Zambezi Times Online

Rising EU Wheat Demand To Benefit Zambian Exporters

LUSAKA, Mar 24 - Zambia stands to benefit tremendously from increased demand for wheat in the European Union (EU) as a result of drought and heat waves that ravaged that trading block's crop last year.

According to the Public Ledger that is published weekly by the London Commodity Exchange, wheat suppliers are expected to tighten further this year because the new states joining the EU in May 2004 are likely to buy up some of the existing wheat stocks.

"With drought and heat-waves ravaging EU crops last year, prices have risen and supplies are already very tight, the Public Ledger says.

The prominent grain trading house called Toepfer says the EU's expansion on 1st May 2004 and the resultant opening of borders will lead to wheat exports to the new member states. This means a further tightening of the supply balance.

Increased demand is expected from Poland and from non EU member states such as Russia for EU brewing barley over the coming months. Although wheat prices in the last few weeks had generally fallen because the strong euro had reduced exports to countries outside the community.

However, future prices will depend on further developments in the international markets and the US dollar.

The EU market has been one of the largest importers of Zambia non-traditional exports (NTEs) in the past three years up to 2002. The EU accounted for 26.98 per cent in 2002 of the total NTEs.

Its contribution dropped both in terms of value and percentage having recorded US$99.36 million in 2002 as compared to US$106.52 million in 2001.

Wheat is among the agricultural products in Zambia with enormous potential to contribute to the non-traditional exports. Therefore, the favourable weather patterns and increased rainfall during the past two sessions in the country is bound to motivate Zambian exporters of wheat and other agricultural produce to increase supplies to the yearning EU market this year.

Meanwhile, reports indicate that global maize stocks have fallen leading to a projected high demand for the product in the international markets.

The growth in demand has eroded stocks substantially in places like USA which points to the fact that much more planting and exporting of maize needs to be done this year in order to prevent severe shortages.

US maize futures on the Chicago Board of Trade soared to 15 months higher as a record low position loomed over the market, giving fresh impetus to farmers to grow more of the crop.

Trade consensus is that US farmers would plant between 300,000 to 1.5 million extra acres of maize this spring.

Source: The Times of Zambia/All Africa Global Media

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