Market Reports Featured Articles
Grain: World Markets and Trade
Abundant export crops of wheat have been putting pressure on prices and have forced US export prices for corn down, according to the USDA Foreign Agricultural Service.
Wheat Prices Respond to Major Exporter Stock Rebuilding
Since the price spike in March, prices have fallen dramatically due to strong production in the northern hemisphere. Furthermore, with larger estimated crops in major exporting countries (Canada, the European Union, the United States, and Australia), their ending stocks are forecast to rebuild by about 40 percent. However, at 39 million tons, they are still forecast at 12 million tons below the 25-year average level. Historically, global wheat prices have shown a strong inverse correlation to ending stocks held by these 4 major exporting countries, since much of their stocks are normally available for export to the world. In recent weeks, prices leveled off well above the 5-year average price of $209/ton in part due to sustained strong global demand and uncertainties over crops in the southern hemisphere (Argentina and Australia).
WHEAT: WORLD MARKETS AND TRADE
Larger Exportable Supplies of Lower Quality Wheat Stimulates Stronger Feed Use and Import Demand
Abundant exportable supplies of lower-quality wheat, particularly in the EU, Ukraine, and Russia, are pressuring prices, leading to a projected 31 percent growth in the global use of wheat in feed rations. The EU is the world’s largest wheat-based feed economy and with a sharply higher wheat crop, its expected use of feed-quality wheat in animal feed rations is estimated to jump 25 percent (up 13 MMT) this year, replacing imported corn and sorghum. In addition to meeting domestic needs, the EU’s exportable surplus is expected to be substantially higher than in recent years. Russia and Ukraine also have larger crop prospects, and are expected to consume more feed-quality wheat while expanding exports.
Import demand for feed-quality wheat is expected to climb as well. Countries that have the flexibility to change their feed rations will likely shift to include more feed quality wheat. Korea and Israel, for example, are expected to raise their demand for feed-quality wheat and reduce their imports of higher-priced corn.
PRICES:
Domestic: During the month of August, prices for Hard Red Spring (HRS) fell $34 to $364/ton, Soft Red Winter (SRW) prices dropped $15 to $236/ton, but Hard Red Winter (HRW) increased $4 to $337/ton, and Soft White (SWW) increased $6 to $328/ton.
TRADE CHANGES IN 2008/2009
Selected Exporters
- EU exports are up 2.5 million tons to 18.0 million due to larger exportable supplies.
- Ukraine and Russia are both raised 500,000 tons to records of 9.0 and 14.0 million, respectively, based on larger crop prospects and increased world import demand for feed quality wheat.
- Canada is up 500,000 tons to 17.5 million as the larger crop increases exportable supplies.
- Argentina is down 1.0 million tons to 7.5 million due to lower crop prospects.
- Australia is reduced 1.0 million tons to 14.0 million due to reduced crop prospects.
- Kazakhstan is reduced 600,000 tons to 5.4 million due to a smaller crop.
Selected Importers
- South Korea and Philippines are both up 500,000 tons to 4.6 and 2.8 million, respectively, based on stronger expected demand for wheat to replace corn in feed rations.
- Israel is up 400,000 tons to 1.9 million as expected demand for wheat to replace corn in feed rations.
TRADE CHANGES IN 2007/2008
Selected Exporters
- EU is up 1.0 million tons to 12 million due to larger-than-expected late-season shipments.
- Kazakhstan is lowered 1.5 million tons to 7.0 million based on lower shipments primarily due to its export ban.
- Syria is reduced 300,000 tons to 500,000 due to drought-related supply concerns.
Selected Importers
- Algeria is up 300,000 tons to 5.5 million on larger-than-expected late-season shipments.
- EU is up 500,000 tons to 7.0 million on higher-than-expected late-season imports.
- Russia is slashed 560,000 tons to 440,000 on reduced import needs.
COARSE GRAINS: WORLD MARKETS AND TRADE
PRICES:
Domestic: U.S. corn export prices averaged $238 per ton in August, down $34 from July on less demand for imported corn (particularly from the EU), abundant supplies of feed quality wheat and corn in Russia, Ukraine, and Europe, and the strength of the dollar. Sorghum prices averaged $230 per ton, in August, down $30 from July, due to less demand from the EU and lower corn prices.
TRADE CHANGES IN 2008/09
Selected Exporters
- Argentina corn is cut 3.0 million tons to 12.0 million because of reduced production prospects as relative profitability prospects drive acreage to soybeans.
- Ukraine corn is cut 500,000 tons to 3.0 million, still a record, because of a smaller crop.
- Australia barley is down 500,000 tons to 3.5 million due to a cut in production.
- Russia and Ukraine barley are up 400,000 and 500,000 tons to 2.5 million and 5.5 million, respectively, because of larger exportable supplies.
- Argentina sorghum is down 500,000 tons to 800,000 based on expected lower demand from the EU, due to higher grain production including an abundant supply of feed quality wheat.
Selected Importers
- EU corn is cut by 1.0 million tons to 3.0 million because of huge domestic supplies of grains.
- Mexico corn is lowered by 1.0 million tons to 9.5 million in light of forecast record production.
- South Korea corn is cut again this month by 500,000 tons to 7.7 million, the lowest in a decade, as feed quality wheat makes inroads against corn.
- Israel corn is reduced 300,000 tons to 1.0 million, the lowest in 6 years.
- EU sorghum is down 500,000 tons to 1.0 million based on lower expected demand and abundant supplies of grains.
TRADE CHANGES IN 2007/08
Selected Exporters
- Australia barley is raised 500,000 tons to 3.5 million with greater-than-expected shipments to Saudi Arabia.
- Kazakhstan barley is cut in half to 600,000 based on stronger competition from Russia and Ukraine.
- Russia and Ukraine barley are up 300,000 and 1.9 million tons to 1.3 million and 3.9 million, respectively, based on unexpectedly strong late-season shipments to North Africa and the Middle East.
Selected Importers
- Iran and Saudi Arabia barley are up 500,000 and 1.0 million tons to 1.0 million and 7.5 million, respectively, based on late-season import demand.
Further Reading
 |
- | You can view the full report by clicking here. |
October 2008
