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Poor household may face prospects of wheat price increase

Despite regional cereal shortfalls,maize meal prices have been stable since April and will likely remain stable through to September.

This year’s global wheat output is still forecast to exceed 2018’s outturn by 36 million tons (5%). What this simply means is that the world grain production forecast in 2019/20 stood at 2 708 million tons, which was higher than in July. 

“This is owed to an increase in wheat and rice trade almost offsetting reduction of trade prospects for maize and sorghum” said grains economist Dr Abongile Balarane. 

According to a Market Intelligence Report produced by the National Agricultural Marketing Council the global forecast expanded due to the upward revision made to the forecast for world maize production, now pegged at 1 124 million tons, 2.0% higher than in July and up 0.7% from 2018. 

The Food and Agriculture Organisation (FAO) said the buoyant expectations were “mostly stemming from improved yield prospects in the United States, despite excessive rainfall through much of the planting season.” 

Despite regional cereal shortfalls,maize meal prices have been stable since April and will likely remain stable through to September. 

The total domestic maize is estimated at 13 770 803 tons, with a demand of 12 188 000 tons in this season. The total supply of sorghum is projected at 239 760 tons, and it is estimated that 9 000 tons of sorghum will be exported.

“The positive global grain production projection for rice and wheat is beneficial for South African importers since South Africa is one of the major importers of these commodities” said Dr Abongile Balarane. 

South Africa remains a net exporter of maize as a result of unfavourable weather conditions in SADC region such as Zimbabwe, Lesotho, and Mozambique. Dr Balarane worried about the poor households in the region who will be unable to afford the price of staple foods. 

“Given that the rand is currently struggling, farmers are likely to face high input costs as the fuel prices remains high. Subsequently, consumers are likely to pay more for grain and grain prices in the near future” he said. 

Poor household may face prospects of wheat price increase
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