Record EU Wheat Exports Surge Higher

Global wheat trade is forecast at a record and the EU is in the best position to benefit from the expansion with its freight and logistical advantages to markets in the Middle East and North Africa. In addition, supplies are abundant as a result of resurgent production and less use in feed rations. EU corn supplies are plentiful on account of a large crop and another year of sizable imports. Low corn prices are driving a shift from wheat to corn in feed rations, freeing up more wheat for export.

The EU has a window of opportunity to export while the supplies of its competitors, Russia and Ukraine, are tightening. EU export licenses (a proxy for export sales) have been unusually strong in recent weeks and are up 44 percent from the same period a year ago. Major buyers in the Middle East and North Africa have accounted for much of this activity. For example, Algeria recently purchased over a million tons of French wheat, while Saudi Arabia and Iran made large purchases of German wheat over the last month.

WHEAT: WORLD MARKETS AND TRADE

OVERVIEW

Global production is up slightly based on bigger crops in Australia and India which are partly offset by reductions in China, Paraguay, and Uruguay. Middle Eastern and North African countries purchased sizable quantities in recent weeks driving trade to a new record. EU and Russian exports are raised but U. S. exports are unchanged. The season-average farm price is raised slightly.

PRICES:

Domestic: Prices of all wheat classes were up during the month of February. Hard Red Spring (HRS) rose $10 to $342/ton after spiking to $355/ton mid-month. Hard Red Winter (HRW) surged $23/ton to $306 on continuing concerns over poor crop conditions in parts of the U.S. Plains. Soft Red Winter increased $12 to $266/ton and Soft White Wheat (SWW) was up $2 to $283/ton.

TRADE CHANGES IN 2013/14

Selected Exporters

• EU is boosted 1.5 million tons to 29.0 million as export licenses of nearly 2.7 million tons in the last 4 weeks reflect continued strong sales. Some wheat is being displaced by corn in feed rations, making more available for export.

• Russia is up 1.0 million tons to 17.5 million as a result of increased competitiveness evidenced by recent sales to Egypt and Iran.

• Serbia is raised 300,000 tons to 1.1 million because of strong shipments to date.

• Turkey is increased 300,000 tons to 4.0 million based on higher-than-expected flour shipments.

Selected Importers

• Iran is boosted 1.0 million tons to 6.0 million supported by recent purchases of EU and Russian wheat.

• Morocco is raised 300,000 tons to 2.3 million on a strong recent pace and temporary suspension of the import duty.

• Russia is up 500,000 tons to 1.0 million based on higher-than-expected imports from Kazakhstan.

• Saudi Arabia is boosted 500,000 tons to a record 3.2 million on recent large purchases from the EU and Russia.

• Syria is raised 300,000 tons to 1.8 million on larger-than-expected shipments.

RICE: WORLD MARKETS AND TRADE

OVERVIEW

Global production, consumption, and trade for 2013/14 are projected up from last month’s record levels. China and India have larger crops, and a series revision to Burma boosted trade. Global stocks are the highest in more than a decade, mostly due to a series revision for Indonesia.

STOCKS

Combined stocks in India, Thailand, and Vietnam – the world’s top three suppliers – are projected to hit a record in 2013/14. The expansion is largely driven by Thailand’s rice pledging policy. Stocks in India and Vietnam are expected to be relatively flat year-to-year but have more than doubled during the past decade. These massive stocks overhanging the market could pressure prices. Thai quotes are already down roughly 25 percent from last year.

SELECTED TRADE CHANGES

Burma’s exports are revised from 2010 onwards, jumping 413,000 tons to 1.2 million in 2013 and 550,000 tons to a projected 1.3 million in 2014.

Iran’s 2013 imports are boosted 250,000 tons to a record 2.2 million, while Iraq’s are lowered 100,000 tons to 1.3 million on trade data.

COARSE GRAINS: WORLD MARKETS AND TRADE

OVERVIEW

World corn production is raised slightly with a small increase for China. Global trade is up slightly on higher demand from Indonesia and the European Union. The U.S. export estimate is boosted slightly, but the season-average farm price is unchanged.

PRICES

Since the release of the February WASDE report, U.S. corn quotes have climbed $14 to $232/ton on strong export sales, the absence of Argentine competition, and political uncertainty in Ukraine. Ukrainian and U.S. quotes have moved in tandem and are currently at parity. Argentine quotes are now at an $8/ton discount as its new-crop harvest looms. As of late February, Brazilian quotes were no longer available as exporters turn their attention to shipping soybeans.

HIGHLIGHT

Canadian oats exports are cut 200,000 tons to 1.5 million because of logistical challenges stemming from extreme weather and record crops, which have intensified competition for rail cars. EU exports are raised by 100,000 tons to 250,000 in response to surging U.S. oats prices. United States imports are lowered 100,000 tons to 1.5 million.

TRADE CHANGES IN 2013/14

Selected Exporters

• U.S. corn is raised by 1.0 million tons to 42.0 million on continued strong sales and limited competition from Argentina, Brazil, or Ukraine.

• Australian barley is boosted 500,000 tons to 5.5 million based on greater exportable supplies and strong demand from China for feed. Sorghum is cut 300,000 tons to 600,000. Although supplies are lowered because of drought, strong demand from China limits the reduction in exports.

Selected Importers

• EU corn is boosted 500,000 tons to 11.0 million on the continued strong pace of import licenses. Conversely, exports are cut 500,000 tons to 2.0 million as export licenses have slowed on stronger domestic demand.

• Despite larger domestic supplies, Indonesian corn is up 600,000 tons to 2.8 million because of strong demand and favorable international prices.

• Malaysian corn is cut 200,000 tons to 3.2 million on sluggish feed demand from the poultry sector.

• Peruvian corn is up 200,000 tons to 2.3 million based on a higher pace of trade to date, especially with the United States.

• Chinese barley is raised 300,000 tons to a record 2.8 million on larger purchases from Australia for feed use.

• Mexican sorghum is slashed 200,000 tons to 300,000 as purchases remain moribund in the face of strong Chinese demand for U.S. sorghum