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USDA Grains: World Markets and Trade


13 June 2013

USDA Grains: World Markets and Trade - June 2013USDA Grains: World Markets and Trade - June 2013

Global wheat production is expected to significantly recover from last year, with the Black Sea accounting for nearly 70 percent of that growth. Production is also projected higher in all traditional exporting countries, except the United States.
USDA Grains: World Markets and Trade Reports

Resurgent Global Wheat Production Not Sufficient to Rebuild Stocks

Global Production

Exporter Ending Stocks

Black Sea: Kazakhstan, Russia, and Ukraine.
Traditional: Argentina, Australia, Canada, EU, and the United States.

Contrary to expectations that the production rebound will result in higher stocks and lower prices, the world is not awash in wheat. Exporters’ ending stocks are expected to remain tight because of sharp draw-down in 2012/13 and this year’s higher domestic feed use. Major exporter supplies are typically available to world markets. However, in the past, some governments (e.g. Russia, Ukraine, and Argentina) have restricted exports, regardless of stock availability. India remains a wild card as an exporter because it still has substantial stocks of low-quality wheat and unpredictable policies.

Despite the abundant global crop and lower import demand, prices are expected to be firmer than they were 2 years ago, when production was at a similar level. Higher global consumption is expected to underpin prices.

Resurgent Global Wheat Production Not Sufficient to Rebuild Stocks

Global Production

Exporter Ending Stocks

Black Sea: Kazakhstan, Russia, and Ukraine.
Traditional: Argentina, Australia, Canada, EU, and the United States.

Contrary to expectations that the production rebound will result in higher stocks and lower prices, the world is not awash in wheat. Exporters’ ending stocks are expected to remain tight because of sharp draw-down in 2012/13 and this year’s higher domestic feed use. Major exporter supplies are typically available to world markets. However, in the past, some governments (e.g. Russia, Ukraine, and Argentina) have restricted exports, regardless of stock availability. India remains a wild card as an exporter because it still has substantial stocks of low-quality wheat and unpredictable policies.

Despite the abundant global crop and lower import demand, prices are expected to be firmer than they were 2 years ago, when production was at a similar level. Higher global consumption is expected to underpin prices.

Wheat: World Markets and Trade

Overview

Global production for 2013/14 is down and trade is up slightly. U.S. exports are raised 1 million tons as strong early-season sales combined with tight pre-harvest supplies in other exporting countries boost opportunities. The season-average U.S. farm price is up from last month because of projected tighter supplies and higher U.S. corn prices. For 2012/13, U.S. exports were lowered.

U.S. Weekly FOB Export Bids

Prices:

Domestic: Wheat prices for all classes were down over the past month. Hard Red Winter (HRW) dropped the most, $13/ton to $325, as the crop nears harvest. Despite tight supplies, Soft White Wheat (SWW) fell $11/ton to $299 reportedly over concerns about potential trade disruptions from the discovery of genetically engineered wheat in Oregon. Soft Red Winter (SRW) was $2/ton lower to $282, as harvest delays caused by cool temperatures and excessive rainfall in the Midwest support prices. Hard Red Spring (HRS) dropped $5/ton to $353.

Trade Changes in 2013/14

Selected Exporters

  • Canada is raised 500,000 tons to 19.0 million on increased competitiveness, particularly in the Middle East as a result of tightening Black Sea supplies.
  • EU is boosted 1.5 million tons to 18.5 million as a result of tightening Black Sea supplies.
  • Russia is cut 1.0 million tons to 17.0 million on expectations of a smaller crop.
  • Ukraine is lowered 1.5 million tons to 8.0 million on a smaller crop projection.
  • The United States is up 1.0 million tons to 26.5 million as large early-season sales boost expectations of strong shipments over the next few months.

Selected Importers

  • EU is cut 500,000 tons to 6.0 million due to lower projected imports of feed-quality wheat because of tighter Black Sea supplies.
  • Iran is doubled to 2.0 million tons as recent purchases of EU wheat indicate higher demand.

Trade Changes In 2012/13

Selected Exporters- based on trade data

  • Australia is up 1.5 million tons to 20.5 million.
  • Brazil is up 300,000 tons to 2.0 million.
  • Canada is up 300,000 tons to 18.8 million.
  • Russia is up 350,000 tons to 11.1 million.
  • EU is up 500,000 tons to 22.0 million.
  • India is cut 500,000 tons to 8.0 million.
  • United States is cut 700,000 tons to 27.3 millions.

Selected Importers

  • Egypt is raised 500,000 tons to 8.5 million as a result of larger-than-expected imports by the private sector.

Rice: World Markets and Trade

Overview

Record global production in 2013/14 is forecast to outpace consumption, leading to a build-up of stocks. Trade is adjusted lower for 2013 and 2014, on the basis of both reduced exports from Thailand and imports by Nigeria. U.S. production, consumption, stocks, and trade all remain lower for 2013/14, compared to 2012/13 levels.

Prices:

A year ago, U.S. and Thai export quotes approximated each other, while Indian and Vietnamese quotes followed each other at a much lower level. Recently, each tier of price quotes has diverged, resulting in four distinct price levels with an even larger spread. The U.S. quotes have risen on strong demand and diminishing supplies, while Thai quotes have fallen with expanding supplies. Indian quotes have strengthened, in part due to domestic policies, while Vietnamese quotes have declined on a large harvest and weaker demand from traditional markets.

Export Quote Spread Widens

Feature

Since India removed its ban on nonbasmati exports in late 2011, the pace of monthly shipments has remained at a high level of about 800,000 tons/month. India is expected to continue to be the largest exporter through 2013 and 2014. In contrast, Thai exports fell sharply and have remained lower. Both countries hold large stocks overhanging the market.

Indian Monthly Exports Pace Exceeds Thai Pace

The difference between U.S. and some Asian exporter quotes continues to widen over the past year, amid strengthened U.S. prices and weakening Vietnamese and Pakistani quotes. The spread of $200-$250/ton, which has not occurred since 2008, has prompted some traditional importers of U.S. rice to shift to lowerpriced suppliers.

Asian Rice Export Quotes Undercut U.S. Quotes

Selected Trade Changes

  • Angola’s imports are raised by 150,000 tons to 500,000 in 2013 and 525,000 in 2014 on the pace of shipments to this rapidly growing market.
  • Iran’s imports are lowered 150,000 tons to 1.6 million in 2012 on final trade data.
  • Nigeria’s imports are cut by 500,000 tons to 2.4 million in both 2013 and 2014 as high tariffs substantially curtail trade.
  • Thailand’s exports are down 500,000 tons to 7.5 million in 2013 and to 8.0 million in 2014 on uncompetitive prices and lower global import demand.

Coarse Grains: World Markets and Trade

Overview

World corn production in 2013/14 is down because of a smaller forecast U.S. crop. Global trade is slightly higher with greater exports from India, but U.S. exports are unchanged. The U.S. season-average farm price is raised slightly because of tighter supplies. For 2012/13, U.S. exports are lowered and the season-average farm price is boosted slightly, because of strong lateseason cash prices.

Prices:

Immediately after the release of the May WASDE report, U.S. corn quotes dropped over $10/ton. However, continued wet weather and concerns over delayed planting in the U.S. Corn Belt spurred prices higher, closing on June 7 nearly unchanged at $305/ton. South American quotes were also up; Brazil remains less competitive as Argentina’s harvest and export program advances. Meanwhile, Ukrainian quotes were up $15 to $290/ton, narrowing the gap with U.S. prices, as old-crop supplies tightened.

Corn Daily Export Bids

Trade Changes in 2013/14

Selected Exporters

  • Indian corn is up 500,000 tons to 3.5 million on expectations for continued weak domestic demand (2012/13 exports are raised 800,000 tons to 4.8 million).

Selected Importers

  • Indonesian corn is up 300,000 tons to 2.2 million on greater exportable supplies from India and indications of strong feed demand (2012/13 imports are boosted 200,000 tons to 1.9 million).

Trade Changes in 2012/13

Selected Exporters

  • U.S. corn is cut 1.0 million tons to 18.5 million on continued sluggish sales and shipments.
  • EU corn is up 500,000 tons to 1.5 million based on a surge in export licenses during April and May.
  • Russian corn is cut 300,000 tons to 2.0 million due to slowing shipments.
  • South African corn is raised 200,000 tons to 1.9 million on the pace of shipments and larger old-crop supplies.

Selected Importers

  • U.S. corn is up 800,000 tons to a record 3.8 million as the pace of shipments from South America is expected to continue until new-crop domestic supplies become available in the fall.
  • Japanese corn is down 500,000 tons to 14.5 million, the lowest in more than 25 years, due to high corn prices.
  • Mexican corn is cut 500,000 tons to 7.0 million on a sluggish import pace from the United States.
  • Turkish corn is boosted 600,000 tons to 1.3 million, the highest in a decade, on largerthan- expected imports (principally from Russia).

June 2013

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