World wheat trade up, U.S. exports down
World wheat trade for the international July-June 2012/13 trade year is projected up 1.6 million tons to 141.8 million this month, driven by stronger demand for imported wheat in Iran and a number of other countries throughout the world.
The Iranian Government is continuing to build up its reserve wheat stocks in the midst of an intricate political situation. The wheat import projection for Iran is raised this month by 1.0 million tons to 4.0 million, reflecting the strong pace of deliveries from the EU-27 –Lithuania– and Australia.
The dynamics of relative prices for wheat and corn accelerated wheat (while cutting corn) imports in Korea, up 0.5 million tons to 5.5 million. Algeria and Yemen have been recently purchasing wheat at a faster pace than expected earlier, especially from the EU-27 (France), and their 2012/13 imports are projected up 0.3 million tons this month each, to 5.5 and 2.9 million, respectively.
Japanese, Chinese, and Chilean wheat imports are up 0.2 million tons each due to the pace of pur chases, and are expected to reach 6.1, 3.2, and 1.0 million tons, respectively. Jap an has recently made unusual purchases of SRW wheat from the U.S. that is likely to be used for feeding.
There are small increases this month in projected imports by Canada, Ecuador, Tanzania, and Togo. Import prospects for 2012/13 are reduced this month for Egypt and Kenya.
The projection for Egyptian imports is reduced by 1.0 million tons this month to 8.5 million. For a number of reasons the country has trouble in securing sufficient wheat import supplies.
Political instability led to depreciation of the country’s currency and a sharp reduction in currency reser ves. This in turn puts strain on the state budget and affects the ability of the country’s state grain buyer—the General Authority for Supply Commodities (GASC)—to regularly import sufficient quantities of wheat using the customary wh eat tenders.
In order to maintain an adequate food consumption level to avoid possible unrest, Egypt is increasing the procurement price for local wheat and is subsidizing its flour production. The Government’s hope is to get additional wheat from farmers. This, however, would drive down stocks, and thereby be at odds with the traditional policy of maintaining high wheat reserves.
Kenyan wheat imports are also reduced 0.2 million tons to 1.0 million, mainly because of the dwindling wheat supplies from Russia and Ukraine. Based on the recent pace of exports and continued price competitiveness enhanced by weak exchange rates, exports are in creased this month for the EU-27. Based on the volume of export licenses, EU-27 exports are projected up 1.0 million tons to 19.5 million, almost 20 percent higher than a year ago when EU-27 wheat output was 5.0 million tons larger.
This year, lack of competition from Russia and Ukraine allowed European (and especially eastern European) wheat exporters to expand their deliveries to the traditional Russian and Ukrainian importers of North Africa and the Middle East. This wheat export e xpansion by the EU-27 is being matched by high corn imports, the largest in 10 years. Brazilian wheat exports are projected up 0. 5 million tons this month to 1.7 million tons. Since eliminating tariff rate quotas for wheat exports through July 2013, Brazil has been exporting feed-quality wheat at a higher-than-expected pace.
Ukraine’s export prospects are up 0.3 million tons this month to 6.5 million. Based on the pace of shipments in recent months, exports are projected higher this month also for Croatia, Iran (a particular sale of wheat to Syria), Morocco, and Serbia. Faced with increased competition from EU- 27 and India, and a relatively strong currency, U.S. wheat exports are reduced 0.5 million tons to 28.5 million for the international July-June trade year, which is still 0.4 million tons higher than last year’s exports.
Despite improved shipments, outstanding wheat sales are currently on par with last year.
As we enter the last quarter of the marketing year, and approach the last quarter of the trade year, it becomes in creasingly difficult to sustain the pace of shipments necessary to meet last month’s U.S. export projection. From July 2012 through January 2013, the U.S. Census Bureau reported that exports of wheat reached 13.6 million tons, down from 15.2 a year earlier.
However, grain inspections for February 2013 were 2.5 million tons, up 33 percent compared with a year ago. Outstanding export sales as of February 28, 2013 are at 5.4 million tons, almost the same as last year at this time. For the June-May 2012/13 local marketing year, U.S. wheat exports are projected down 25 million bushels to 1,025 million.
Source: Wheat Outlook