A surge in wheat sales to North Africa that contributed to prices doubling will ease because stockpiles are now big enough to last until the harvest, said the Home Grown Cereals Authority, the UK crop forecaster.
Algeria, Egypt, Libya, Morocco and Tunisia will import 22.3 million metric tonnes of wheat in the year through June, 18 per cent of the global total, the US Department of Agriculture estimates. Wheat prices rose until mid-February on accelerated buying as those governments sought to boost stockpiles, before falling again in recent weeks as purchases tapered off.
“They have sufficient stock levels right now to cover their domestic needs,” said David Eudall, an analyst at the Kenilworth, England-based HGCA, which is funded by farmers. “There’s no reason for them to go out of their way to purchase grain to replenish stock levels.”
Protests erupted across northern Africa and West Asia in the last several months, in part driven by a surge in food prices that the United Nations says rose to a record in February. Governments bought more grain to curb domestic prices and quell rioting that toppled leaders in Tunisia and Egypt.
Chicago wheat climbed 14 per cent between December 31 and February 14, before sliding 13 per cent in the following period.
Egypt is expected to buy about 10 million tonnes of wheat this season, making it the world’s biggest importer, according to the HGCA. Its import needs doubled in three decades. The government’s General Authority for Supply Commodities bought 235,000 tonnes of US and French wheat at a tender on February 23.
Enough wheat
The country probably has enough wheat to cover six months of demand and “prolonged high levels of imports is therefore unlikely,” the HGCA said in a report.
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Wheat traded on the Euronext Liffe exchange in Paris more than doubled from June to February. Russia, once the world’s second-biggest wheat exporter, halted shipments in August after its worst drought in a half century ruined crops.
The price difference between May-delivery milling wheat in the French capital and Chicago grain for delivery the same month has narrowed to $34.78 a tonne, after widening to as much as $60.07 on February 1.
France shipped 111,060 tonnes of wheat to Algeria from Rouen, Europe’s biggest cereal-shipping hub, in the week to March 2, port data show. That was the largest shipment in at least six months. Algeria, the region’s second-biggest wheat buyer, bought 2.95 million tonnes of the grain from all origins from December 16 to January 26, probably the most the country ever bought over five weeks, the French crops office reported last month.
“The high domestic food prices and obviously the civil unrest that was partly being caused by that, that was the real trigger,” Eudall said. “You’d have to expect that the purchases start to slow down as we get closer to harvest in mid-May.”
Wheat in North Africa is usually harvested in May and June, according to Eudall. Crop conditions are “promising,” though “good rains” are needed in March and April, he said.