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Why are wheat prices not trading
at normal levels?
t
he international market currently has an ample supply
of wheat. The Int rnational Grains Council expects the
2016/2017 marketing year to end with closing stocks of
228 million tons. This is 30% of the world production, which
is forecasted at 743 million tons (
Table 1
).
The high supply resulted in a decrease in global wheat prices. On a
year on year basis the prices decreased with 17%. These low inter-
national prices resulted in an increase in the current wheat tariff
within the l cal market.
This marketing year was marked by uncertainty due to the delay in
the tariff announcement and the on-going uncertainty in terms of
the variable tariff formula. Currently the liquidity in the local mar-
ket is very low and the wheat market is not trading at normal price
levels – the current Safex wheat prices are trading well below the
DIRK STRYDOM,
manager: Grain Economy and Marketing, Grain SA
GRAIN MARKET
overview
– 12 September 2016
ON FARM LEVEL
2005/
2006
2006/
2007
2007/
2008
2008/
2009
2009/
2010
2010/
2011
2011/
2012
2012/
2013
2013/
2014
2014/
2015
2015/
2016
2016/
2017
Production
624,23 599,96 609,19 687,23 681,68 653,87 699,58 657,5 717,06 730,4 736,4 743,25
Total supply
762,8 737,71 743,6 818,31 853,19 851,14 892,13 849,02 886,88 918,78 939,23 960,58
Total
consumption
625,05 603,304 612,521 646,806 655,919 658,581 700,613 679,198 698,508 715,948 721,894 731,71
Closing stocks
137,75 134,41 131,08 171,51 197,27 192,56 191,52 169,82 188,37 202,83 217,33 228,87
TABLE 1: WORLD WHEAT SUPPLY AND DEMAND.
Graph 1: Weekly import tons and tariff applications.
Source: IGC
Oktober 2016
56