Wheat breaks through the R4 000/t barrier

For the first time in history the futures price for wheat in South Africa broke through the R4 000/t barrier on the JSE earlier this month.

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For the first time in history the futures price for wheat in South Africa broke through the R4 000/t barrier on the JSE earlier this month.
“This is particularly bad news for flour and bread prices in the months to come,” said executive director of the Chamber of Milling Jannie de Villiers. The futures price for delivery in May 2008 reached highs of R4 000/t and the price for delivery in July 2008 closed at 000/t, although it was traded at the maximum of R4 030/t.
“We are facing a dilemma,” said De Villiers. “It’s quite difficult to find wheat of a suitable quality internationally, given the current shortages. The better quality US wheat is trading at R7 250/t, while cheaper German wheat can still be bought for R4 200/t.”
The Argentinian government have decided not to sell their current wheat stocks. Wheat is currently priced at about R3 640/t. The supply situation might improve a little as soon as the northern hemisphere starts harvesting in June and July.
“It is quite a challenge to keep the mills going given the difficulty of procuring enough good-quality wheat at these high prices. We will do everything in our power to ensure there is enough bread and maize meal on the shelves,” said De Villiers.
All over the world governments are scampering to deal with high food prices following grain shortages.
Dr Cobus le Roux, director of the ARC Small Grain Institute, said that higher food prices might force the poor to switch to less nutritional food.
Le Roux expects an international shortage of wheat of about 4 million tons this year and for South Africa to import about 1,5 million tons. produced 1,77 million tons of wheat last year while 2,8 million tons is consumed.
Le Roux said that if local wheat producers are paid a fair and just price for high quality wheat, profitability would increase. This would encourage producers to plant more wheat. He said South African wheat quality is undervalued. “Good quality South wheat still trades on par or less with the poorer quality Argentinian or German imports.” – Staff reporter and Annelie Coleman

Annelie Coleman represents Farmer’s Weekly in the Free State, North West and Northern Cape. Agriculture is in her blood. She grew up on a maize farm in the Wesselsbron district where her brother is still continuing with the family business. Annelie is passionate about the area she works in and calls it ‘God’s own country’. She’s particularly interested in beef cattle farming, especially with the indigenous African breeds. She’s an avid reader and owns a comprehensive collection of Africana covering hunting in colonial Africa, missionary history of same period, as well as Rhodesian literature.