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Global wheat prices expected to fall further

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A market analyst estimates 20 to 30 million metric tons needs to be taken off global wheat production in 2016 to turnaround plummeting prices.

Mark Schultz with North Star Commodities in Minneapolis says in the first two months of the year new contract lows are being posted in the U.S. and Europe because of huge supplies.

“We’ve had record wheat crops the last two years globally, so we’ve seen global ending stocks go to its highest levels ever.”

March wheat on the Chicago Mercantile Exchange is trading this week between $4.50 and $4.60.

Schultz tells Brownfield there are a few weather concerns in different parts of the world as the market looks for reasons to recover.

“So far they are what I would call minor-Morocco where it has been drier than normal, and India.  India could be a little bit of a bigger player, but they have a lot of irrigation so it would have to be an extended period of dryness that would go on for at least another 30 to 40 days.”

Otherwise he says the global wheat condition seems to be pretty good, and it’s too early to tell what kind of winter wheat crop the U.S. has.

“Even if you got into cold weather right now, you might have some chatter about possible winter kill or things like that.  But you really won’t know that until it comes out of dormancy.”

Schultz says that is still 30 to 60 days away not only in North America but also for global competitors in Europe and Russia.

 

 

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