"3rd Quarter International Grain Prices and 4th Quarter Import Prices Expected to Fall"

[Asia Economy Sejong=Reporter Kim Hyewon] It is forecasted that international grain prices will decline in the third quarter of this year, and grain import prices will also turn downward in the fourth quarter.

According to the 'International Grain August 2022' report published on the 30th by the Overseas Agriculture Observation Team of the Agricultural Observation Center at the Korea Rural Economic Institute, the international grain futures price index for the third quarter is expected to be 169.6, down 12.3% compared to the previous quarter. The international grain futures price index is also projected to fall by 1.2% in the fourth quarter compared to the third quarter. The futures price index is based on the 2015 level set at 100 to indicate the price level of major grains.

The report stated, "The weather conditions during the growing season in the Northern Hemisphere are factors that increase price volatility in the second half of the year, with wheat growth being favorable and corn harvesting in Brazil proceeding smoothly," and added, "The strong US dollar, falling international crude oil prices, and weak demand due to economic recession are expected to influence the decline in grain prices."

In fact, the international grain futures price index this month stands at 164.5, down 12.6% from the previous month. The report analyzed that concerns over a global economic recession, a strong US dollar, and news of the resumption of grain exports from the Black Sea region have influenced this decline.

By grain type, the wheat price index fell by 20.2% this month, while corn and soybeans dropped by 11.3% and 8.9%, respectively.

The report predicted, "There is a 3 to 7 month lag between futures prices and the import unit prices of grains introduced domestically," and forecasted that prices will fall further in the fourth quarter compared to the third quarter. The import unit price index for food grains is expected to decrease by 6%, and for feed grains by 12% compared to the third quarter.

However, in the third quarter, the import unit price index is expected to rise by 15.9% for food grains and 16.6% for feed grains compared to the second quarter, as contracted volumes from the second quarter, when international grain prices were high due to the Russia-Ukraine conflict and delayed US planting, are being imported.