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OVERVIEW FOR 2018/19

Global wheat production is up this month mainly due to a larger crop in China, while crops were reduced for Australia, Morocco, Pakistan, and Ukraine. Trade is down slightly this month mainly on lower import demand for Bangladesh, China, Indonesia, Thailand, and Vietnam. Exports are lowered for Australia as drought continues. The U.S. season-average farm price is unchanged at $5.10 per bushel.

WHEAT PRICES

U.S.:

In general, wheat prices have been relatively flat over the last few months, pressured by a weak pace of export sales. For October, prices were mostly up from the previous month based on tightening competitor supplies. Soft White Winter (SWW) gained $6/ton to $237, supported by the continuing drought in Australia. Hard Red Spring (HRS) jumped $8/ton to $257 on an uptick in sales. Soft Red Winter (SRW) rose $1/ton to $213. On the other hand, Hard Red Winter (HRW) was down $3/ton to $235 with continued weakness in international demand

Global:

Exporter quotes were mixed in October. Argentine, EU, and U.S. prices were down, while Australian, Black Sea, and Canadian quotes were up. Australia’s drought continues to result in increasingly uncompetitive prices. Black Sea, EU, Argentine, and U.S. quotes are currently within a very narrow range, while Canadian prices are up slightly.

Month Ending Prices for Major Wheat Exporters

Month Ending

Argentina

Australia

Black Sea

Canada

EU

US

October

$225

$322

$228

$265

$228

$235

September

$230

$320

$227

$263

$237

$237

August

$240

$315

$225

$265

$243

$247

Source: IGC

Note on FOB prices: Argentina - 12.0%, up river; Australia - average of APW; Fremantle, Newcastle, and Port Adelaide; Black Sea - milling; Canada - CWRS 13.5% St. Lawrence; EU - France grade 1, Rouen; US - HRW 11.5% Gulf

North America Dominates Global Durum Exports

Durum wheat is commonly used for food products such as pasta and couscous. Canada is by far the world’s leading exporter of durum. In 2017/18, Canada exported more than 4.0 million tons of durum, with the majority of those shipments destined for Algeria, the United States, and Morocco. Exports to Italy, formerly Canada’s largest market, have fallen substantially in light of Italy’s 2017 country of origin labelling rule.

Mexico, a distant second in global durum exports, shipped mostly to Venezuela and Algeria in 2017/18 as shipments to Turkey and Italy dropped off substantially from previous years. This wheat lacks the higher quality factors of Canadian supplies and is generally less preferred for quality-focused pasta markets. Mexican durum is popular in Algeria for making couscous but is still only the second-leading supplier to that market, behind Canada.

The European Union is the top producer of durum wheat but remains a net importer due to strong internal demand. France and Spain export durum, mainly to other EU countries and North Africa. Italy is the primary durum importer in the region based on strong historic demand for pasta as well as exports of pasta products. In recent years, Italy’s slowing imports from North America have been partly offset by larger purchases from France, Kazakhstan, and Russia.

U.S. Durum Prices Down with Rebound in Crop

Based on better growing conditions this season, U.S. durum production is up 41 percent from last year’s drought affected crop. The monthly farm-level price for durum is down significantly from last year and exports are projected up more than 70 percent. Most U.S. exports go to Algeria and Italy, competing with Canada. However, U.S. production is still insufficient to meet domestic use, so the United States is expected to continue as a net importer of durum with nearly all of its imports coming from Canada.

Black Sea Trade Flows (BST Flows)

FeedDinner 2019