Do you think wheat and maize prices will come down due to increased global planting?
There is an increased Global Planting in wheat, maize and other grains recently.
http://www.bloomberg.com/apps/news?pid=20602013&sid=awxQ2Qg91wwc&refer=commodity_futures
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Feb. 12 (Bloomberg) -- Wheat fell, capping the biggest two- day loss since 2003, on speculation that farmers will increase planting to take advantage of prices that have doubled to a record in the past year
U.S. growers planted 3.6 percent more acres with winter wheat from September through November, the government said last month. Sowing of spring wheat also may increase, analysts said.
There's been a lot of wheat planted around the world'' after prices surged,
Wheat Falls as Increased Global Planting May Boost Inventories
Can we expect lower wheat and maize prices this year? I expect so.
Answers
825 points
Dragonsbane answered one year ago …
Will they come down? Yes. When? Good question. By maize, I'm going to assume you're talking about corn (if I'm wrong then just ignore my comments on maize). Corn is artificially high right now due to ethanol subsidies currently being given out in the US in an attempt to "reduce their dependence on foreign oil" and give free money to their corn farmers at the same time. Producing ethanol from corn is one of the most inefficient methods on the face of the planet and has really done nothing but cause inflation and make farmers a lot of money. When the US abandons this ridiculous strategy, agricultural products should drop sharply in price, but who knows when that will be? It certainly won't be in an election year.
On the demand side, demand for both wheat and corn is growing at it's fastest pace in history due to the rate of population growth of our planet and the rate at which poor people in Asia are moving to a middle class existence. That trend is secular and demand is only expected to increase in the forseeable future.
357 points
SharonMR answered one year ago …
Hello MNSL,
Maize (corn) won't be coming down any time soon. My ex-broker was extremely bearish on corn, he said it was suppose to drop by December, 2007. He even suggested a put option on corn, because it was suppose to drop to below 3.00$, because so much had been planted and there would be more than enough to meet demand, but guess what, it went straight up any way. And, demand is still increasing. As long as demand increases, prices will remain high. It's called supply and demand.
904 points
jillybeansisme answered one year ago …
There is also the transportation factor. With oil going up, all goods will have to factor in shipping to destination costs. So even if the product price itself were to come down, it wouldn't be any cheaper to get it to market.
Read more from jillybeansisme
411 points
jester112358 answered one year ago …
Weather conditions for both wheat and corn are expected to be bad with a large possibility of major crop failures in Australia due to drought and too much rain in the plains of the US (a lot of winter wheat is reportedly under water right now). This will adversely affect yields despite how much may have been planted. Since both China and India are having food shortages and only US, canada, and maybe Australia will have surpluses, this is a sellers market with likely huge increases in wheat and corn (and soy beans) prices in the future (2009-2010). The US and Canada are the "middle east" of food and our leading Ag companies, potentially the most valuable companies in the world. The probability of bad weather news is much larger than good, so there is a very small risk to being long on most food commodities over the next two years.
If you want to know more read what Jim Rodgers has to say about evaluating futures prices in his book on commodities and on his numerous on-line interviews.
