The FAO’s Cereal Price Index rose 2% to 227 points from January to February. International wheat prices were seen to increase more than other cereal crops.
Wheat price increase
The FAO said: “Wheat markets were supported by tightening supplies and concerns over the impact of severe cold weather on this year’s crops in Europe and the CIS region.”
It said that international wheat prices remained firm in February with prices rising in most regions. US wheat prices however were practically unchanged, although the FAO noted that US prices were still up 2% from December 2011.
Near record crop
The FAO also forecast 2012 world wheat production to be the second highest on record in its Crop Prospects and Food Situation Report published yesterday.
It forecast that the 2012 world wheat crop will reach 690m tonnes, a figure well above the average in the last five years, but 1.4% lower than last year’s record crop.
In its Commodities daily alert, the Commonwealth Bank reported falls in wheat prices in the wake of these bumper crop forecasts.
“The major driver pushing prices lower yesterday is the near record world supply of wheat,” it said today.
The United States Department of Agriculture is USDA’s WADSE report due later today is expected to confirm the positive crop production figures.
The maize impact
The FAO also reported that maize prices rose in February amid Asian import demands, a weak dollar and poor crop prospects in South America.
David Eudall, senior analyst for cereals and oilseeds at UK’s Agriculture & Horticulture Development Board (AHDB) previously told this site that 2012 wheat prices would be volatile and would be dictated by the global maize market
The US yield of maize will come in July. Eudall said a poor yield would prevent a replenishment of global maize stocks and drive up prices for wheat, while a strong yield would push prices lower.