Low global wheat and grain supplies could squeeze manufacturers
wheat supplies, as harvest forecasts for the 2002-03 season look
increasingly unfavourable. With global stocks being eaten away,
what remains to be seen is how much this will cost the food
industry.
Food manufacturers could be hit by a global shortage of grain and wheat supplies, as harvest forecasts for the 2002-03 season look increasingly unfavourable.
According to a report from Business Line, poor weather conditions and equally challenging harvesting conditions have led to a series of poor early harvests throughout the world. So far this year significant crop reductions have been reported in Australia - which is currently being plagued by drought - the US and the European Union.
Low premium grade wheat supplies have this year hampered trade and kept prices high. Harvesting problems in Canada and another steep cut in Australia's crop forecast have prompted more flour millers to look for alternative origins, including cheaper lower-quality blending wheats.
Until now large surpluses from Russia and southern Asia have been sustaining the supplies.
Latest forecasts made by the London-based International Grains Council (IGC), indicate that world wheat production in 2002-03 will be 562 million tons, compared to 579 million tons for the previous harvest year. Further exacerbating this situation is the forecasted consumption of grains this year, which is estimated to be 593 million tons, compared to 587 million tons the previous year. This means that world stocks will shrink further by 30 million tons to a low 135 million tons, of which the five major exporters will hold 30 million tons, the lowest for seven years.
Economic growth is seen boosting food use in developing countries in Pacific Asia, while more wheat is available for animal feed in Europe and the IGC added.
Although the situation is by no means at crisis point, the dearth could lead to an increase in the prices of wheat and grain, which could affect many of the leading companies in the bakery business on a global level. Whether or not such price increases will be reflected in consumer prices is yet to be seen.
