Missing Bangkok, Paris tourists omen of global wheat demand collapse

By Naveen Thukral, Patpicha Tanakasempipat and Gus Trompiz SINGAPORE/BANGKOK/PARIS (Reuters) - In Bangkok's usually bustling Sukhumvit district the coronavirus pandemic has decimated the tourist trade at the restaurant Permruedee Labnongsaeng owns, cutting daily sales to 5% of normal. The missing tourists from top destinations like Bangkok - the world's most-visited city - Paris and Rome, gone because of the travel restrictions to prevent the coronavirus spread, also means no demand for the noodles, pastries and pasta usually scoffed down there by hungry travellers. 'Tourists disappeared in late February and our sales took a plunge, since then it's been a downhill,' said Permruedee, whose cafe specializes in noodles and Thai curries.

Reuters May 08, 2020 05:06:05 IST
Missing Bangkok, Paris tourists omen of global wheat demand collapse

Missing Bangkok Paris tourists omen of global wheat demand collapse

By Naveen Thukral, Patpicha Tanakasempipat and Gus Trompiz

SINGAPORE/BANGKOK/PARIS (Reuters) - In Bangkok's usually bustling Sukhumvit district the coronavirus pandemic has decimated the tourist trade at the restaurant Permruedee Labnongsaeng owns, cutting daily sales to 5% of normal.

The missing tourists from top destinations like Bangkok - the world's most-visited city - Paris and Rome, gone because of the travel restrictions to prevent the coronavirus spread, also means no demand for the noodles, pastries and pasta usually scoffed down there by hungry travellers.

"Tourists disappeared in late February and our sales took a plunge, since then it's been a downhill," said Permruedee, whose cafe specializes in noodles and Thai curries.

The U.S. Department of Agriculture (USDA) last month cut its wheat consumption forecast for the crop year to June 2020 to 749.78 million tonnes, still an increase from the prior year's 737.05 million. But the severe tourism collapse likely means wheat consumption will be between 10 million and 12 million tonnes lower than the USDA forecast, according one grains analyst and two traders.

"We are going to be drowning in grains, when you look at the demand which has taken a hit because of the coronavirus, and global wheat production outlook," said Ole Houe, a director at brokerage IKON Commodities.

"As of now we are looking at 10 to 12 million tonnes lower consumption than last year, but that is a very conservative estimate. It could be even more, down 30 to 40 million tonnes, which is about 5% below last year's world consumption."

With global wheat production and stocks expected to scale new all-time highs this year, the nosedive in demand means exporters are likely to see a prolonged period of lower prices.

(Graphic: World wheat supply, demand, exports and stocks IMAGE link: https://fingfx.thomsonreuters.com/gfx/ce/azgvomjbkvd/GlobalWheatSandD.png)

CONSUMPTION DROPS IN ASIA, EUROPE

Asia, which accounts for 40% of global wheat consumption, may face a 15%-20% demand contraction between April and June based on orders from major regional flour millers, according to the two Singapore-based traders that provided forecasts.

"It has been really quiet. The initial panic buying which resulted in a 5%-10% increase in noodle demand is gone now," said one of the traders, who has been selling U.S. and Black Sea wheat cargoes in Asia for more than a decade.

Some key mills in Southeast Asia have said they will not place any new orders until after June at the earliest, he added.

In Europe, the world's second-largest wheat market, consultancy Strategie Grains has raised its forecast for EU soft wheat stocks this season, partly because of a sharp drop in milling demand.

France's lockdown has nearly halted tourism and restaurant outings, wiping out a critical source of pastry and bread demand.

"We have outlets in Saint-Germain-des-Pres, on the Champs-Elysees, and in the Tuileries gardens where there isn't a single tourist," said Fabrice Derouet, the international brand director for Paris-based global bakery chain Paul, which has 750 outlets worldwide in 45 countries.

"Since we are selling a lot less, we are making a lot less, so we are using a lot less flour and raw materials."

While flour sales in grocery stores have surged as housebound French made more cakes and bread, home use typically accounts for only 5% of overall flour demand, with the remainder used up by the country's bakeries, restaurants and food industry, the French milling industry association ANMF said.

In Southeast Asia - the world's fastest-growing wheat demand region - tourist arrivals in March to Thailand fell by 76.41% from a year earlier and in Indonesia by 64.11% from a year ago, devastating street vendors and noodle stalls.

"The tourists are not here anymore. I’ve been selling food here over 50 years but this is the worst time yet. We’re all going out of business," said Salinee Witprasertkul, 75, who runs a food stall in Bangkok's Chinatown.

(Graphic: Benchmark global wheat price IMAGE link: https://fingfx.thomsonreuters.com/gfx/ce/xegvbklybpq/CMEWheatPrice.png)

PILE UP

The steep slump in everyday wheat demand will create a backlog along the entire global grains logistic system. The USDA is forecasting wheat stockpiles will climb to a record 292.78 million tonnes by June.

Wheat prices, down roughly 6% this year, may fall further.

"Wheat is still overpriced as the market has yet to price in demand destruction," said Houe of IKON Commodities.

The USDA trimmed its wheat demand estimates from March to April by roughly 5 million tonnes and further revisions are expected in its May and June assessments.

(Graphic: World wheat demand estimates by month and crop year IMAGE link: https://fingfx.thomsonreuters.com/gfx/ce/jbyprjxlmpe/USDAWeatDemandCutsMay2020.png)

Still, the pasta and noodle demand from families in lockdown has boosted some wheat exporters, with Italian food association Federlimentare saying pasta plants are running full on higher overseas demand and ramen exporters in South Korea registered a 31.5% jump in first-quarter shipments.

And many Parisian bakers can still depend on local bread demand despite the lockdowns.

"We're only at 60% of our revenue...but people still make time to go out for their baguette," said Sebastien Mauvieux, a baker and owner of Pain Pain bakery in the Montmartre district of Paris.

(Reporting by Naveen Thukral; additional reporting by Jane Chung in SEOUL, Yuka Obayashi in TOKYO, Fransiska Nangoy in JAKARTA, Michaela Cabrera in PARIS and Elisa Anzolin in MILAN; Editing by Christian Schmollinger)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.