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Wheat prices should firm up from here

posted Sep 27, 2011, 2:48 AM by Puneet Goyal   [ updated Oct 4, 2011, 10:44 PM ]
Tuesday, 27/09/2011

The forecast rain on the eastern seaboard later this week should also really help many crops that had been struggling.Wheat prices may have been pushed down too far and should be set to rise as we move into the Australian harvest, according to some analysts.
Senior grains and oilseed analyst at Rabobank, Dean Smith, says that the wheat price has been caught up in the latest round of volatility on world financial markets and may have been sold down too far.
He says even food commodities are not immune to the falls, as large financial institutions speculate in many commodities.
"Wheat is currently at US$240 a tonne, but we think by the end of the year the price should be around US$255 a tonne," he said."It is not a great return for farmers, but it is still a good number if you look at the prices historically.
"The price could go higher as there's adequate supply of wheat, but the corn crop keeps getting downgraded every month with the bad weather and lack of rain in the US."
The corn price is linked strongly with the wheat price."I don't think there is too much downside in the market from where we are now, but another debt crisis could push prices down, but the fundamentals are strong for a price above where it is now," Mr Smith said."Russia is still in the market for wheat, but the real driver for growing demand is in China and India.
"They are in the market for the soft commodities like grain and meat, so any real the growth is coming from Asia."