The tension currently taking place in the Middle East, between the United States and Iran, is putting pressure on the export of North American wheat, according to information from T&F Consultoria Agroeconomia. In this scenario, US producers would be worried about losing market share in the Middle East.
“Without continued demand from the Middle East, farmers, who have already faced difficulties because of the recent US-China trade war and difficult weather last year, could face new obstacles in 2020. Wheat futures traded on the Chicago Board of Trade have already have had an impact since the airstrike, falling 2.2% to around US$ 5.50 a bushel in the last two trading sessions. Before the decline, wheat was on the rise, reaching its highest level since summer 2019 at US$ 5.60 a bushel last week. This price level reflected the optimism that the signing of a preliminary trade agreement this month would unlock demand in China”, indicates the Consultancy.
Therefore, countries in the Middle East are expected to import 17.3 million tons of wheat in the 2019/20 marketing year, according to the US Department of Agriculture (USDA), which will make them some of the largest importers of the commodity outside of Southeast Asia and North Africa. In contrast, the US claims only a small portion of exports to the region.
“Of these countries, Iraq and Yemen are among the largest importers of US wheat. This week, Iraq – which imported around 470,000 tons of American wheat until October 2019 – voted to expel American troops from the country in reaction to the airstrike that killed Soleimani in Baghdad. The vote encouraged threats of sanctions from President Trump”, he concludes.
Source: agrolink
