Global wheat supplies fall to critical level; large reserves of China does not provide relief

  • Global wheat supplies fall to critical level; large reserves of China does not provide relief
    FarmIreland.t. E.
    Scorching hot, dry summer ended five years of abundance in many countries-producers of wheat and emptied all the stocks of major exporters to the lowest level since 2007/08, when low grain stocks contributed to food riots in Africa and Asia.

  • Email

Scorching hot, dry summer ended five years of abundance in many countries-producers of wheat and emptied all the stocks of major exporters to the lowest level since 2007/08, when low grain stocks contributed to food riots in Africa and Asia.

Although global stocks are expected to hit an all-time high at 273 million tons at the beginning of the marketing season 2018/19 grain, according to the Ministry of agriculture estimates, the problem of which almost half in China, which is likely not to produce any in the world markets.

Experts predict that by the end of the season, the eight largest exporters, there will be 20% of world reserves – a total of 26 days cover from one-third a decade ago.

The Ministry of agriculture estimates that China, which accounts for 16 percent of the world’s wheat, will hold 46 per cent of their stocks at the beginning of the season, which begins now, and more than doubled by the end.

126.8 million tons China is estimated to hold up to 135 percent compared to 54 million five years earlier.

“People need to get rid of China’s stock market (in their calculations) … if you do this, it’s just incredibly hard,” said Dan Basse, the President of the company agresource Co in Chicago.

File photo: a French farmer harvests wheat at sunset, Bourlon, Northern France, on July 19, 2018. Reuters/Pascal Rossignol – RC18D49DE370/file photo

The repetition of the 2007/2008 crisis, which forced many countries to limit or ban exports, it is unlikely that in the absence of other drivers, including $150 for a barrel of oil .

In the last three years of high wheat prices of $5.93 per bushel on the Chicago Board of trade pales in comparison to a high of $13.34-1/2 a bushel in February 2008.

See Also

Major problems in the sector of potatoes are coming home to roost this summer

I started an article last month, quoting Warren Buffett and his explanation is that systemic weaknesses become more apparent during the troubles (or, as he said, only during low tide, you discover who has been swimming naked’).

Importers in North Africa, also appears to better this time, with higher reserves of its own.

“It can affect food inflation, and in North Africa they have a good harvest this year, fortunately, so that their dependence is not as big as in past years,” said abdolreza Abbassian, a senior economist at the United Nations food and Agriculture Organization (FAO).

“I don’t think we want to be an alarmist in terms of the consequences,” he added.

China began stockpiling wheat in 2006, setting a guaranteed minimum price to ensure food security and stability.

Approximately 9.75 $per bushel as of last week, Chinese prices are now so high that they can not sell internationally, without incurring major losses.

Rabobank analyst Charles Clarke said that China will continue to build up stocks next year, but in the long run it will look to reduce reserves to curb domestic production, reduce imports or internal auctions.

Arnaud Caron, a French farmer drives a McCormick F8-413 mill, next to modern combine harvester claas combine harvester lexion 660, as he collects his last field of wheat in Vauvillers, Northern France, July 23, 2018. Reuters/Pascal Rossignol

“It will be a slow process … I did not expect that exports, which will arrive in the near future,” he said.

Government stocks of wheat now amounts to almost 74 million tons, according to Shanghai JC intelligence co. Ltd, one of the most 2014-2017 but a small number old how 2013.

Sylvia Shi, an analyst with JC intelligence said that China will continue to import wheat, it cannot produce in sufficient quantities to help meet the growing demand for high-protein varieties for products such as bread and other bakery products as diets become a European country.


The wheat crop in several of the largest global exporters – Argentina, Australia, Canada, European Union, Kazakhstan, Russia, Ukraine and the United States – this year has suffered.

The spring drought in the black sea bread basket of Russia and Ukraine soon after the summer heat in the European Union. Now dry weather threatens the harvest in another major exporter, Australia.

Evidence of serious harm increased as the collection progresses.

Predictions for the 28-member European Union has repeatedly cut, with Germany’s low grain harvest in 24 years after the crops wilted under the highest summer temperatures since records began in 1881.

The Ministry of agriculture of Russia held a meeting with traders on Friday to discuss the export volumes.

The Ministry denied export restrictions was discussed, but traders, some of whom were at the meeting, said that the curbs could be introduced at the end of the season, after complaints from domestic producers of meat about the rising cost of feed.

USA is in a better position to benefit from the reduction of the world’s supply, with much higher reserves more than competitive exporters and growth.

The forecast will provide a much-needed boost to American farmers, caught in the crossfire of a trade war with China, a huge importer of U.S. soybeans and corn, as well as in Mexico and Japan, two of the main buyers of American wheat.

“The winner in the long run, the United States, they should receive some stream of demand for them. It’s been a few years since we have seen that the United States will be able to demand,” said Matt Ammermann, commodity risk Manager with intl FCStone.

The black sea and Europe will have to lose market share, said Ammermann.

Canada, one of the best quality in the world wheat exporters are expected to enjoy larger yields than last year, according to a recent crop tour. But patchy rains have left crops varies across the Western provinces.

“We have no bin-Buster is. I just don’t understand how we can encourage exports is also much higher,” said Paterson grain trader said Doyle.


The two largest exporters of wheat in the southern hemisphere, Argentina and Australia, still months before the harvest.

A record harvest is forecast in Argentina, but production in Australia is expected to fall to the lowest level in more than a decade of drought on the East coast.

Francisco Abello, who manages 7,000 hectares of land in the Western and North-Central province of Buenos Aires, said he and other growers to take advantage of high prices by investing in fertilizer to increase yields.

“We started well the season,” said Abello. “The ground was moist at planting time. Then it was cold and dry, what are the best conditions for the start of the growing season of wheat.”

The Buenos Aires grain Exchange has pre-wheat harvest is estimated at 19 million tons, what is written above is the current record 17.75 million tons.

In Australia, the Outlook is less optimistic. Analysts say that production could fall below 20 million tons for the first time since 2008, although still likely to be more this year, harvest only 13 million tons.

“The West look as the largest producer of the region can produce a crop in excess of only 9 million tons. That can save employment,” said Phin Ziebell, agribusiness economist at national Australia Bank. “But with dry weather the decline in production in the East, he could cut exports at the national level.”

Online Business Classes