World wheat trade at 7-year low August 15, 2002
DROUGHT conditions in Australia, Canada and the United States will lead to the smallest trade in world wheat in seven years, a report finds.
The United States Department of Agriculture (USDA) today said world wheat trade would fall to 103 million tons this financial year, down five million tons from 2001-02.
Not since the drought year of 1995-1996 has world wheat trade been so low.
But the USDA said Australia, plus the other main wheat trading nations, would be able to draw on stocks to maintain relatively high levels of exports.
"While the largest exporters, the US, Canada and Australia, had reduced production this month, they are expected to draw on stocks in order to limit changes in exports," it said.
"The major exporters of high quality wheat, the US, Canada and Australia, are expected to drop stocks more than 12 million tons or 37 per cent."
In Australia's case, the USDA expects total exports to be 15.5 million tons.
"Australia's export project was reduced to 1.5 million tons to 15.5 million tons," it said.
"While down from a year earlier, this is higher than in four of the previous 10 years."
The Australian Bureau of Agricultural and Resource Economics last month knocked down its estimates of the national wheat crop by 16.4 per cent to 17.1 million tonnes.
The USDA said as the Australian wheat crop would be down, importers would look to other countries for their supplies.
Both Canada and Australia are expected to lose sales to Kazakstan which has had a reasonable wheat crop.
Total world production is expected to fall to 572 million tons, while global consumption is tipped to rise to a record 595 million tons.
This is expected to push the world's stocks of wheat down to their lowest level in seven years.
With the drop in supplies, prices are expected to continue climbing which many countries will be forced to accept rather than shift to a lower cost product.
"Food demand for wheat tends to be price inelastic in the middle and high income countries, while many low income countries have limited cheap alternatives because of price increases forecast for coarse grains and rice," it said.