September 27, 2001

Wheat Trade and Prices May Advance, But Slowly

Total world wheat trade is projected to advance and prices of both common wheat and durum are expected to increase in the period from 2001 to 2010, but prices will increase only slightly and recovery is expected to be slow, according to a report from the Center for Agricultural Policy and Trade Studies at North Dakota State University.

Won Koo, center director and professor of agribusiness and applied economics at NDSU, says the evaluation of U.S. and world wheat industries used the Global Wheat Policy Simulation Model with projections based on assumptions about the general economy, agricultural policies, weather conditions and technological changes.

The model projects that total world wheat trade will increase by over 17 percent, from 88.9 million metric tons in 2000 to 104.3 million metric tons in 2010. Prices for common, or bread, wheat are expected to increase about 1.1 percent from $2.61 (in 1996 dollars) per bushel in 2000 to $2.64 per bushel in 2010, and durum prices about 5.3 percent for the period, from $3.18 per bushel to $3.35 per bushel. However, prices are expected to increase only slowly for the next two to three years.

The model contains five exporting regions, including Argentina, Australia, Canada, the U.S. and the European Union, and 13 importing countries and regions.

All exporting countries are predicted to increase their production and exports of common wheat during the period. World consumption is expected to increase faster than production, resulting in a gradual increase in the world price. Wheat production in the U.S. is expected to grow faster than that in other countries.

Financial problems in South American and Southeast Asia are expected to weaken wheat demand for the next few years but it should recover later in the forecast period, Koo says. The Former Soviet Union region is predicted to increase imports of common wheat with durum imports remaining constant. This region may also increase wheat production substantially during the period. Egypt, the largest importer of common wheat in North Africa, is predicted to increase its imports. Demand for both common and durum wheat by other countries in the region is also expected to increase.

For a copy of the report contact: Carol Jensen, Agribusiness and Applied Economics, P.O. Box 5636, Fargo, ND 58105, phone (701) 231-7442, fax (701) 231-7400, e-mail cjensen@ndsuext.nodak.edu . The report is also available electronically at http://agecon.lib.umn.edu/ .

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Source: Won Koo, (701) 231-7448, wkoo@ndsuext.nodak.edu
Editor: Gary Moran, (701) 231-7865, gmoran@ndsuext.nodak.edu