World wheat trade slightly down, U.S. export prospects reduced

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World wheat trade in 2012/13 (international July-June trade year) is projected at 136.1 million tons, down just 0.5 million tons this month. Russia’s imports are projected higher by 0.5 million tons to 1.0 million tons as higher domestic prices following the historically tight domestic wheat supplies in Siberia are expected to encourage wheat imports from bordering Kazakhstan.

Algeria’s imports are boosted 0.3 million tons to 5.3 million because of reduced production. Imports for Mexico are trimmed 0.2 million tons to 4.0 million, with relative prices favoring sorghum over wheat. This is also a move toward more traditional proportions between wheat and sorghum in importing and feeding in Mexico.

It followed last year’s unusually low sorghum supplies in the United States that resulted in record-high wheat imports and the lowest (on par with only 2007/08) sorghum imports in 25 years. Projected wheat imports are also reduced in Kenya, Sudan, Tajikistan, Thailand, and Yemen. Kenyan imports (down 0.2 million tons) are expected to be limited by the tight supplies from the Black Sea. Sudanese and Tajikistan imports are trimmed 0.3 and 0.1 million tons, respectively, because of higher estimated beginning stocks, while in Thailand, import reduction (down 0.2 million tons) is a reflection of a shift away from wheat toward feeding of domestic broken rice.

There are also small (under 0.1 million tons) changes this month in imports for Angola, Belarus, Kyrgyzstan, Mauritania, New Zealand, Oman, and Papua.

This month’s changes in 2012/13 wheat export projections are largely offsetting. Exports by Russia are up 1.0 million tons to 9.0 million, reflecting a rapid pace of exports despite tight supplies. So far Russia has already exported about 8.0 million tons of grain, out of which more than 6.5 million is wheat. 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 even opening the door to wheat imports.

Wheat exports are also up 1.0 million tons to 6.0 million in India, supporting the current fast pace of wheat exports as the country regularly floats tenders to export wheat and has reportedly exported about 2.0 million in its local marketing year. Projected wheat exports are also boosted for Argentina, up 0.5 million tons to 7.3 million, reflecting increased competitiveness and a strong export pace. Mexican wheat exports are up 0.2 million tons to 0.8 million indicating higher demand for durum wheat in North African countries and recent reported sales.

Wheat exports are projected lower this month for three major wheat exporters, namely EU-27, Australia, and Canada. Lower supplies and higher domestic prices are projected to reduce wheat exports for the EU-27, down 1.0 million tons to 16.5 million. Because of a lower forecast wheat crop and aggressive Argentine exports, Canadian wheat exports are trimmed 0.5 million tons to 19.0 million. In Australia, where supplies are projected 3.0 million tons lower this month, local marketing year exports (October-September) are trimmed, down 3.0 million tons to 18.0 million, while international trade year exports (July-June) are reduced just 0.5 million tons to 20.5 million.

A sharp reduction in wheat exports by Australia is expected to happen around and after June 2013, as wheat prices later next year are expected to be much lower than now. Australia is expected to move its wheat before Northern Hemisphere countries begin their wheat harvest in July 2013. In the first three months of the international trade year (July-September), Australia has already exported around 7.0 million tons of wheat, which leaves just about 13.0 million tons for the country to ship during the remaining 9 months. Exports are also reduced for Uruguay, reflecting lower supplies.

The world wheat trade estimate for the international 2011/12 July-June year is further increased this month by 0.4 million tons, to a record 152.7 million. Revised information and final numbers from statistical agencies for July/June called for increased exports by India, up 0.4 million tons.

Trade year imports are also up for Afghanistan, Bangladesh, EU-27, and Sudan by 0.2 million tons each, and are down 0.1 million tons for both Sri Lanka and Yemen. Australian wheat exports for its 2011/12 October-September local marketing year are up 1.0 million tons, reflecting the high pace of reported shipments in July-September 2012. Local marketing year (December-November) exports are also up 0.6 million tons to 12.7 for Argentina, which is the highest on record. Small changes for a number of countries are mostly offsetting.

U.S wheat exports for 2012/13 July-June are projected to decrease 1.0 million tons this month to 31.5 million, which is still 3.5 million larger than in the previous year. Wheat exports have been off to a very slow start, though it is expected that U.S. wheat exports are going to be back-loaded this year. U.S. wheat exports are expected to increase as other countries drive down their stocks through domestic use or exports. Census export data for July-August 2011 show wheat grain exports at 4.56 million tons, which is lower than a year ago when wheat exports reached just 28.1 million tons for the year. Inspection and outstanding sales also lag behind.

Consequently, U.S export commitments (July-August data (Census Bureau), plus September inspections and September 27 outstanding sales) add up to 11.2 million tons, versus 12.2 million last year, a 7.5 percent decline. For the local 2011/12 June-May marketing year, U.S. exports are projected down 50 million bushels this month to 1,150 million.

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