News last update:6 Aug 2012

Wheat shortage becoming alarming

European and US wheat prices are reaching all- time highs as a result of production miseries in Canada, Australia and Europe. Global wheat stocks are the smallest in three decades.

Drought has returned to Australia. Spring rains forecast failed to arrive in the Australian wheat belt, which stretches across the south of the country. Only a few millimetres fell in scattered locations, not enough to rescue the growing season. Australia's Grain Council is forecasting another terrible harvest.

It was expected that Australia, one of the world's top wheat exporters alongside the US and Canada, to produce more than 26 million tons in the 2007-08 crop year. Forecasts now have been slashed to almost half. Murray Jones, president of the Grains Council of Australia, is expecting only to harvest a meagre 15 million tonnes.

Climate and stock management to blame
Drought in the southern hemisphere, floods in Europe and critically low stock levels have provoked panic buying by importers in India, Egypt and Iraq. Another weak harvest is prompting speculation among grain traders that Australia could be on the brink of importing grain for animal feed.

That would be only the second time in its history that the country, the world's second-biggest wheat exporter, would be forced to import grain to feed its livestock. Only the US, apart from the corn-wheat competition, seems not to be affected by detrimental climate or market conditions.

It can be considered the residual supplier of grains to the world. When storage bins in the rest of the world are empty, grain traders can turn to US supplies to fill their bins again.

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