Good weather means bad news for grain prices

Favourable weather conditions have left price of grain depressed, with US wheat and corn futures down to two-and-a-half and two-year lows respectively.

Even the "slightest hint of weather issues" can give grain markets a quick lift, says Lee Lovell of Investmentu.com. But this year there hasn't been any sort of hint of unruly weather hampering harvests, and prices have fallen on the prospect of rising supplies. US wheat and corn futures have slid to two-and-a-half and two-year lows respectively, while soybeans, where supply has been tighter, are back down to July levels.

The US Department of Agriculture is expecting the second-biggest American corn crop and the biggest soybean crop on record, while on the wheat front production is set to rise in all four major exporting countries. The world is "awash in wheat", says Tom Polansek in Barron's. Demand has fallen back amid the global recession and world stockpiles are now expected to reach 187 million tonnes, an eight-year high.

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