Published: 2007-02-07

With the future prices of wheat expected to go up, domestic agricultural product prices have reached a plateau. And although the government has auctioned off grain stores for the sixth time, price stabalization techniques are becoming less and less effective. 
  
By the end of September, investment attitudes began to split: some bullish investors still had faith in wheat futures, while others chose take their profit and leave the market. Many are still asking themselves whether they should cash out. 
    
In the beginning of that month, the Chicago Board of Trade’s (CBOT) wheat futures market opened. According to the US Department of Agriculture’s ten-month forecast, global output of wheat will decrease for 2006-07, with large scale reductions in reserves bringing them to a 25 year low. This is expected to set prices soaring. CBOT’s wheat futures are already at an all-time high. 
    
The pressure in the CBOT market will certaintly affect other agricultural markets and the pace of domestic investment. Corn and soybean oil are also base products of the CBOT and teir prices reflect the US agricultural market. 
    
The buying up of wheat, soybean oil, and corn futures has occurred as they all becoming bull markets. And although the CBOT’s wheat market will enter a period of reorganization on October 12, investors are still optimistic. 
    
The National Oil News Center’s analyst Li Xigui told the EO that due to strong demand in the latter half of this year, the spot price for corn will increase. Data reveals that in 2006 China’s corn demand reached 141.5 million tons, a new historical record. At the same time, this years domestic corn output will reach 141 million tons. 
    
China’s successive public auctions have increased wheat circulation for the purpose of keeping prices down. But for market with rising prices, the auctioned wheat will quickly be absorbed.