Food, Fuel and Volatility - a UK perspective on the world grain market.

Production of any grain is demand led. Over the last 8 years, wheat demand has outstripped production but prices did not rise on a sustained basis as draw down of high global stock levels met the balance. Now, these stocks are far lower and demand can only be met by increasing wheat production. If this is achieved by next harvest, prices would be expected to fall, but with low existing stock levels, any shortfall could place upward pressure on prices. Such volatility would be expected to remain in the market until some stock levels return to ‘buffer’ the demand and production boundary.