Updated IGC forecasts lead to soaring wheat prices

The IGC was still anticipating a balanced wheat market at the end of May, it is now forecasting a slight 2 million ton deficit for the year 2015/16, notes Commerzbank. 

The reappraisal was prompted by weaker wheat production. Although the ICG expects global demand to be 2 million tons lower than previously estimated, this is not sufficient to offset a 4 million ton fall in production. The IGC attributes the lower production to unfavourable weather and harvesting conditions in India, Australia and the EU. Both corn and wheat were able to gain just short of 3% during the course of trading yesterday to close at 383 US cents and 538 US cents per bushel respectively, adds Commerzbank.