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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