What's Going To Get The Wheat Market Up?

The International Grains Council have increased their global wheat production estimate for 2009/10 from 668 MMT to 674 MMT. They've also raised world ending stocks from their previous estimate of 191 MMT to 197 MMT, a 32 MMT (or 19%) increase on 2008/09. Global stockpiles have now increased by more than 66% in the last two years, as output has comfortably exceeded consumption.

There may be a very small glimmer of hope for cereal growers somewhere down the line. The Canadian Wheat Board this week estimated world wheat production for next season (2010/11) at 644 MMT, some 30 MMT below the current marketing year. Even so, that figure is only in line with the current global consumption figure from the USDA.

What do we need to get this market up? Increased consumption from more bioethanol plants? It's going to take more than 150 new Ensus/Vivergo's to get through the existing surplus. A crop disaster somewhere like China/India? It's coming to something when you're praying for disasters isn't it? Maybe a more radical, well if we've got too much of it let's stop planting the stuff approach? "But I've got to plant something, and I've got all these fixed costs to pay."

Hmmmm. None of that lot is very likely right now is it. So I guess we've got to wait on speculative money coming back, pushing prices up to totally unrealistic levels on a whim with no foundation? Things are pretty desperate when that's all you've got to hang your hat on.