Tight supplies in the global wheat market - South Africa

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The recent monthly report of the International Grains Council underscored the view that global wheat supplies will be tight in the 2018/19 season.

The Council placed its production estimate at 717 million tonnes, which is 3 percent lower than the five-year average global production. This is partly due to an expected lower harvest in the EU, Russia, Ukraine, Australia and Kazakhstan, amongst others. The decline in production in almost all the aforementioned countries is underpinned by expectations of lower yields on the back of unfavourable weather conditions, as well as the reduction in area planted in some countries.

Although global wheat usage in food and industrial purposes could remain solid in the 2018/19 season, animal feed could decline by 5 percent year-on-year. The animal feed industry will potentially use maize and soybean as a substitute due to price competitiveness.

Overall, the 2018/19 global wheat stocks could decline by 6 percent year-on-year to 250 million tonnes. This could potentially add an upward pressure on global wheat prices in the near-to-medium term.

 With South Africa being a net importer of wheat, the global shocks could also influence the local market this season. One positive point, however, is that South Africa’s 2018/19 wheat imports could amount to 1.4 million tonnes, down by 33 percent from the previous season.

The potential decline in domestic wheat imports follows an expected 18 percent annual increase in wheat production to 1.85 million tonnes in the 2018/19 season. This is supported by both improvement in weather conditions in the Western Cape, as well as the expansion in area planted in other provinces. Moreover, the expected showers within the next two week in most parts of the country could boost soil moisture and subsequently crop conditions, particularly in the Free State, Limpopo, North West and the Eastern provinces where the crop is still at early stages of development that requires moisture.

 Also worth noting is that the recent rainfall in the Western Cape has led to a notable improvement in dam levels- Agbiz

Read the full report- on AGRI NEWS NET-