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USDA Grains: World Markets and Trade


13 September 2012

USDA Grains: World Markets and Trade - September 2012USDA Grains: World Markets and Trade - September 2012


USDA Grains: World Markets and Trade Reports

Exporter Wheat Ending Stocks Tighten

Global wheat trade is down 11 percent as a result of tightening supplies and higher prices. However, U.S. exports are up. Supplies in most major exporting countries are tightening, with stocks expected to be down 15 million tons from last year. U.S. supplies are up from last year and ending stocks, although down slightly, and are expected to represent a larger share of exporter stocks.

Black Sea countries’ exportable supplies have tightened dramatically as a result of production related shortfalls and export constraints in Ukraine. Consequently, Black Sea exports are expected to be half of last year’s total with market share dropping from 25 percent to only 14 percent. Russia and Ukraine play a significant role in supplying North Africa and the Middle East with competitively priced milling wheat. Reduced exports from Ukraine will also lower EU imports of feed-quality wheat. As Black Sea supplies dwindle, importers are already turning to higher-priced suppliers.

In an unusual development, India is providing needed supplies to global markets. India can now effectively compete as a result of tight global supplies and rising prices. India is expected to export 5 million tons this year, the most in 9 years. This could be the tip of the iceberg as the country is currently saddled with a huge surplus and inadequate storage facilities.

Wheat: World Markets and Trade

Overview

Global wheat production for 2012/13 is lowered as cuts in Russia, Kazakhstan, and the EU are slightly offset by an increase in Ukraine. Ukraine’s exports are cut 2 million tons as a result of an agreement between the government and exporters to limit shipments. Global trade is nearly unchanged. U.S. exports are unchanged as supplies remain uncompetitive at current prices. The season-average U.S. farm price is projected slightly lower as heavy early-season marketings outweigh future strong prices.

Feature

Wheat Prices Again Reflect Milling Value, Global Wheat Trade Drops with Less Wheat Feeding

Gulf Soft Red Winter (SRW) wheat and corn prices (as a proxy for global prices) have reverted back to the normal milling value relationship, after being inverted for nearly a year. Last year, Australia had a record crop with an unusually large proportion of feed-quality wheat available for export that helped mitigate tight supplies of corn in Asian markets.

In the absence of large Australian supplies of feed-quality wheat and tightening supplies in Black Sea countries, world wheat trade is expected to be driven increasingly by food demand for wheat.

Prices

US Weekly FOB Export Bids

Domestic: Prices of all wheat classes rose in August with Soft White Winter (SWW) posting the largest gain, up $19 to $355 per ton. SWW briefly dipped below corn spurring a surge in exports. Strong corn prices combined with tightening Black Sea supplies are supporting wheat prices. Hard Red Winter (HRW) nudged up $5 to $371 per ton. Soft Red Winter (SRW) advanced $9 to $349 per ton. Hard Red Spring (HRS) rose $6 to $390 per ton.

Trade Changes in 2012/13

Selected Exporters

  • Argentina is up 300,000 tons to 6.8 million on stronger-than-expected shipments in July and August.
  • Brazil is raised 500,000 tons to 1.5 million as higher world prices will pull domestic wheat into export channels.
  • EU is up 500,000 tons to 17.5 million as tightening supplies in the Black Sea make exports more competitive.
  • Turkey is raised 300,000 tons to 3.5 million due to increased exportable supplies allowing shipments of flour and products to resume at normal levels.
  • Ukraine is slashed 2.0 million tons to 4.0 million due to an agreement between government and exporters which limits trade.
  • United Arab Emirates is doubled to 600,000 tons owing to Iran’s higher import demand.

Selected Importers

  • China is lowered 500,000 tons to 1.5 million as higher wheat prices reduce the incentive to import.
  • Egypt is cut 500,000 tons to 9.0 million because the high volume of imports at the close of 2011/12 boosted available supplies in the new year.
  • EU is reduced 500,000 tons to 5.5 million as a result of the reduced availability of feedquality wheat supplies in Ukraine.
  • Iran is doubled to 2.0 million tons because of higher-than-expected purchases to date.
  • Russia is up 300,000 tons to 500,000 on expected imports from Kazakhstan.
  • Turkey is boosted 500,000 tons to 4.0 million as a result of the government’s temporary elimination of the import duty on 1.0 million tons through 2014.

Rice: World Markets and Trade

Overview

Global consumption in 2012/13 is forecast to outpace production, but stocks will remain the second highest in a decade, and trade is virtually the same as the previous year. U.S. production is projected to rebound, and, although exports are down year-to-year, they are up from the previous month.

