By Madeleine Coorey / AFP
Sydney: Asia’s wheat stockpiles are set to grow this year as major exporter Australia, along with China and India, forecast larger crops, raising the prospect of lower prices for the golden grain, analysts say.
Official figures released last week indicate Australia is likely to reclaim its rank as the world’s third largest wheat exporter after the United States and Canada.
While China has predicted a 2.4% increase in wheat yields from a year ago, and India, the world’s second largest wheat producer, has forecast this year’s harvest will hit a record 78.4 million tonnes.
It is expected the increased crops will help ease prices which have surged as a result of the global food crisis which has hit developing nations, where wheat is often a staple food among millions of poor, particularly hard.
The Australian Bureau of Agricultural and Resource Economics (ABARE) said wheat production was forecast to be 22.5 million tonnes in 2008-2009 — well above the 13 million tonnes harvested last year.
Analysts said more farmers had planted wheat after shrinking stockpiles and increased demand pushed prices to historic highs earlier this year, with the price hitting a record $10.93 a bushel in Chicago in February.
Wheat crops have been particularly attractive to Australian farmers seeking a quick income after years of devastating drought which has seen many move from sheep farming to the more lucrative grain.
John Hogan, who is acting branch manager in agriculture and trade at ABARE, said: “This year’s northern hemisphere wheat harvests were also expected to be bigger so there is expected to be an increase in world grain stock.”
“Prices generally have been drifting lower because of expectations of a higher world crop,” he added.
In Asia, the China National Grain and Oils Information Centre has forecast 2008 wheat yields will reach 112.5 million tonnes.
At the same time, China’s wheat consumption has dropped to below 100 million tonnes a year, director of the centre, Shang Qiangmin told the Guangming Daily in April.
“Generally speaking the weather was good for growth later this year and we had plenty of rains,” Feng Lichen, a trader at the Commodity Exchange in the northeast Chinese port city of Dalian told AFP.
India has forecast that its harvest for this year will rise 3.45% to 78.4 million tonnes, bettering a previous forecast of 76.78 million tonnes.
Agriculture Minister Sharad Pawar said the harvest would be “the highest since India’s independence” in 1947 thanks to plentiful monsoon rains.
On Wednesday, the government announced it would release 909,000 tonnes of wheat stocks for sale in the open market in September and October in a bid to ease prices and to meet demand during the upcoming religious festival season.
India also recently slightly eased a ban on wheat exports, allowing sales of wheat seeds, but traders believe the government would rather maintain big buffer stocks of wheat with general elections looming.
After poor harvests, India was forced in 2006 and 2007 to import more than seven million tonnes of wheat from costly world markets to boost its buffer stocks intended mainly to feed its hundreds of millions of poor, raising alarm about food security in the country of 1.1 billion people.
In Pakistan, 21 million tonnes of wheat were produced this year and the country is importing a further 2.5 million tonnes to meet its requirements, senior agriculture ministry official Qadir Bux Baloch told AFP.
But hoarding and smuggling to neighbouring Afghanistan could mean consumers still face hardships in getting wheat flour bags at the government-subsidised price of Rs300 ($3.80) per 20 kilograms.
In Bangladesh, output of wheat — a tiny percentage of the country’s 28 million tonne annual cereal production which consists mainly of rice — is also on the rise.
In the year to 30 June, 2008, it rose by 14.3% to 0.8 million tonnes from 0.7 million tonnes in the previous year, according to official figures.
Weather will still be critical in the coming months in Australia, where timely rains will influence the forecasts.
But Mick Keogh, executive director of the Australian Farm Institute, said the situation was looking much better than 12 months ago when the European Union, Australia and Canada all experienced significant reductions in their wheat crops coupled with the general running down of stocks over the years.
He said with reasonable harvests now expected in North America and Europe and Australia that exports about 80% of its wheat there will certainly be some kind of easing in grain prices over the next four to six months.