With the changes in wheat beginning stock almost fully offsetting, foreign wheat supplies are up 7.5 million tons, while foreign wheat use in 2013/14 is projected to increase 6.9 million tons this month to a record 671.1 million. All the global increase in wheat use is from foreign disappearance, as U.S. domestic wheat use is unchanged.
The largest increase is in wheat food, seed, and industrial use for India, up 2.0 million tons to 87.5 million. In order to at least partly relieve its bulging wheat stocks (currently at twice the required level), and dampen the high growth in domestic wheat prices, the Government of India has recently allocated a total of 9.5 million tons of wheat — 8.5 million tons to bulk consumers, and 1.0 million tons to small private traders — out of wheat stocks in Punjab and Haryana.
Another development in India that is expected to increase its food consumption (of both wheat and rice) is that the long-awaited overhaul of the Public Distribution System (PDS), a policy intended to support the hungry (nearly a quarter of the country’s 1.2 billion population), finally has a chance to materialize.
In July 2013, the cabinet cleared the National Food Security Bill (NFSB), which is expected to be passed into law during the current August session of the Parliament. The food security bill is expected to restructure the PDS, which is acknowledged as being inefficient, leakage prone, and corrupt.
Wheat food use is also projected slightly up in Iran, Turkey, and several more countries.
The largest increases in wheat feed use are projected for China, EU, and Syria. China is expected to feed 1.0 million tons more wheat with some of it coming from the abundant but lower quality harvest. A substantial amount of this wheat is below the government quality requirements for storage.
State reserves being rotated out of storage because of low quality or damage are also expected to boost wheat feeding.
At the same time, China is expected to boost imports of high-quality wheat for both milling purposes (mixing with low-quality wheat), and to replace the sub-par wheat in its state reserves. Some wheat imported into southern China may move directly into feed channels.
With more projected wheat output of marginal quality (because of generally wet growing conditions), the EU is expected to feed another 0.7 million tons, reaching 53.2 million of feed use (about the average of recent years).
In Syria, wheat feeding is projected to double, up 0.5 million tons to 1.0 million. Because of the political conflict, the Government is reportedly not capable of procuring its usual share of the harvest, as the large wheat-producing areas in the north are under the insurgents’ control.
Because of a record in both wheat production and yields, though of low quality, residual use is projected to increase year to year, while farmers in the northern part of the country are expected to use more of their wheat on farms as animal feed.
To counterbalance the shortage of wheat in the government-controlled part of the country, and to be able to feed the population, the regime is regularly issuing official tenders and buying larger than expected quantities of wheat.
Feed use is also expected to be higher in Moldova and Kazakhstan (up 0.3 and 0.2 million tons) because of higher production; in Morocco (up 0.2 million tons) because of higher beginning stocks; and by less than 0.1 million tons in a number of countries. Wheat feed use is projected lower in Thailand, Vietnam, and Jamaica because of lower expected wheat imports.
World wheat ending stocks for 2013/14 are up 0.6 million tons this month to 173.0 million, as projected increases in production are marginally larger than this month’s growth in expected use. The increase in foreign stocks is larger, up 1.3 million tons to 158.0 million, as U.S. wheat stocks are down 0.7 million tons.
Projected global stocks are down only 1 percent from last year, and almost 27 million tons lower than in 2011/12. The largest increase this month in ending stocks is for Iran, up 1.3 million tons to a record of 7.4 million.
The country appears to continue to amass record-level wheat reserves, a trend that started about a year ago, and is related to the sanctions and other reactions of Western countries to Iran’s nuclear program.
Ending stocks are also projected up 0.8 million tons for Pakistan, with its reported substantial purchases of wheat mostly from the Black Sea countries.
Partly offsetting is a decline in EU wheat ending stocks, down 0.7 million tons to 11.0 million. Despite a hefty increase in production, lower expected imports and higher exports pull the stocks down. There are small (under 0.3 million tons) changes in projected ending stocks this month for a number of countries.
Source: Wheat Outlook