Covid19: New developments in meat and wheat industries
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Disruptions in the global agricultural supply chains and uncertainty about how long the Covid-19 pandemic will last have resulted in three major developments including closures of major meat processing plants , wheat export restrictions, and looming hunger in Africa.
He says America, Brazil and Canada, which accounted for nearly a third of global meat and edible offal exports in 2019, have closed some of the meat processing plants, because of the spread of coronavirus amongst their employees over the past few days. In the US and Canada, mainly beef and pork processing plants are affected, while in Brazil, the closures are influencing poultry-related processing plants. Given the significant share of these countries to global meat trade (28%), if the processing plants closures spread and remain for a prolonged period, there could be fears of a global meat shortage and potentially an uptick on prices.
The wheat market continues to be dominated by prospects of export limitations and at the end of March 2020, Russia placed an export quota of 7.0 million tonnes of wheat in the three months to June to protect its domestic supply before the harvest period for the new crop which is due in July. While the quota has now been reached following large exports over the past few weeks, news reports suggest that the Russian government sees no need to limit exports for the remaining months leading to July. Locally South Africa is a net importer of wheat and it is estimated that the 2019/20 wheat imports could increase by 33% year-year to 1.8 million tonnes. This is 13% higher than the five-year average import volume, exacerbated by the decline in domestic wheat production on the back of unfavorable weather conditions in parts of the Western Cape in late 2019.
He says America, Brazil and Canada, which accounted for nearly a third of global meat and edible offal exports in 2019, have closed some of the meat processing plants, because of the spread of coronavirus amongst their employees over the past few days. In the US and Canada, mainly beef and pork processing plants are affected, while in Brazil, the closures are influencing poultry-related processing plants. Given the significant share of these countries to global meat trade (28%), if the processing plants closures spread and remain for a prolonged period, there could be fears of a global meat shortage and potentially an uptick on prices.
The wheat market continues to be dominated by prospects of export limitations and at the end of March 2020, Russia placed an export quota of 7.0 million tonnes of wheat in the three months to June to protect its domestic supply before the harvest period for the new crop which is due in July. While the quota has now been reached following large exports over the past few weeks, news reports suggest that the Russian government sees no need to limit exports for the remaining months leading to July. Locally South Africa is a net importer of wheat and it is estimated that the 2019/20 wheat imports could increase by 33% year-year to 1.8 million tonnes. This is 13% higher than the five-year average import volume, exacerbated by the decline in domestic wheat production on the back of unfavorable weather conditions in parts of the Western Cape in late 2019.
