South Africa witnesses record high wheat prices

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According to a report from the Foreign Agricultural Service of the US Department of Agriculture (USDA), South Africa’s local wheat prices increased to record high prices of $300 per tonne in April amidst the Coronavirus-triggered lockdown.

In South Africa, wheat is the second most-consumed grain. Hence, any notable price changes have a detrimental impact on consumers’ food expenditure.

As a net importer of wheat, local wheat prices in the country are mainly influenced by fluctuations in international wheat prices, the South African rand exchange rate and transportation costs.

According to USDA, the African nation has imported around 2 million tonnes of wheat in 2019-20, accounting for more than 50% of the local demand.

Producers are likely to plant more than 490,000 hectares of wheat for 2020-21, while consumption is expected to reach 3.4 million tonnes.

South Africa will again have to import about 2 million tonnes of wheat in 2020-21. The rand exchange rate will stay under pressure due to the uncertainty regarding the global recession and the Moody’s downgrade, as per the USDA estimates.

“This means that for the next year local wheat prices will remain relatively high, which will have a negative inflationary impact on bread and wheat flour prices and increase the South African consumers’ expenditure on basic food products,” the USDA said.