Wheat Exporter Ending Stocks Surge Despite Record Global Consumption

Global wheat consumption is projected at a record in 2014/15. Food use is expanding because of population growth, urbanization, and rising incomes. Growth is particularly strong in Sub-Saharan Africa and Southeast Asia. Feed use is up as well, mainly driven by a huge jump in EU usage. The EU is projected to have a record crop with a large quantity of competitively priced feed-quality wheat.

Even with consumption at a record, exporter ending stocks are up nearly 20 percent from last year. The EU, Russia, and Ukraine account for all of this increase. Bumper crops in all three countries are enabling robust exports, in addition to stock building. The EU is forecast to be the world’s largest exporter and prices currently are the most competitive. Russia’s exports are projected at a record, while Ukraine’s exports are its second highest. Even though these countries are exporting large amounts of wheat, they are still expected to have a surplus, which will continue to pressure prices.

U.S. stocks are forecast slightly higher year-to-year in spite of a smaller crop as high relative prices make exports less competitive. Canada’s stocks are projected to decline as this year’s crop is down from last year’s record. Stocks in Australia and Kazakhstan are nearly unchanged.

WHEAT: WORLD MARKETS AND TRADE

OVERVIEW

Global production for 2014/15 is projected at a record with bigger crops this month in both Canada and Kazakhstan. Global trade is up, driven by a boost in Bangladesh, Egypt, Iran, and the United States’ imports. Exports are raised in Canada, EU, Iran, Kazakhstan, Turkey and Ukraine, while Russia is lowered. U.S. exports are unchanged. The season-average farm price is raised slightly.

U.S. PRICES:

Export prices for all wheat classes were up in November. Hard Red Spring (HRS) and Hard Red Winter (HRW) prices rose by $2 to $369/ton and $3 to $288/ton, respectively. Soft White Winter (SWW) jumped $11 to $287/ton as supplies tighten with strong export sales. Soft Red Winter (SRW) spiked $17 to $271/ton and is the highest since mid-May, over concerns that unprotected winter wheat crops (no snow) would sustain damage from early-season frigid temperatures.

TRADE CHANGES IN 2014/15

Selected Exporters

• Canada is up 500,000 tons to 23.0 million tons on a larger crop and strong global demand for durum.

• European Union is boosted 1.0 million tons to 29.0 million on continued large sales.

• Iran is raised 500,000 tons to 700,000 on reports of larger flour exports to neighboring countries.

• Kazakhstan is up 500,000 tons to 5.8 million on a larger crop.

• Russia is cut 500,000 tons to 22.0 million because of reduced competitiveness.

• Turkey is boosted 600,000 tons to 3.8 million on a strong pace of flour exports, particularly to Syria and Iraq.

• Ukraine is raised 300,000 tons to 10.3 million on the fast pace of shipments to date.

Selected Importers

• Bangladesh is up 300,000 tons to 3.6 million on the strong pace of shipments.

• Egypt is raised 500,000 tons to 10.0 million on strong year-to-date purchases by both the private and the public sector.

• Iran is boosted 1.0 million tons to 6.0 million on continued strong purchases and recent deliveries.

• The United States is raised 300,000 tons to 4.7 million on larger Canadian supplies and tightness in the U.S. durum market.

RICE: WORLD MARKETS AND TRADE

OVERVIEW

Global production for 2014/15 is slightly up as larger crops in China, Guyana, South Korea, and Vietnam more than offset a reduction in Indonesia. Global trade is up driven by Indonesia. Global consumption is unchanged, while stocks are slightly higher. U.S. production and trade are unchanged.

Four months into 2014/15, commitments (sales plus shipments) for U.S. medium- and shortgrain rice have been lagging last year’s pace. This is largely due to slower sales and shipments to Japan, Jordan, Korea, and Taiwan more than offsetting record sales to Turkey. With open tenders of traditional markets and tight supplies in other exporting countries, the pace is expected to pick up in coming months to fulfil the current forecast. In comparison, commitments for longgrain rice are ahead of last year, supported by recent sales to Iraq, improving commitments for all rice. U.S. exports are generally two thirds long-grain rice and one third medium- and shortgrain rice.

SELECTED TRADE CHANGES for 2014

• Burma’s exports are up 150,000 tons to 1.5 million reflecting larger shipments to China, the EU, and Russia.

• China’s imports are up 100,000 tons to 3.9 million on larger purchases from neighboring countries.

• EU imports are up 100,000 tons to 1.5 million on large purchases from Cambodia and Burma.

• Indonesia’s imports are cut 175,000 tons to 1.2 million as there is no approval for specialty rice by the Government.

SELECTED TRADE CHANGES for 2015

• Burma’s exports are up 100,000 tons to 1.4 million on expectations of greater demand in the region.

• Indonesia’s imports are up 300,000 tons to 1.3 million on a reduced crop.

• Thailand’s exports are up 200,000 tons to a record 11.0 million on expectations of stronger demand in Indonesia.

COARSE GRAINS: WORLD MARKETS AND TRADE

OVERVIEW

World corn production remains a record and is up with higher production in China and the EU more than offsetting lower crop prospects in Argentina. World trade is down slightly on lower Argentine exports and reduced Chinese imports. The U.S. season-average farm price is unchanged this month.

PRICES

Following the release of the November WASDE report, U.S. corn quotes have declined further to become more competitive with other origins. Despite a late harvest and logistical delays, U.S. quotes continue to be pressured by large supplies, a strong U.S. dollar, and continued competition. U.S. quotes are $9/ton below South American and about even with Black Sea. Black Sea quotes are up slightly as political uncertainty and foreign exchange concerns limit farmer selling.

TRADE CHANGES IN 2014/15

Selected Exporters

• Argentine corn is reduced 500,000 tons to 12.0 million and barley is down 400,000 tons to 1.6 million on smaller crop forecasts.

• Vietnamese corn is doubled to 400,000 tons on reports of shipments of domestic corn to regional markets.

• U.S. sorghum is raised 200,000 tons to 5.8 million on continued purchases by China.

Selected Importers

• Chinese corn is cut 500,000 tons to 2.0 million on a larger crop and as policies continue to encourage imports of alternate feed grains. Sorghum is up 400,000 tons to 5.0 million.

• Saudi barley is lowered 500,000 tons to 7.0 million based on large late-season shipments (2013/14) and sluggish growth in barley feed demand.

• Japanese sorghum is down 300,000 tons to 1.2 million with imported sorghum less competitive compared with other feedstuffs