• Global prices trading close to weakest in five years
  • Wheat futures in South Africa rose to record this week

South Africa will increase duties on wheat imports to the highest on record to protect local farmers as prices of the grain on the Chicago Board of Trade trade near a 5 1/2-year low.

The nation will raise the tariff to 1,224.31 rand ($85) a metric ton, Pretoria-based South African Grain Information Service said in a statement on its website, based on calculations using a formula created by the country’s International Trade Administration Commission. The current duty of 911.20 rand was imposed in September, and was the highest since the government introduced the regime in 2002, according to Sagis. The higher levy has yet to be published in the Government Gazette.

The tariff increase “might be good support for domestic farmers as they are at the final harvesting stages, roughly 95 percent complete," Wandile Sihlobo an economist at the Grain SA farmers’ lobby, said by phone.

Wheat futures in Chicago are trading near the 5 1/2-year low of $4.6075 a bushel that was reached on May 5. Futures have fallen 18 percent this year so far, while in South Africa, the cereal for delivery in March rose to a record 4,730 rand a metric ton on Dec. 2, the highest for a most-active contract on record.

While South Africa is the sub-Saharan region’s biggest producer of the grain after Ethiopia, it’s still a net importer of wheat, according to the U.S. Department of Agriculture data.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE