August 2, 2012

 

World wheat prices up 17% due to global drought

 

 

Due to a global drought and rapid population growth, world wheat prices have risen by 17%.

 

Global wheat prices will continue to go up, due to global warming induced drought and rapidly increasing population expansion, according to the Turkish Chamber of Agriculture Union President Åžemsi Bayraktar.

 

Bayraktar said it was impossible for global wheat prices to fall given the world's rapid population growth, drought, and the use of biofuel in cars. The fact that countries like Brazil and China are increasingly turning to meat also creates an increase in demand, as wheat is needed to feed livestock, he added.

 

"Given such a context, it is impossible to see a fall in global food prices," said Bayraktar.

 

Bayraktar also announced Tuesday (July 31) in a written statement that from January-June 2012 agriculture and food exports from Turkey were up 11.2%, and that imports were down 8.8%. According to Bayraktar, agriculture and food exports hit US$6.6 billion on-year and imports were US$6.13 billion. He noted that in the midst of a global crisis this represented a huge success for Turkey.

 

However, Turkish Flour Industrialists Federation (TUSAF) President Erhan Özmen offered a different view, telling Anatolia news agency that despite the global drought there had been no abnormal drop in grain production.

 

"Prices are going up on paper. However, there isn't a really gloomy picture as is depicted. I think there is a lot of speculation and things will normalise shortly," he said.

 

"Last year 695 million tonnes of wheat were produced globally. This year the number dropped by 30 million tonnes to 665 million … This is it," said Özmen, explaining that last year there was an overproduction of wheat and that this year's drop was therefore in the normal range.

 

"The world is reacting very strongly to news of the drought in the US. There is no abnormal fall in the production of corn, soy, or wheat. Of course, stock exchanges are pricing this very seriously. The world has become very good at speculation. First the production numbers were bloated, then the drought news was exaggerated," he said.

 

Separately, according to Reuters, hard-hit US livestock and poultry producers have petitioned the government to reduce or cancel the required use of ethanol in gasoline for a year, asking for "a little help" to ride out the worst drought in 56 years.

 

"We are having trouble buying corn... it's really putting a burden on our operations and many others across the nation," says J.D. Alexander, president of the National Cattlemen's Beef Association, whose Nebraska feedlot is about half full of cattle. "It's time to wean the ethanol industry and let it stand on its own."