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OVERVIEW

For 2017/18, global production is up this month slightly as larger crops are expected for Russia and the European Union. Global trade is forecast up slightly from last month and remains a record. Imports are forecast down for Jordan, India, and Vietnam, but higher for Iraq, Brazil, Ethiopia, and Mexico. Exports are projected up for Russia and the United States which more than offset a reduction in Australia. The U.S. season-average farm price is unchanged at $4.60 per bushel.

US PRICES

Overall, wheat prices for most classes were down slightly during the month of October on weak sales activity and advancing winter wheat planting progress. Concerns about Mexico purchasing wheat from Argentina also contributed to lower prices. Hard Red Winter (HRW) was down $4/ton to $214 and Soft Red Winter (SRW) fell $9/ton to $187 due to rain in growing regions. Hard Red Spring (HRS) declined $2/ton to $278 due to the larger-than-expected U.S. spring wheat crop. Soft Winter White (SWW) remained unchanged at $206/ton.

Sub-Saharan Africa’s Wheat Consumption Outpacing Production; Pushes Imports Higher

Demand for wheat in Sub-Saharan Africa (SSA) has expanded dramatically in recent years. In addition to rapid population growth, per capita consumption is also trending higher, driven by urbanization, changing tastes, and rising incomes. In countries such as Nigeria and Ethiopia, wheat consumption is rising as consumers switch from local staples such as cassava, millet, and teff.

Production, on the other hand, has grown but continues to fall short of consumption. The climate in most SSA countries is too warm for wheat, making it a very minor crop on the continent. Among them, Ethiopia is the most self-sufficient, typically producing about 80 percent of the wheat it consumes. Ethiopia produces more than half of the region’s total wheat production, with South Africa, Kenya, and Sudan accounting for most of the remainder.

Many countries in the region have increasingly relied on imports to fulfill growing demand. Total imports for the region have expanded by about 50 percent in 7 years. Most of the SSA wheat trade is in the form of grain, but imports of flour and products have also picked up, now accounting for nearly 20 percent of the region’s imports. Turkey’s flour exports to SSA have quadrupled in 6 years with the largest regional markets being Sudan and Angola. SSA’s share of global wheat imports stands at over 10 percent now, a portion that seems likely to expand if growth in wheat demand continues at the same pace.

At the same time, the share of imports coming from the United States has dropped from roughly a third down to just over 10 percent. This shift is most evident in Nigeria, where the United States lost market share to lower-priced Russian and EU wheat amid economic challenges in the country. Similarly, U.S. exports to South Africa have also trended lower in the face of rising competition. Notably, some of the U.S. exports to the region, particularly to Ethiopia, come in the form of food aid. Hard Red Winter comprises the majority of U.S. exports to the region.

TRADE CHANGES IN 2017/18

Selected Importers

  • Brazil is lifted 200,000 tons to 7.5 million based on a smaller crop and lower quality.
  • Ethiopia is raised 200,000 tons to 1.4 million due to large recent tenders.
  • India is lowered 500,000 tons to 3.0 million based on the government raising the import duty to 20 percent in an attempt to support domestic wheat prices.
  • Iraq is up 600,000 tons to 3.5 million based on large purchases of U.S. wheat.
  • Jordan is cut 200,000 tons to 1.1 million with expectations of slower consumption.
  • Mexico is up 200,000 tons to a record 5.4 million based on strong demand. The United States remains the dominant exporter to Mexico, with sales and shipments outpacing the same time last year. Additionally, Mexico has recently purchased wheat from Argentina for the first time ever. Canada and Russia have also supplied wheat to Mexico in recent months.
  • Vietnam is down 800,000 tons to 4.0 million based on slower- than-expected imports at the beginning of the trade year.

Selected Exporters

  • Argentina is raised 500,000 tons to 12.5 million based on the strong pace of old-crop (2016 harvest) shipments.
  • Australia is lowered 1.0 million tons to 19.0 million based on slower-than-expected September exports.
  • Brazil is down 200,000 tons to 800,000 based on a smaller crop.
  • Russia is raised 500,000 tons to 33.0 million due to the strong early pace of trade, the competitiveness of Russian wheat, and strong global demand. Furthermore, the state-owned Russian Railways (RZD) introduced a rail tariff discount to attract additional volumes of grain shipments.
  • United States is elevated 500,000 tons to 26.5 million primarily based on recent strong sales to Iraq.
Wheat World as of November 2017
Attribute17/18 Nov'17Change17/18 Oct'1716/1715/1614/1513/14
Area Harvested (1000 HA)219,845+280(+.13%)219,565222,352223,662221,518219,671
Beginning Stocks (1000 MT)255,610-966(-.38%)256,576241,356217,756194,770177,649
Production (1000 MT)751,975+790(+.11%)751,185753,888735,259728,187715,091
MY Imports (1000 MT)179,208+275(+.15%)178,933179,201170,097159,445158,678
TY Imports (1000 MT)179,226+275(+.15%)178,951179,371168,616158,787160,424
TY Imp. from U.S. (1000 MT)0-029,12021,71922,93331,405
Total Supply (1000 MT)1,186,793+99(+.01%)1,186,6941,174,4451,123,1121,082,4021,051,418
MY Exports (1000 MT)180,675+631(+.35%)180,044182,860172,837164,175165,876
TY Exports (1000 MT)182,159+250(+.14%)181,909182,211172,007161,900162,479
Feed and Residual (1000 MT)140,771-720(-.51%)141,491147,488136,500131,712126,662
FSI Consumption (1000 MT)597,815+790(+.13%)597,025588,487572,419568,759564,110
Total Consumption (1000 MT)738,586+70(+.01%)738,516735,975708,919700,471690,772
Ending Stocks (1000 MT)267,532-602(-.22%)268,134255,610241,356217,756194,770
Total Distribution (1000 MT)1,186,793+99(+.01%)1,186,6941,174,4451,123,1121,082,4021,051,418
Yield (MT/HA)3.42-3.423.393.293.293.26