and India, and the growing competitiveness of wheat from the EU-27”.

But it detailed that amid this rise, import growth continued to outpace export growth. Increased import demand is predominantly coming from China and Europe, it said.

The price pressures

Bakery and snack manufacturers have been grappling with high commodity prices for some time now – working hard to offset costs and pass pricing on while remaining competitive.

Francisco Redruello, senior food analyst at Euromonitor International, said that higher commodity prices impact smaller bakery and snack firms.

Discussing Europe, the analyst said that should economic pressures and commodity volatility worsen, industry would be forced to consolidate as the problem becomes unmanageable for smaller companies. See HERE .