The adjustments in the wheat import tariff are satisfied when the international wheat price (US No.2 HRW) deviates from the base price by more than US$10 per tonne for three consecutive weeks. From the week ending 30 January to 13 February, the international wheat prices consistently traded above US$235 per tonne, making a deviation of US$10 per tonne above the base price of then US$218 per tonne. Thus, leading to a downward revision of the import tariff.

During this period the international wheat prices were partly supported by concerns that drier weather conditions in the southern Plains of the US could negatively affect the harvest. The International Grains Council (IGC) forecasts US 2017/18 wheat production at 47.4 million tonnes, down by 25% from the previous season.

Nonetheless, the global market is well supplies, following an uptick in production in India and the Black Sea region. IGC forecasts 2017/18 global wheat production at 758 million tonnes, up by a percentage point from the previous season. This implies that the international wheat prices could trade sideways in the near to medium term. In the week ending 03 April 2018, the international wheat prices traded at levels around US$237 per tonne.

It is also worth noting that the wheat import tariff has triggered again on 20 March 2018 to R293.74 per tonne, down by 25% from the current rate of R394.85. The newly calculated rates will only be applicable after publication in a government gazette. The timeframe for this process is unclear. The previous adjustments took more than three weeks.

Chart: South African wheat import tariff

Source: SAGIS, Agbiz Research

The post SA’s wheat import tariff revised down to R394.85 per tonne appeared first on Agri Limpopo.