Semolina Outlook
The semolina market is one of the main markets in the commodities market. The demand for semolina is constantly on the rise year-over-year because it has become a staple ingredient in many foods such as pasta, couscous, and breakfast cereals. There are three major challenges with this commodity: weather, freight rates, and demand.
In an American Journal of Agricultural Economics article, state that increased interest in vegetarian diets will drive global semolina consumption up by 40% by 2021. This increase will not be enough to meet the growing need for semolina. Other countries like China and India are also increasing their demand for semolina, making it difficult to meet that demand.
Semolina production will be decreased by drought. Average yields have declined by 30% from the 1970s to the present. Up until recently, there was no major yield loss due to a lack of rain or dry weather, but droughts have begun to impact yields in some parts of the world. The most important semolina producing regions that have experienced an increase in drought are: North Africa, Eastern Europe, North America, and West Africa.
The price of freight has increased since 2008-2009. Western Europe is one of the main suppliers of the semolina market. Western Europe has seen freight rates increase 25% in the last two decades. This increase has greatly hindered the semolina industry in Western Europe.
The demand for semolina is growing due to the rising number of vegetarians in many areas across the world. Another major factor in the demand for semolina is that it is used in a variety of products and most require semolina to be produced by a large number of regions throughout the world.
Unrest in North Africa and Central Asia very likely will have a negative effect on shipments coming from that region. The economy of North Africa and Central Asia is very sensitive at this point, so any major economic changes could cause food stabilization problems.
The Middle East is the main supplier of semolina in the world. The political stability of the Middle East could decline due to economic problems. The price of fuel could continue to rise, which would cause a decrease in exports from the region and make it less desirable for imports to come from.
In Africa, politics played a major role in exports and imports during the last two decades. The politics between Libya and Egypt was very intense and caused large amounts of disruption in trade All over Africa, but especially for countries bordering Egypt. In West Africa political unrest also caused havoc on agricultural markets, but didn't affect semolina as much as other crops due to its strong demand.
The demand for semolina has increased with an expanding population and global food production needs. This increase in demand has led to fluctuations in price as well as stretches of down time where there are no sellers at all due to lack of stock or aging inventory sitting around waiting to be sold. While the supply does face challenges, there have been times in which large increases in demand have led to additional stock being brought on board.
Along with the increase in demand, there has also been an increase in the cost of semolina. This has happened due to the changing currency value around the world as well as a growing population that is looking for more variety and quality. The rising price levels can cause difficulties when it comes to selling on certain markets that were previously flourishing due to lower prices. This is also a reason for lower equipment use and profitability by manufacturers who are looking for higher yields and less costs.
