Domestic price of wheat in New Zealand - Data and Analysis (2000-2027)

IBISWorld forecasts the domestic price of wheat to increase 0.9% during 2019-20, to reach 139.6 index points. Despite rising global production, demand for wheat and wheat-based products around the world is expected to increase at a faster rate. Additionally, local demand has increased as downstream businesses such as bakers and flour millers have been increasing the size of their contracts in order to ensure ongoing supply.New Zealand exports the majority of its milling wheat, and is therefore reliant on imports, largely from Australia, to meet domestic demand. As such, the domestic price of wheat is heavily influenced by movements in Australian production. This was particularly evident over the two years through 2018-19 when Australian production declined substantially. This was due to prolonged drought conditions and led to significant double-digit growth in prices in New Zealand.In 2017-18, Countdown pledged to use New Zealand wheat in all of its bread and rolls, having previously used Australian wheat. The Arable Food Industry Council has also recently announced plans to make New Zealand self-sufficient in milling wheat by 2025. This was in response to the recent drought in Australia, which limited Australian exports and undermined confidence in New Zealand about future Australian supply. New Zealand also experienced unfavourable weather conditions in 2017-18 including both untimely, excessive rainfall, as well as dry periods.The majority of wheat produced in New Zealand is feed wheat. This is largely consumed locally, and supplies the agricultural producers, most significantly poultry producers. Demand from poultry producers has increased over the past five years, as consumers have switched away from red meat, towards the leaner chicken meat. This has boosted domestic feed wheat prices over the past five years. Overall, IBISWorld forecasts the domestic price of wheat to increase at a compound annual rate of 1.2% over the five years through 2019-20.