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WORLD MARKETS AND TRADE
Exporter Wheat Supplies Meet Global
Demand, But Prices Surge
(September 10, 2010) Wheat stocks in traditional exporter countries, (Argentina, Australia, Canada, EU and the United States), while lower than last year, are still the second highest in 5 years. Ending stocks are larger this month for several reasons; 1) expanded supplies in Canada, and 2) quality deterioration in the EU means less exports but higher wheat prices increase domestic substitution of other grains in feeding. On the other hand, stocks are expected to decline 1.4 million tons in the United States due to increased export demand.
Wheat prices have surged 65 percent since the beginning of July, driven mostly by market uncertainty over supplies from the Black Sea region. The wheat crops in both Russia and Kazakhstan have been devastated by drought, while the crop in Ukraine also suffered from adverse weather conditions. Russia's export ban and Ukraine's export slow-down, combined with production shortfalls, have created uncertainty and contributed to market volatility. However, prices are still well below the record average price of $368/ton, reached in 2007/2008.
Wheat: World Markets And Trade
Domestic prices--Prices of all classes of wheat continued to climb in August on expanding export prospects. Hard Red Winter (HRW) surged $43/ton to $311/ton, rising above Soft Red Winter (SRW), and reverting to the usual price relationship. HRW has risen due to increased demand, particularly from Egypt. Hard Red Spring (HRS) jumped $64/ton to $376/ton. SRW climbed $21/ton to $304/ton, and Soft White Wheat (SWW) is up $27/ton to $298/ton.
Trade Changes In 2010/2011
Selected Exporters--Australia is down 500,000 tons to 15.5 million based on logistical constraints.
--Canada is boosted 2.0 million tons to 17.5 million due to larger exportable supplies.
--EU is lowered 3.0 million tons to 21.0 million on reduced exportable supplies and quality concerns, particularly for German wheat.
--Iran is raised 450,000 tons to 500,000 due to greater exportable supplies and opportunities opened by reduced supplies in Russia.
--Kazakhstan is up 500,000 tons to 6.5 million on higher Russian import demand.
--Russia is raised 500,000 tons to 3.5 million based on exports shipped before the ban.
--United States is boosted 1.0 million tons to 34.0 million on strong demand, particularly for higher quality wheat.
Selected Importers--Nigeria is up 400,000 tons to 4.0 million due to expected consumption growth.
--Russia is raised 1.4 million tons to 2.0 million due to increased demand for milling wheat caused by drought-reduced production.
Trade Changes In 2009/2010
Large late-season adjustments reflect reported shipments
Selected Exporters--Canada is up 500,000 tons to 19.0 million.
--The United Arab Emirates is raised 450,000 tons to 950,000.
Selected Importers--Indonesia is down 450,000 tons to 5.4 million.
--Iran is up 600,000 tons to 3.6 million.
--Turkey is lowered 300,000 tons to 3.2 million.
Rice: World Markets And Trade
Despite weather problems in China and Pakistan, global crop prospects remain excellent. Record world production is expected to not only meet rising demand but also maintain global stocks at the highest level since 2004.
Though quotes from all origins are up somewhat from last month, Vietnam's increase is the most dramatic. With 2010 contracts already at a record 6.2 million tons, Vietnam raised the minimum export price of 5% broken to $450 per ton FOB, essentially halting new sales and, for the first time, pushing above higher-quality U.S. #2/4 quotes ($445 per ton FOB). Vietnamese quotes are now only $30 below Thai 100B quotes, a stark departure from the $120 spread just 2 months ago. As sales stall in Vietnam, Thai sales are expected to increase as the government finally releases intervention stocks. U.S. long-grain sales are also expected to pick up on newfound competitiveness and a record crop. By contrast, the medium-grain trade is somewhat on hold as the California crop has yet to be harvested. In addition, many tenders in major markets have yet to be announced.
