OTTAWA – According to many economists, high prices mean one thing: Low prices are just around the corner.
But wheat growers can probably count on at least another year of buoyant markets before that happens, says an official with the International Grains Council.
John Tjaardstra, deputy executive director of the London-based agency, says current prices are bound to lead to a substantial increase in wheat production next year.
While that may edge prices down, supplies of wheat are so low that it’s questionable whether stocks can be rebuilt to any significant degree.
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“It will take at least another year beyond that of good production before we can see stocks coming back to what they were roughly a year ago,” he told reporters after speaking to a meeting of the Canada Grains Council.
Markets will remain volatile, with wheat prices ready to move at the slightest provocation, he said.
“Certainly on balance, I think they will remain very firm,” he said. “But I’d hate to predict they’ll stay at $200 (a tonne) or go down to $180.”
Earlier, in a speech to the meeting, Tjaardstra said 1996-97 could be a pivotal year for the world grain
industry.
The grains council is projecting carryover stocks held by the five major exporters will decline by three million tonnes to 32 million tonnes in June 1996, the lowest they’ve been since 1973-74.
Total world wheat stocks will be around 93 million tonnes, which represents a record-low 17 percent of projected use. Coarse grain carryover stocks are expected to be down by eight percent, with at least two consecutive good crops needed to replenish supplies.
Tjaardstra said while the current markets are good news for exporters, it’s making importers nervous, especially debt-ridden developing countries which account for about 75 percent of world trade.
