Asia Wheat Demand Taking a Hit as Regional Currencies Weaken
Wheat demand in Asia is taking a hit as currencies in the region are weakening against the dollar leading Agrocorp International to estimate that imports for 2015 across Asian countries will likely fall by between 5% and 8% compared to 2014.
As the middle class grows in emerging economies, leading to shifts in consumer tastes to more traditionally Western foods, wheat demand in Asia has been climbing. Imports into the region increased by 6% in 2014/15 to 42.74 million tons – up from 40.37 million tons in 2011/12, according to the U.S. Department of Agriculture (USDA). However, this year, Asian millers are reducing purchases and are not carrying reserve stocks due to currency shifts that are causing dollar-denominated wheat to become more expensive.
The price of wheat is currently at a four-week low due to expectations of rain in the U.S. and Russia, and it is believed that commodity prices have bottomed out as harvests in the northern hemisphere are nearing completion. However, a rally is not expected because of the high volume of global supplies.