World wheat trade for the international 2012/13 July-June trade year is projected higher this month by 2.7 million tons, to 138.8 million. China’s imports are projected 1.0 million tons higher to 2.5 million, reflecting strong pace of imports in the past month and recent purchases from various major exporters.

Wheat imports in the EU-27 are boosted 0.5 million tons, mainly on account of lower wheat availability in the United Kingdom, where there are reportedly shortages of milling-quality wheat. Egyptian imports are up 0.5 million tons to 9.5 million, as the Egyptian wheat-buying agency, the General Authority for Supply Commodities (GASC), continues extensive acquisitions of wheat, mainly from Russia and Ukraine.

Intensified and largely unexpected wheat purchases from Russia and Ukraine in recent months lead to higher projected imports in Israel, Kenya, and Mexico, up 0.2 million tons each. Imports are also adjusted up 0.1 million tons for Taiwan, Tanzania, Vietnam, and Armenia. Imports are trimmed for South Korea, down 0.2 million tons to 4.4 million, as wheat feeding contracts with relative prices increasingly favoring corn. Imports are also adjusted down 0.1 million tons for Algeria, reflecting higher wheat output.

Exports from Ukraine are projected up 2.0 million tons this month, reaching 6.0 million. The Government reportedly has recently increased the top limit in its so called “goodwill” agreement with wheat exporters, raising it to 5.5 million tons. Exporters, nervous and wary of the Government’s unpredictability, are attempting to export the maximum possible quantities of wheat, fearing still another change in export policy. So far through the first week of November, Ukraine has already exported 4.5 million tons of wheat.

Exports by Russia are projected up another 1.0 million tons to 10.0 million, reflecting winning tenders to Egyptian GASC and a generally rapid pace of exports, despite reportedly tight supplies.

In July-October, Russia had already exported about 8.2 million tons of wheat, while total grain exports surpassed 10 million tons. As already noted in our previous October publication, the pace of exports is expected to slow down and practically halt in the second part of the marketing year, as domestic wheat prices are on the rise, thereby reducing exports and likely opening the door to wheat imports.

Projected wheat exports are also raised further for India, up by 1.0 million tons to 6.0 million. Higher exports by India support the current fast pace of wheat imports mainly by South East Asia, but also by the Middle East and East Africa.

A share of the additional volume of wheat that the Indian government is pushing through the country’s public distribution system is expected to end up in the open market and be exported. Another 1.0-million-ton increase in wheat exports is for EU-27, with exports projected to reach 17.5 million tons. The EU-27 has been very competitive in the Middle East and North Africa, with French wheat being considerably cheaper than Russian. The high current volume of issued export licenses supports the increase. Pakistan exports are up 0.2 million tons to 1.0 million. The country’s wheat is competitive in the region, and with a higher estimate for 2012/13 wheat output, Pakistan is expected to export additional wheat.

Wheat exports are projected lower this month for Australia, down 1.5 million tons to 19.0 million, where wheat production is expected to be 2.0 million tons lower. Exports are slightly reduced for Moldova, down to almost zero, reflecting lower supplies.

U.S wheat exports for 2012/13 July-June are projected to decrease further by 1.0 million tons this month to 30.5 million, which is still 2.4 million larger than in the previous year. The pace of sales and commitments is slow, while domestic wheat prices have been trending up. Though it is expected that U.S. wheat exports are going to be back loaded this year, the existing data that already cover 5 months of the international July-June year (and 6 months of the local June-May year) show lower commitments than last year at this time.

Census wheat exports for July through September 2012 were only 7.1 million tons, down 8 percent compared to the previous year. According to Grain Inspections, October wheat exports remained behind the previous year’s pace by 22 percent, reaching just 1.5 million tons. As of November 1, outstanding export sales of wheat were 4.1 million tons, slightly lower than a year ago.

Consequently, U.S export commitments (July-August data from the U.S. Census Bureau, plus October inspections, plus November 1 outstanding sales) add up to 12.7 million tons, versus 13.8 million last year, an 8 percent decline. For the local 2012/13 June-May marketing year, U.S. exports are projected down 50 million bushels this month to 1,100 million.

Source: Wheat Outlook