Drought results in 17 percent spike in global wheat prices

Drought results in 17 percent spike in global wheat prices

ISTANBUL- Hürriyet Daily News
Drought results in 17 percent spike in global wheat prices

Farmers in Turkey’s Aegean province of Denizli collect wheat in sweltering heat. Wheat prices are not going to fall says Bayraktar Head of Agriculture Chamber Union. DHA photo

Global warming induced drought and rapidly increasing population expansion are the reasons behind the rise in global wheat prices, which will continue to go up, according to the Turkish Chamber of Agriculture Union President Şemsi Bayraktar. He also said that global wheat prices had risen by 17 percent.

Bayraktar said it was impossible for global wheat prices to fall given the world’s rapid population growth, drought, and the use of biofuel in cars. The fact that countries like Brazil and China are increasingly turning to meat also creates an increase in demand, as wheat is needed to feed livestock, he added.

“Given such a context, it is impossible to see a fall in global food prices,” said Bayraktar.

Food exports up 11.2 pct
Bayraktar also announced yesterday in a written statement that from January to June 2012 agriculture and food exports from Turkey were up 11.2 percent, and that imports were down 8.8 percent. According to Bayraktar, agriculture and food exports hit $6.6 billion year-on-year and imports were $6.13 billion. He noted that in the midst of a global crisis this represented a huge success for Turkey.

However, Turkish Flour Industrialists Federation (TUSAF) President Erhan Özmen offered a different view, telling Anatolia news agency that despite the global drought there had been no abnormal drop in grain production.

“Prices are going up on paper. However, there isn’t a really gloomy picture as is depicted. I think there is a lot of speculation and things will normalize shortly,” he said.

“Last year 695 million tons of wheat were produced globally. This year the number dropped by 30 million tons to 665 million … This is it,” said Özmen, explaining that last year there was an overproduction of wheat and that this year’s drop was therefore in the normal range.

Overreaction to draught
“The world is reacting very strongly to news of the drought in the U.S. There is no abnormal fall in the production of corn, soya, or wheat. Of course, stock exchanges are pricing this very seriously. The world has become very good at speculation. First the production numbers were bloated, then the drought news was exaggerated,” he said.

Separately, according to Reuters, hard-hit U.S. livestock and poultry producers have petitioned the
government to reduce or cancel the required use of ethanol in gasoline for a year, asking for “a little help” to ride out the worst drought in 56 years.

“We are having trouble buying corn... it’s really putting a burden on our operations and many others across the nation,” says J.D. Alexander, president of the National Cattlemen’s Beef Association, whose Nebraska feedlot is about half full of cattle. “It’s time to wean the ethanol industry and let it stand on its own.”