December 3, 2008
Price dive to flatten 2009 world wheat harvest
Wheat planting worldwide may drop as much as 3 percent next year after prices tumbled from a record and as a recession cuts meat consumption and feed grain demand, said the Canadian Wheat Board.
Ian White, chief executive officer of the Winnipeg-based board, said in an interview in Tokyo that Canada, the second biggest wheat exporter after the US, will have wheat harvest fall as much as 5 percent from 25.1 million acres (10.2 million hectares) this year.
Decreased planting will make the wheat prices susceptible to supply problems as global stockpiles are at historical lows even after a record harvest, White said. Inventories are forecast to rise for the first time in 4 years as of June 30, 2009, after a year earlier falling in the top five exporting countries to the lowest in 30 years, according to the International Grains Council (IGC).
Prices slumped to a 17-month low of US$4.965 a bushel on October 24, retreating 61 percent from a record US$13.495 on February 27, as investors sought cash amid a credit crisis.
White said that global wheat demand will probably fall by 1 percent to 3 percent from this year as an economic slump may spur consumers to cut spending on meat, decreasing use of the grain in animal feed. Consumption is forecast by the IGC at 650 million tonnes in 2008-09, compared with 614 million a year earlier.
Nobuyuki Chino, president of Tokyo-based Unipac Grain Ltd., said that consumers will reduce spending not only on luxury goods but also on necessities such as food eventually, as global economies are deteriorating. Grain prices will then come under pressure due to lack of demand.
Grain importers such as South Korea purchased wheat as a cheaper feed grain alternative when Chicago corn prices surged this year. Feed makers in Asia's second-largest grain importer bought feed wheat in May for the first time in a year.
While staple food consumption is slightly increasing, a reduction in feeding will overcome the small increase, White added.
Still, the CWB forecasts its milling wheat exports will rise by 9.6 percent to more than 16 million tonnes in the year to July 31, 2009, from a year earlier on demand for higher-protein Canadian wheat, White said. Of the total, 3.5 million tonnes will be durum and 12.5 million tonnes other varieties, he added.
White stated that overall wheat exports from Canada will rise to almost 18 million tonnes from 15.8 million tonnes. Exports of feed wheat from the country will be "almost negligible" as this year's crop is of flour-milling quality.
CWB has a monopoly over wheat shipments from western Canada. Its main export markets include Japan, Indonesia and Sri Lanka, White added
Global wheat stockpiles are forecast to grow 27 percent from a year earlier to 150 million tons as of June 30, 2009, representing 23 percent of world annual consumption, the International Grains Council forecast last month.