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Global Grains Uncertainty Increases Price Volatility

25 May 2012
International Grains Council

GLOBAL - Uncertainty about the outlook for global grains and oilseeds production dominated market activity during May, resulting in heightened price volatility, also partly reflecting deepening worries about the world economy amid eurozone problems.

There was an associated marked strengthening of the US dollar, contributing to movements in dollar-denominated export quotations. While prospects for world wheat production were initially considered mostly favourable, markets turned abruptly higher as crop perceptions deteriorated.

US maize values slumped following bearishly interpreted official supply and demand data, including an above-trend rise in projected 2012/13 yields. An equally sharp rebound followed, boosted by tight nearby supplies and strength in wheat, but the market turned lower again, weighed by good early growing conditions.

Rice prices in Thailand posted solid gains on intervention buying and fresh export sales. After recent strength, soyabean values were pressured by weaker external markets, especially crude oil and equities, with a stronger dollar and signs of slower demand from China weighing on US futures.

Mostly because of a sharp drop in the sub-index for soyabeans, IGC’s daily index (GOI) fell by 3 per cent over the month. The average of ocean freight rates in the three grainscarrying sectors was pressed lower by a build of surplus Panamax tonnage.

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May 2012

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