Global financial turmoil often overrode supply fundamentals, leading to frequent and unpredictable price swings, which also affected other commodities. Continued strength in crude oil prices and further dollar weakness had an impact. Ocean freight rates initially strengthened further before moving down on reports of possible reduced industrial activity in China ahead of the Olympic Games.
Global wheat prices were above $440 a tonne on March 27, after peaking to over $520 a tonne. IGC forecasts that global grain output in 2008 would be 1,694 tonne, an increase of 32 million tonne.
World wheat production would be at 646 million tonne, an increase of 42 million tonne over the previous year, due to a 2.5% increase in area under cultivation. Global prices of maize were around $240 a tonne by March 27. IGC forecasts global maize output to decline by 20 million tonne to 748 million tonne, while barley output would increase 10% to 148 million tonne.
According to estimates, India has achieved record grain production of 219.32 million in 2007-08, including 94.08 million tonne rice, 74.81 million tonne wheat, 36.09 million tonne coarse cereals, and 14.34 million tonne pulses. Cotton output is estimated at 23.38 million bales of 170 kg each, an all-time record. Oilseeds output is estimated at 27.16 million tonne.
Experts believe that the market manipulation is the cause for rising prices. At the global level there are few players who dictate the prices.
Does the farmer benefit from the price rise The payments made by the the Canadian Wheat Board show that the farmers were paid between $ 260 to $ 284 a tonne for various qualities of non-durum wheat, while the global price for wheat peaked to over $ 520 a tonne. In India farmers were paid Rs 850 a quintal while wheat was imported at Rs 1650 a quintal.