| Wheat prices expected to remain stable in 3 months | Send to a friend |
| Thursday, 30 September 2010 08:22 |
 By Samuel KamndayaCitizen Reporter Dar es Salaam. Tanzania’s wheat prices will remain stable during the next three months, a marketer says. “There is no reason for fear…. we have enough stocks to last until December,” the assistant general manager in the Marketing Department at the Bakhresa Group of Companies, Mr Yusuf Kamau, told The Citizen recently. Wheat prices hit a two-year high level in August when weather conditions ravaged Russia's grain plantations. Prices soared 42 per cent in July, in what analysts described as the highest monthly increase in at least 51 years. That happened after a severe drought scorched one-fifth of Russia’s wheat farms, forcing the world’s number three producer to ban cereal exports. Russia estimates that wheat exports will drop by between 30 and 44 per cent this year. Canada, another major exporter of wheat, expects the lowest wheat yields since 2002 because of crops that were destroyed by heavy rains or left unplanted. Mr Kamau said the company foresaw the shortages long time ago and decided to act before it was too late. “This is not the first time that the world faces wheat shortages…it happened two years ago and since then, we have been taking precautions by importing enough wheat.” He said after December, the price would be determined by market forces. However, the recent increase in wheat flour prices have nothing to do with problems in Russia. According to him, the increases are only a reflection of the depreciating local currency against the dollar. A survey in various parts in the country indicates that the wholesale price of a 25kilo bag increased to Sh18, 000 from Sh16, 000. With an export ban in Russia, Tanzanian importers say the price may rise as they will now be forced to import the cereal from the US and Canada at prices that are more expensive than those in Russia. “The decrease in the wheat supply has a direct effect to Tanzania, because we used to get cheap wheat from Russia. Following the ban, all millers are stuck,” Mr Rahul Aggarwal, the Coast Millers Ltd general manager, told The Citizen. Prices in the international market Global foodgrain prices are likely to remain high in the coming months despite high output estimates this season. Bad weather in Brazil and Russia and rising global demand have made the grain market sensitive. The assessment of the damage due to dry weather in Russia, Western Australia and South America and floods in India, China and Pakistan is yet to be done. This is offering grain traders speculative opportunity on futures platforms. As a consequence, foodgrain prices have started moving up. Corn prices, for example, rose to $5.2375 a bushel in New York, before closing at $5.0825 on Tuesday. CBOT soybeans for November delivery rose 5-1/2 cents, or 0.5 per cent, to $10.90 a bushel on Tuesday. Soybean prices were led by concerns over the impact of frost in Canada on the canola crop, dry weather in South America and the prospect that the sharp recent rise in corn prices may result in lower soy plantings in the US. Rabobank, in its September 16 report, has raised concerns over movement of grain prices. The downward revision in US corn yield to 162.5 bu/acre from 165 bu/acre about a month earlier has raised concerns. Similarly, China’s total corn availability forecast of 166 million tonnes (mt) this season is unlikely to be met due to floods in many parts of the country. Anxieties ahead Moving ahead, the Russian market is increasingly focused on setbacks to new winter crop plantings. The country is likely to see a substantial contraction in planted area this season due to poor subsoil moisture. Even areas that miss winter wheat planting and get picked up for spring crops are expected to have inferior yields. This has significant implications for next season’s global wheat market. Anecdotal reports suggest planting progress in Russia is five to 25 per cent less than normal, says Rabobank. Cropping farmers globally are set for a bumper 12 months, with prices for grain, oilseed and cotton at very high levels. The challenge for the market now is to ensure that farmers plant enough relevant crops to meet the 2011 demand. The current prices suggest soybean plantings will increase again at the expense of corn in South America, with cotton at 15-year highs likely to gain acreage in the central west of Brazil. In the European Union, wheat prices need to encourage additional planting for the next season’s crop. A major battle for acres is building in the US, with wheat expected to recover some of the 5.5 million acres lost to other crops over the past couple of seasons. Australia’s 2010-11 wheat exports may fall short of forecast for near-record shipments, as dry weather threatens crops in the country’s top grain-exporting state, Western Australia. Also, Russian grain stocks at large and medium-sized farms stood at 21.55 mt as of August 31, compared to 29 mt a year before. The dramatic decline in grain availability has threatened price control. Add this page to your favorite Social Bookmarking websites           |
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