World wheat use up despite higher prices
Despite reduced wheat production prospects, and sharply higher world wheat prices supported by higher corn prices, foreign wheat use for 2012/13 is projected up 2.6 million tons this month to 649.4 million (though this figure is 14.0 million tons lower than for 2011/12). Foreign feed use for 2012/13 is up 3.2 million tons this month, while food, seed, and industrial (FSI) use is down slightly, with sizeable adjustments in individual countries largely offsetting.
Tighter domestic corn supplies and higher projected corn prices for 2012/13 warrant some shift from corn to wheat feeding as feed-quality wheat becomes more price competitive relative to corn in several countries. Wheat feeding is boosted 1.0 million tons to 55.0 million in the EU-27, as its corn production is reduced by much more than wheat (by almost 4.0 million tons).
Prospects for EU wheat feed also appear more favorable as rain during the harvest in northern Europe could reduce wheat quality. Wheat is also projected to substitute for corn as feed in South Korea, Vietnam, and Israel, where wheat feeding is up 0.5, 0.5, and 0.3 million tons, respectively. A recovery in wheat supplies in Ukraine is expected to boost its wheat feeding by 1.0 million tons in 2012/13.
Wheat feeding is adjusted upward by smaller amounts this month in Thailand, India, and Philippines. Because of dwindling wheat supplies, Russian wheat feeding is adjusted down 0.5 million tons. Tiny adjustments in wheat feeding are made for Guatemala, Ecuador, Uruguay, and New Zealand.
The only important change in wheat food use this month is for India, up 1.3 million tons. In an attempt to contain its double-digit food inflation, and with another record harvest, the Indian Government is expected to unload additional amounts of grain from its stocks. Reductions in projected food, seed, and industrial use for Ukraine, EU-27, Morocco, Russia, and others more than offset the Indian increase, and are mostly a reflection of lower wheat supplies and higher prices.
Source: Wheat Outlook