Trade Changes For 2011
--Pakistan's exports are slashed 750,00 tons to 2.9 million as floods have reduced the crop and damaged infrastructure.
--Afghanistan's imports are reduced 100,000 tons to 200,000, as Pakistan is by far the largest supplier due to proximity and relative prices.
--Iran's imports are cut 300,000 tons to 1.2 million on the expectation that imports from Pakistan will fall.
Trade Changes For 2010
--Thailand's exports are 500,000 tons to 9.0 million because the government stock release is happening much later in the year than originally anticipated.
--Vietnam's exports are bumped 450,000 tons to a record 6.2 million on contracts to date. By contrast, imports are dropped 100,000 tons to 400,000 on a slowdown of border trade with Cambodia.
--Indonesia's imports are doubled to 500,000 tons as relatively high domestic prices have caused a surge in trade with neighboring countries.
--Iran's imports are dropped 150,000 tons to 1.2 million on the pace of shipments.
--Nigeria's imports are lowered 100,000 tons to 1.7 million on slower-than-expected imports from Thailand.
Coarse Grains: World Markets And Trade
Global corn imports are forecast up significantly on expectations of increased import demand from the EU and Russia. Although USDA forecasts a slight reduction in the U.S. crop this month, the United States still has supplies of corn to meet this higher demand.
Domestic--Through early September, U.S. corn export prices rallied over $30/ton to $221/ton, the highest level since late September 2008. The jump in prices is a result of continued concern over shrinking Russian grain supplies, disappointing early harvest results in the United States, and strong U.S. export sales to traditional markets such as Japan and Mexico.
Brazilian and Argentine quotes were also sharply higher on strong import demand from the Middle East, North Africa, parts of Southeast Asia, and prospects for the EU.
Trade Changes In 2010/2011
Selected Exporters--U.S. corn is boosted by 1.5 million tons to 53.5 million as a result of expanding global feed grain demand and will likely backfill in Asian and some North African countries, as Ukrainian and South American corn covers new demand from Russia and the EU.
--Brazilian corn is up 500,000 tons to 9.0 million on greater exportable supplies.
--Ukrainian corn is raised 500,000 tons to 5.5 million due to strong demand from Russia.
--Canadian barley jumps 400,000 tons to 1.4 million on larger old crop exportable supplies and greater new crop production.
--U.S. sorghum is raised 200,000 tons to 4.0 million because of prospects for EU demand.
--Canadian oat exports are lowered 200,000 tons to 1.3 million on sharply lower production, while imports for the United States are cut 200,000 tons to 1.4 million.
Selected Importers--Canadian corn is cut 300,000 tons to 2.2 million based on higher expected production.
--EU corn is up 2.0 million tons to 5.0 million with continued cuts in crop production. (Exports are also cut in half to 500,000 tons.)
--Japanese corn is cut 200,000 tons to 16.1 million (and the prior year is cut 300,000 tons) based on slackening feed grain demand arising from animal disease problems.
--Russian corn is up 700,000 tons to 1.0 million, the highest in over 15 years, in the face of tight feed grain supplies and strong domestic demand.
--Russian rye imports are tripled to 300,000 tons on expectations of imports from nearby countries, particularly Belarus.
Trade Changes In 2009/2010
Selected Exporters--Argentine corn is raised sharply by 1.5 million tons to 15.5 million because of near record March-August shipments.
--Argentine sorghum is boosted 200,000 tons to 1.4 million, the highest in well over a decade, and Australian sorghum is cut 200,000 tons; both are based on trade data.
--South African corn is cut 400,000 tons to 1.6 million because of slow exports, despite record supplies and stocks.
--Ukrainian corn is lowered 200,000 tons to 5.0 million because of slow late-season trade.
Selected Importers--Chinese, Egyptian, Indonesian, and Mexican corn are boosted a combined 1.2 million tons based on trade data.
September 10, 2010
Foreign Agricultural Service
USDA, Washington, D.C.
P.O. Box 520526
Independence, MO 64052-0526