Sunday, 5 December, 2021

Rising int’l wheat prices may hit local market

Wheat prices doubled in a year in global market

  • Special Correspondent
  • 21 November, 2021 12:00 AM
  • Print news

Wheat prices hike in the international market may push up the price in the local market as Bangladesh is mostly dependent on imported wheat, importers said.

“We have imported Russian wheat at $225-$240 per tonne in October 2020. The price has jumped to $380-$390 per tonne in October 2021,” Abul Bashar Chowdhury, chairman of BSM Group, one of the country's top wheat importers, told the Daily Sun on Saturday. 

He said the price of Canadian wheat also increased to $475-$485 per tonne in October 2021 from $250 during the same period last year.

“We are witnessing abrupt prices hike of wheat in the international market as production of wheat declined in major wheat-producing countries including Canada, USA and Russia due to drought and rough weather,” Abul Bashar Chowdhury said.

Local wheat importers have already informed the matter to the tariff commission and commerce ministry.

According to data, US wheat prices have soared substantially in the past year as shown in International Grains Council (IGC) Freight on Board (FOB) export quotes.

In October 2020, the average1 US Gulf quote for U.S. Hard Red Winter (HRW) wheat was $272 per metric ton (MT), while the quote for U.S. Hard Red Spring (HRS) for shipment from the Pacific Northwest (PNW) was $290 per tonne.

These monthly average quotes for October 2021 are up by 30 per cent and 46 per cent, respectively, to $355 and $427 per tonne. The price increase is particularly stark for HRS as this class was directly impacted by the drought in the Northern Plains in the USA.

Supplies of high-protein Spring Wheat and Durum are very tight currently and premiums for those classes are particularly high. Soft White (SW) quotes have also risen dramatically in the past year (up 76 per cent to $445/MT) as drought in the PNW region resulted in a much smaller crop.

Canada is one of the world’s largest grain exporters and about half of its shipments go through Vancouver.

“The disruption comes during the busiest time for grain shipping and as global supply chains are already struggling with congestion and backlogs and the flood damage will interrupt exports of wheat and vegetable oil, potentially causing a rise in global food prices, which are already at a 46-year high.”

Flooding and landslides have cut off Canada’s largest port and third-largest port of North America, Vancouver, from all rail services with port officials warning that there will be a significant knock-on effect for the country’s supply chain. Significant sections of rail lines serving the Port of Vancouver were shut down by flooding and landslides following rainstorms that pounded British Columbia and the Pacific Northwest. The port can handle the most diversified range of cargo in North America: bulk, containers, breakbulk, liquid bulk, automobiles, and cruise. As the country’s gateway to over 170 trading economies around the world, the port handles $1 of every $3 of Canada’s trade in goods outside of North America.

The most hit-hard area British Columbia - a major conduit to Asian markets and home to one of the busiest ports on the West Coast -- has been paralyzed by extreme weather: wildfires and a record heatwave choked the region in the last summer. This time the disruptions threaten the movement of goods ahead of the busy winter holiday season. About two-thirds of containers in British Columbia are transported by rail, said Dave Earle, chief executive officer of the B.C. Trucking Association.

Also, wheat production in Bangladesh has declined drastically during the last two decades as farmers are shifting their investment to produce other crops found economically more viable.

Over the last 22 years, the country’s wheat production was decreasing by 0.44 per cent a year on an average, according to Knoema, a comprehensive source of global decision-making data. “Farmers are being more interested in the cultivation of maize and vegetables than wheat since they are getting higher produces in those crops,” AKM Monirul Alam, director of Field Services Wing at the Department of Agriculture Extension (DAE), told the Daily Sun. He attributed the fall of wheat production to blast disease, drought and changes in weather including the change in the pattern of rainfall. IndexMundi, a facts and statistics data portal, ranks Bangladesh seventh among the wheat importers.  According to a United States Department of Agriculture (USDA) report published on November 8 this year, Bangladesh has set the annual food grain production target for wheat at 13 lakh metric tonnes for fiscal 2020- 21.

The government will procure a total of 950,000 tonnes of food grains from farmers across the country in the current fiscal year, according to a decision on Sunday.

Under the program, 300,000 tonnes of paddy, 500,000 tons of boiled rice and 150,000 tons of wheat will be procured.

The wheat procurement drive will start on 1 April 2022.