September 12, 2016

12/09/2016: Changing market dynamics and the prospect of a fourth consecutive record harvest

by Amy Reynolds, Senior Economist, IGC
With the northern hemisphere harvest moving toward the final stages, it is shaping up to be an interesting year for the global wheat market. 

Following three consecutive record harvests, the world has been very well supplied with wheat over recent seasons.

Despite record demand, huge crops have seen world stocks swell to all-time peaks. This has put pressure on prices; since mid-2013, average milling wheat export prices (US$ fob) have fallen by about one-third.
  
Amy Reynolds

World production for the current 2016/17 season could potentially be a record for a fourth consecutive year, but despite this, there are signs that the dynamics of the market are changing. The global trading environment is being complicated by disappointing harvest quality in major growing areas, including in parts of the US and the EU.

So, although overall world availabilities could be at their highest ever, securing supplies of the desired milling quality may be somewhat harder, and more expensive, than in recent seasons. The impact of this is already visible in recent price movements.

Reflecting abundant supplies overall, the Council’s index of world average export prices is at around 10 year lows. However, price premiums for the best quality milling wheat, with high protein levels, good hagberg falling numbers and test weights, are widening.

The way in which this affects global trade will be of particular interest to the IGC.

Competitively priced supplies from the EU and the Black Sea region (Kazakhstan, Russia and Ukraine) have captured an increasing share of global wheat trade in recent years, with their shipments reaching all-time peaks.



Read the full article HERE.
 

The Global Miller
This blog is maintained by The Global Miller staff and is supported by the magazine GFMT
which is published by Perendale Publishers Limited.


For additional daily news from milling around the world: global-milling.com

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