The world wheat crop is projected to rise 9% year-on-year to a record 770 million metric tons (MMT) in the 2019-20 season, according to the head of a U.S.-based agricultural research company.
“This is largely due to returns from better European and Russian yields,” Daniel Basse of AgResource told Anadolu Agency.
Assuming normal weather, world wheat prices will drop as low as $280-285 a ton, he added.
“We would expect, maybe in the late May-June timeframe, world wheat prices would bottom out,” Basse said.
He projected Turkey will have a good crop this year, highlighting that the weather has been relatively good.
Turkey’s wheat crop last year was around 21.5MMT, according to the Agriculture and Forestry Ministry.
The country consumed 20.5MMT of wheat in 2018, says ministry data.
Turkey imports nearly 4MMT of wheat every year, mostly to make flour, pasta, cookies, semolina, and bulgur for export. In other words, imported wheat makes up the raw material for exported goods, according to the ministry.
Turkey has been the world’s top flour exporter for the last six years. Last year, Turkey exported nearly 3.5 million tons of flour, or nearly one-third of the world’s total flour exports.
Pointing out that Turkey both produces and imports wheat, Basse said lower prices will help the Turkish milling industry but not Russian farmers or indeed farmers around the world.
– Caloric intake
Touching on international changes in caloric intake, Basse said China posted the biggest rise over the last decade-plus, with caloric intake jumping from 2,100 to 3,100 kilocalories per day over the last 15 years.
The average caloric intake in the Western world is about 3,400 kcal per day, he said.
The next-biggest rise was south Asia — India, Pakistan, and Bangladesh — where caloric intake went from about 1,900 kcal to 2,400-2,500 kcal a day, he said.
“So as that part of the world starts to grow economically, their caloric intake should go with it,” Basse said, adding that this will create opportunities for more production by farmers.
But as the world population is expected to reach 9 billion by 2050, Basse said the world should figure out how to farm more efficiently after around 2045-2055, when farmlands will no longer have room to expand.
“Any future increase in crop production will be due to yield, not due to more land, so mankind has to figure out ways to farm differently,” he said.
– US and China
Telling how the U.S. and China are working on a bilateral trade deal under which China would be obligated to secure $50 billion-plus of U.S. agricultural goods annually, Basse said China is working to reduce its trade deficit with the US.
Basse said if the world’s top two economies strike an exclusive trade deal, other exporters — especially emerging countries that used to ship to China — may lose out.
He projected that U.S. prices to China would rise more so than other suppliers.
“The Chinese would actually be forced to pay more for their food goods than they might otherwise but they are doing this to avoid U.S. President Donald Trump and his threats of tariffs and hopefully keep U.S. consumers buying lots of Chinese goods,” he said.
This would shift trading arrangements around the world to be detrimental, he said.
But he underlined that if Trump is not reelected in 2020, the whole China deal could be off, as it will not be a formal trade treaty done through the World Trade Organization (WTO) or the U.S. Congress.
“So U.S. politics in particular for the upcoming election could be very interesting to the world dynamics of commodity trade. It provides tremendous uncertainty,” Basse added.
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