SA wheat ends best run of gains in two years

South African wheat fell, ending the longest run of advances in two years as the rand strengthened against the dollar, cutting the cost of imports and making them more attractive relative to local grains.

Wheat futures for delivery in September dropped for the first time in nine days, declining 0.2% to R4,034 by the midday close of trading on the South African Futures Exchange in Johannesburg Tuesday.

The rand strengthened 0.3% to 12.6474 per dollar by midday in Johannesburg. It has gained 0.9% since dropping to a 2001 low against the dollar on July 31.

“South Africa is a net importer of wheat, so the rand plays quite a big role,” Brink van Wyk, a trader at BVG (Pty) Ltd., said in an e-mailed response to questions.

While the nation is the sub-Saharan region’s largest grower of wheat after Ethiopia, it is a net importer of the cereal and the region’s biggest buyer after Nigeria and Sudan, U.S. Department of Agriculture data shows.

South African growers are forecast to sow 478,300 hectares (1.2 million acres) with wheat in 2015, according to the nation’s Crop Estimates Committee. While that’s 0.4% more than last season, it would be the second smallest area on record, the CEC said.

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Adjusted for inflation, the price of wheat is now lower that any time in history.
That is the reason why farmers can no longer afford to subsidize the consumer by producing wheat in SA. Local production is only 50% of what it used to be.
Local farmers need better protection against subsidized imports.
Wheat farmers are in the same position as Mittal Steel and Highveld Steel. The import of subsidized steel is killing the industry and create massive unemployment.

This government is asleep behind the wheel, as job opportunities and food security are exported to the countries that subsidize production.