Feature

Thai Rice Exports Plummet in First Half of 2012

Much has been made about Thailand’s intervention program and India’s re-entry into the rice market. Yet these are not the only factors causing Thailand to slump to the third-largest exporter, after 3 decades at the top. Changes in import demand in Thailand’s top five markets are causing the country’s exports to tumble. Larger production in Bangladesh and Indonesia reduced import demand this year, accounting for over a third of the Thai drop. Iran’s imports from Thailand in 2011 were an anomaly, and the country has returned to purchasing most of its rice from India and Pakistan. Overall shipments to Iraq are down, but it is not yet clear where the country will source its remaining import needs. Surprisingly, exports to Nigeria are up, largely driven by traders importing before the imposition of a higher duty in July, and this pace is unlikely to continue.

Trade Changes

Selected Exporters

  • Brazil is up 100,000 tons to 1.1 million in 2012 on the pace of shipments and up 200,000 tons to 800,000 in 2013 as traders try to maintain markets despite tight supplies.
  • Burma is cut 150,000 tons to 600,000 in 2013 on a smaller crop.
  • United States is boosted 250,000 tons to 3.4 million in 2013 on larger supplies.

Selected Importers

  • Indonesia is bumped up 250,000 tons to 1.5 million in 2012 on reports of BULOG purchases.
  • EU is down 100,000 tons to 1.3 million in 2012 and down 150,000 tons to 1.4 million in 2013 as purchases are likely to remain slower than originally expected.
  • China is reduced 200,000 tons to 1.3 million in 2013 as excellent conditions push the crop to a new record.

Coarse Grains: World Markets and Trade

Overview

Global corn trade for 2012/13 is unchanged, despite tighter exportable supplies in the EU and Serbia. U.S. corn exports are unchanged while production is slightly lower. The season-average farm price is projected lower from last month, though at a record. Although U.S. exports are lowered for 2011/12, global trade is boosted nearly 2 million tons on strong shipments from South America.

Prices

U.S. corn export quotes initially declined following the release of USDA’s August report, but rallied late in the month on disappointing yield reports. However, quotes subsequently dropped over $14 from their peak to $329 per ton on weak export sales and shipments. Interestingly, prices have shed $25 per ton since peaks around July 20, likely due to a combination of slack demand, less uncertainty as the season progresses, and confirmation of strong old-crop South American shipments.

South American quotes have moved in tandem with U.S. corn but remain at a large discount.

Corn Daily Export Bids

Trade Changes in 2012/13

Selected Exporters

  • Brazilian corn is raised 1.5 million tons to a new record 14.5 million based on indications that record shipments in August portend huge shipments into the new Oct/Sep trade year.
  • EU corn is halved to 500,000 tons on tight feed grain supplies as production is cut again, this month by 4.4 million tons.
  • Serbian corn is slashed by 900,000 tons to 400,000 because of continued dryness; since July, exports have been cut more than 75 percent. (Exports for 2011/12 are raised 300,000 tons to a record 2.1 million based on trade data.)
  • Canadian barley is boosted 500,000 tons to 1.7 million based on a larger-than-expected crop and strong global demand.
  • Russian barley is cut 500,000 tons to 1.5 million because of a smaller crop and tight domestic grain supplies. Ukrainian is boosted 500,000 tons to 2.5 million.

Selected Importers

  • Egyptian corn is raised 300,000 tons to 5.5 million based on continued strong demand. (Imports for 2011/12 are boosted sharply by 1.0 million tons to 6.5 million).
  • Chinese barley is raised 300,000 tons to a record 2.5 million on robust demand for malting barley. (Imports for 2011/12 are up 200,000 tons to 2.4 million.)

Trade Changes in 2011/12

Selected Exporters

  • U.S. corn is cut 500,000 tons to 38.5 million as sales and shipments continue at historic lows.
  • South American corn is up a combined 1.9 million tons (Argentina 500,000 tons, Brazil 1.0 million, Paraguay 400,000) as exports from the region accelerate with high prices and abundant old-crop supplies.
  • Argentine and Australian barley are raised 200,000 tons each based on trade data.
  • EU barley exports are boosted sharply by 1.0 million tons to 3.4 million based on the pace of new-crop (July onwards) licenses.
  • Russian barley is raised 200,000 tons to 3.4 million; Ukrainian is cut 300,000 tons to 2.0 million. Both changes are based on recent trade data.
  • U.S. sorghum is up 200,000 tons to 1.6 million because of late-season shipments to Mexico as new-crop supplies have become available.

Selected Importers

  • Chinese corn is raised 300,000 tons to 5.3 million based on trade data.
  • Saudi barley is raised 500,000 tons to 8.0 million with reports of strong shipments from the EU and Russia.
  • Colombian sorghum is boosted 250,000 tons to a record 550,000 because of a surge in shipments from Argentina.

September 2012

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