South Africa: South African Wheat Prices Reach Record High LevelsUSDA
South Africa’s local wheat price increased sharply to record high levels in April 2020. Wheat is the second most important grain commodity consumed in South Africa after corn. Hence, any sharp increase in wheat prices will have a detrimental effect on the South African consumers’ food expense. Since deregulation in 1997, South Africa’s wheat production declined over time while local demand for wheat rose, resulting in an increase in South Africa’s dependence on wheat imports and in the impact of the exchange rate. The South African Rand depreciated by 25 percent since January 2020 due to COVID-19 and Moody’s downgrade of South Africa’s credit rating to junk status, driving local wheat prices to record levels. Record high wheat prices have a negative inflationary impact on bread and wheat flour prices, and increase the South African consumers’ expenditure on basic food products.