Wheat Prices Expected to Firm in 2016

Commodity prices faced a decline last year as demand remained weak and the market suffered from an oversupply. One of the worst years for commodity market in 2015, could be changing soon in 2016 due to weather disturbances and the sentiments turning somewhat positive. Wheat lost more than twenty four percent in 2015.

Last year, strong harvest in some of the key producing and exporting countries led to huge wheat stocks globally. Lower demand for wheat added to the troubles with stocks moving to record high levels.

Prices dropped due to a supply glut, the strong US dollar and strong competition. It also dipped the CBOT wheat prices to a low of five and a half year low to $4.56 per bushel on December 2 last year.

Following an array of bumper harvests, the wheat output of India is likely to drop for a second consecutive year in 2015-
16.

According to the Ministry of Agriculture, wheat acreage has dropped more than six percent to 28.2 million hectares as of January. Unfavourable weather conditions and lower acreage in key producing areas of UP, MP and Punjab is expected to lower the wheat output of India.

The country's demand is predicted to be 93.5 million tones which are expected to result in a shortfall of more than ten million tonnes in 2015-16. That may spike wheat prices.

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