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USDA Grains: World Markets and Trade


09 April 2014

USDA Grains: World Markets and Trade - 9 April 2014USDA Grains: World Markets and Trade - 9 April 2014


USDA Grains: World Markets and Trade Reports

Global wheat trade is estimated at a record in 2013/14, surging over 50 percent in just 10 years. This trend has been driven primarily by countries in the Middle East, North Africa, and Sub-Saharan Africa. Expanding populations, rising incomes, changing tastes, and government policies have contributed to rising demand in these countries. Imports have filled the gap between rapidly growing consumption and mostly stagnant production.

The Middle East is the largest driver of growth. For example, Iran’s initiative to become self-sufficient has not materialized as imports have soared in recent years. Another example is Saudi Arabia, which has become a major importer as they phase out production.

In North Africa, governments primarily control the markets in order to be able to supply subsidized, low-cost bread to the public. Bread is considered a staple in these countries and the governments actively work to keep prices very low.

Sub-Saharan Africa, as a whole, has a rapidly growing population and increasing demand for wheat in diets. Production is marginal and imports have provided consumers in these countries with alternative food sources. Nigeria is a significant source of growth, but smaller countries combined are also playing a major role.

WHEAT: WORLD MARKETS AND TRADE

OVERVIEW

Global production is nearly unchanged. Trade is down slightly, mostly due to reduced import demand from China. Exports are lowered in Australia, Canada, India, and Ukraine and raised in Kazakhstan. U.S. exports and the season-average farm price are unchanged.

PRICES: Domestic: All classes are up this month, but prices have subsided from the peaks reached a few weeks ago. Prices rallied early in the month based on political uncertainty in Ukraine, as well as concerns about dryness in the U.S. Plains. Prices then receded based on higher-than-expected March 1 U.S. stocks and increased area in Kansas as reported in the March 31 Prospective Plantings report. Hard Red Winter (HRW) settled $24 higher at $330/ton after peaking at $348. Hard Red Spring is up $15 at $357/ton after soaring to $376 earlier in the month. Soft Red Winter (SRW) is up $21 at $287/ton. Soft White Wheat (SWW) is $6 higher at $289/ton.

TRADE CHANGES IN 2013/14

Selected Exporters

• Australia is down 500,000 tons to 18.0 million on smaller-than-anticipated sales to China.

• Brazil is cut 300,000 tons to 200,000 based on a slow pace of exports of feed-quality wheat.

• Canada is lowered 500,000 tons to 22.0 million as record crops continue to bog down the logistical system.

• India is reduced 500,000 tons to 5.0 million as a result of slow sales of government-held stocks.

• Kazakhstan is raised 500,000 tons to 7.5 million on larger-than-expected rail shipments to Russia.

• Ukraine is cut 500,000 tons to 9.5 million on account of the slow shipment pace and the focus on shipping corn.

Selected Importers

• Bangladesh is lowered 300,000 tons to 3.0 million due to slowing purchases from India.

• China is slashed 1.5 million tons to 7.0 million as purchases are less than expected.

• United States is raised 200,000 tons to 4.7 million, a record, as shipments from Canada are expected to pick up through the end of the trade year.

RICE: WORLD MARKETS AND TRADE

OVERVIEW

Global production and consumption for 2013/14 are projected up from last month’s record levels on larger crops in Brazil, Sub-Saharan Africa, Pakistan, and Vietnam. Trade is virtually unchanged as lower shipments by Vietnam are offset by Thailand and Pakistan. U.S. exports are down slightly.

FEATURE

The quantity of rice traded globally has grown 50 percent in the past decade largely due to rising demand in Sub-Saharan Africa and Asia. Imports by the rest of the world rose by one-third in the past 10 years while shipments to Africa and Asia rose by two-thirds each. Population growth in both regions is boosting demand, but changing preferences are causing sales to Africa to trend upward, as well. At the country-level, however, demand is less predictable. Four different countries have been the top importer in the last decade. Production levels, agricultural policies, and relative prices can radically impact import demand in a given year. In 2014, for example, China is expected to be the number one importer, up from number eighteen 3 years ago.

