Miller Magazine Issue: 123 March 2020

26 NEWS MILLER / MARCH 2020 ABARES: Wheat prices to increase slightly The world wheat indicator price is forecast to average slightly higher at US$225 per tonne in 2020–21, up from US$220/t, according to Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) March quarter Agricultural Commodities report released on 3rd March. Lower wheat production in the Black Sea region, the European Union and the United States is forecast to result in higher prices. ABARES predicts that over the me- dium term to 2024–25, world import demand for wheat will continue increasing in line with population growth, changing diets and rising incomes. However, prices are projected to fall gradually (in real terms) over the medium term due to world supply growing faster than demand. In 2020–21 world wheat production is forecast to inc- rease marginally to around 766 million tonnes (Mt), lar- gely reflecting record production in India and a return to more favourable seasonal conditions in Australia and Ar- gentina. World wheat consumption is forecast to increase in 2020–21 and over the medium term to 2024–25 due to a growing world population consuming more milling and feed wheat. Persistent drought conditions have led to more Australian wheat being consumed domestically rat- her than being exported, driving up domestic prices and reducing exports. The volume and quality of wheat exports from the Bla- ck Sea and Argentina have increased significantly over the five years to 2019–20, making wheat from these sources competitive in price-conscious Asian markets. Australia is expected to regain these Asian markets when increased production and exportable supply lead to more competi- tive export prices. This will enable Australian exporters to once again take advantage of transport cost advantages over more distant suppliers. Recent increases in Argentina’s wheat export tax and the possibility of the Russian Federation restricting exports due to concerns about domestic supply are also likely to lead to an increase in the price of wheat from these suppliers. ABARES forecasts world barley and corn prices will re- main relatively unchanged from low levels in 2020–21 and over the medium term to 2024–25. Global produc- tion has outpaced consumption in recent years, resulting in significant inventories and relatively low prices. This is the result of long-term improvements in productivity and crop yields. Projected lower wheat prices mean that substitution in feed grain will prevent any significant price increases in coarse grains. World coarse grain production is forecast to rise by 2pc in 2020–21, primarily driven by higher corn producti- on in the United States after a poor season in 2019–20. In combination with elevated US stocks, this is likely to mean corn prices will remain at their current low levels in 2020–21. Global barley production is forecast to fall slightly as production returns to more average levels, following a record year due to widespread favourable conditions for major producers. GRAIN CENTRAL