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Global wheat, barley rout may be nearing an end as demand firms

Wheat use for animals will climb to a two-year high in the EU.

Wheat and barley prices may be approaching a “floor” as the recent price rout spurs more demand, according to French researcher Strategie Grains.

The world’s livestock producers will use more wheat in feed rations in the coming season at the expense of corn, with barley demand also poised to rise, the firm said in an emailed report. In the European Union, wheat use for animals will climb to a two-year high and the bloc’s pork producers are expected to boost output as a deadly swine disease ravaging China’s hog herds raises its demand for meat imports.

“In France, wheat is now cheaper than maize in the large consumption zones in the west of the country,” Strategie Grains said. “Following the steep price falls of recent weeks, wheat and barley prices have no great potential for any significant additional decrease.”

Still, while prices may be nearing a low, large corn stockpiles are also expected to deter rallies. Wheat and barley also could fall if harvests in the Black Sea region are bigger than expected. Strategie raised its outlook for Russia’s wheat harvest to 80 million tons, topping the US Department of Agriculture’s forecast for 77 million.

Most-active contracts for wheat futures in Chicago and Paris both reached a one-year low earlier this week, and feed barley prices at France’s Rouen port are also trading at the lowest since early 2018. The EU is expected to face stiff competition for wheat exports from Black Sea nations and Argentina, and French milling wheat prices may keep tumbling to remain competitive, Strategie said. 

© 2019 Bloomberg L.P

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