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Global wheat market issues worth monitoring
We must pay closer attention to developments in the global wheat market. As South Africa, we are a net importer of wheat, so developments in the global market matter for our wheat prices and the wheat-based products that end up on the tables of many households across our country.
Right now, some of the key issues worth following are the drier weather conditions in parts of Australia, which are worrying. Australia is a key global wheat producer, and if its harvest falls notably, that will have a pronounced impact on the global wheat harvest.
We are also watching the fuel issues in Russia and their impact on farmers. These events will impact global wheat prices, something that we watch closely as importers of wheat.
South Africa imports roughly 1.8 million tonnes of wheat a year. This is about half of our annual wheat needs.
In fact, we are starting to see a mild uptick in wheat prices because of these issues, amongst other factors.
Domestically, the wheat spot price is around R6,054 per tonne, up 3% from a year ago. There are also rising concerns broadly about the geopolitical tensions and the likely disruptions to the movement of grains, particularly in the Black Sea region.
In the coming days and weeks, we will be following these events closely to make sense of their impact on South African consumers.
--Wandile Sihlobo is the Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz)
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