Record-breaking global wheat stocks are depressing prices for this key food ingredient.
“End wheat stocks for 2009/10 could reach 195 million tonnes globally, the highest quantity in a decade,” an economist at the UK’s cereal tracker HGCA explained to FoodNavigator.com.
While the wheat spot price hit vertiginous highs between GBP180-200 a tonne in 2008, today prices have fallen by nearly fifty per cent. At the end of last week, feed wheat posted prices of GBP96.74 a tonne.
The projected 195m stock figures for wheat compare to 165 million tonnes for 2008/09, and 130 million tonnes when food prices started to rocket, in 2007/08.
Fall in plantings
And despite the rise in stocks, plantings all over the world have only fallen by one to two per cent for the 2010/11 season, continued the HGCA economist.
With only a slight reduction in plantings, next year a generous global tonnage could feed into an already ‘heavy stock market’, encouraging prices to remain ‘depressed’.
But it is, arguably, too early to make a call on cheaper wheat-based ingredients in the near future. “Crude oil is rallying, and we still haven’t seen what the weather will be like, there is always a yield risk,” adds the HGCA spokesperson.
In other words, any hit to next year’s global wheat plantings would translate to a price rise for wheat.
As a result of the ‘heavy supply situation’ today, Europe has enjoyed a boost to exports in recent weeks. In the past two to three months cheaper prices have been competing to clutch new export markets. “There’s an oversupply at the moment, which is making the market aggressive,” said the HGCA economist.
In addition, fund activity, he continued, resulted in overpriced wheat in the US in early February and March. In the EU, ‘where there is less fund activity and the market is more reactive’ to the mechanics of supply and demand, EU prices were more competitive. A more attractive price opened up new markets for the UK wheat sellers.
“A good thing for the UK, due to the heavy supply situation and stocks,” added the economist. “People always look for the cheaper option.”
The UK prices even began to compete with the US maize market. On 3 March, UK wheat feed came in at GBP94 per tonne, compared to GBP97 for US maize.