Tokyo: Wheat planting worldwide may drop as much as 3% next year after prices tumbled from a record and as a recession cuts meat consumption and feed grain demand, said the Canadian Wheat Board, the world’s largest seller.
More acres will go back to fallow, Ian White, chief executive officer of the Winnipeg-based board, said in an interview in Tokyo. Rising prices drove farmers to plant every available acre in the past couple of years, hurting yields, he added.
Sowing in Canada, the second biggest exporter after the US, will probably fall as much as 5% from 25.1 million acres this year, he said.
Decreased planting will make the wheat price susceptible to supply problems as global stockpiles are at historical lows even after a record harvest, White said.
Inventories are forecast to rise for the first time in four years as of 30 June 2009, after a year earlier falling in the top five exporting countries to the lowest in 30 years, according to the International Grains Council (IGC).
We don’t think the price will get much lower. There is probably some potential for modest recovery, White said, declining to give a specific forecast.
Global wheat demand will probably fall by 1-3% from this year as an economic slump may spur consumers to cut spending on meat, decreasing use of the grain in animal feed, White said. Consumption is forecast by the IGC at 650 million tonnes (mt) in 2008-09, compared with 614mt a year earlier.Consumers will reduce spending not only on luxury goods but also on necessities such as food eventually, as global economies are deteriorating, said Nobuyuki Chino, president of Tokyo-based Unipac Grain Ltd.
Grain importers such as South Korea purchased wheat as a cheaper feed grain alternative when Chicago corn prices surged this year. Feed makers in Asia’s second-largest grain importer bought feed wheat in May for the first time in a year. Staple food consumption is slightly increasing, White said. A reduction in feeding will overcome the small increase.
Global wheat stockpiles are forecast to grow 27% from a year earlier to 150mt as of 30 June 2009, representing 23% of world annual consumption, the IGC forecast last month.