TRADE CHANGES

Selected Exporters

• Vietnam is cut 1.0 million tons to 6.5 million in 2014 on competition from Thailand, India, and Pakistan while imports are doubled to 200,000 tons on trade with Cambodia.

• Thailand is boosted 500,000 tons to 9.0 million in 2014 on competitive prices as the government attempts to sell stocks to pay farmers.

• Pakistan is up 100,000 tons to 3.6 million in 2013 on trade data but raised 500,000 tons to 3.9 million in 2014 on a larger crop.

• United States is lowered 100,000 tons to 3.3 million in 2014 on the pace of shipments.

Selected Importers

• Philippines is up 600,000 tons to 2.0 million in 2014 as the government tries to boost reserves.

• China is raised 300,000 tons to a record 3.5 million in 2013 on trade data but lowered 200,000 tons to 3.2 million in 2014 on larger domestic supplies.

• Bangladesh is boosted 200,000 tons to 500,000 in 2014 as India’s prices are more competitive.

• Sierra Leone is lowered 125,000 tons to 200,000 in 2014 on a larger crop while South Africa is raised the same amount to 1.1 million as rice is currently cheaper than alternative cereals.

• Benin is bumped up 100,000 tons to 350,000 in 2013 and 2014 on the expectation that the strong pace of shipments will continue.

• Madagascar is up 100,000 tons to a record 500,000 in 2014 on a much smaller crop.

• Nigeria is dropped 200,000 tons to 2.4 million in 2013, and Senegal is down 150,000 tons to 1.0 million on shipment data.

COARSE GRAINS: WORLD MARKETS AND TRADE

OVERVIEW World corn production is raised for key exporters including Brazil, South Africa, and Russia. Global trade is up on higher demand from the European Union, Algeria, Iran, and Egypt. The U.S. export estimate is boosted significantly. The season-average farm price is up slightly.

PRICES

Since the release of the March WASDE report, U.S. corn quotes have largely hovered around the monthly average of $230/ton and remain at a small premium to Argentine quotes. Improving navigation conditions for barge traffic, uncertain global feed demand (livestock disease issues), and looming South American competition have pressured export quotes. Meanwhile, domestic and futures prices have been trending higher. U.S. corn is $15-20/ton below Ukrainian where uncertainty over spring plantings and the political situation keep prices firm. Brazilian corn is not currently quoted for nearby shipment months.

TRADE CHANGES IN 2013/14

Selected Exporters

• U.S. corn is raised by 3.0 million tons to 45.0 million on continued strong sales and seasonally limited competition from Argentina and Brazil.

• Argentine corn is cut 1.0 million tons to 12.0 million on slow new-crop sales and shipments. Sorghum is slashed 500,000 tons to 1.5 million because of a smaller crop.

• Mexican corn is up 200,000 tons to 500,000 and South African corn is boosted 300,000 tons to 2.0 million because of larger crops.

• Russian corn is raised 200,000 tons to 3.2 million and Ukrainian corn is up 500,000 tons to 19.0 million based on larger-than-expected shipments.

• Australian barley is raised 200,000 tons to 5.7 million based on the continuing fast pace of shipments.

• Canadian barley is reduced by 400,000 tons to 1.5 million. Although shipments to date are similar to recent years, logistical constraints are limiting trade.

• United States sorghum is up 700,000 tons to 4.7 million, the highest in 6 years, on less competition with Argentina and continued strong sales to China. Chinese imports are boosted 400,000 tons to 3.4 million.

Selected Importers

• Algerian, Egyptian, and Iranian corn are up a combined 1.2 million tons on hefty early-season imports.

• EU corn is raised 1.0 million tons to 12.0 million on the continued strong pace of import licenses.

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