Global Wheat Production Hits Record; Exporter Stocks Rebound

Global wheat production in 2013/14 is projected at a record level. Most major exporting countries have larger crops, with Canada reaching a record; Australia, the EU, Kazakhstan, Russia, and Ukraine have significantly recovered from last year.

Although global import demand and consumption are currently estimated to be at record levels, most exporter stocks are forecast to rebuild. Those stocks are expected to provide a cushion to start next year’s season.

On the other hand, the United States has a smaller crop (particularly Hard Red Winter) and, with stronger exports, stocks are forecast to fall. In fact, stocks are projected to be the lowest since 2007/08. Strong demand from Brazil and China for Hard Red Winter and Soft Red Winter, respectively, have led to the present
relatively tight outlook for U.S. winter wheat.

WHEAT: WORLD MARKETS AND TRADE

OVERVIEW

Global production is projected at a new record. Larger crops in China and Russia partly offset downward adjustments in Argentina and the EU. Trade is projected to reach a new record this month, mostly driven by stronger demand in Egypt, Syria and Japan. The Philippines is expected to switch to cheaper corn, slightly reducing its import demand for feed-quality wheat.

U.S. exports are raised as a result of tighter supplies in Argentina and quality issues in Paraguay.

The season-average farm price is reduced.

PRICES:

Domestic: Wheat prices for all classes plunged in December. Hard Red Winter dropped $19 to $291/ton, the lowest since June 2012. The condition of winter wheat crops in the Northern Hemisphere is satisfactory, although the recent outbreak of subzero temperatures has raised concerns over instances of winterkill in parts of Nebraska and northern Kansas. Large global supplies, particularly in Canada, are pressuring prices. Soft White Wheat (SWW) fell $20 to $272/ton, Soft Red Winter (SRW) slid $9 to $272/ton and Hard Red Spring (HRS) softened $7 to $318/ton.

TRADE CHANGES IN 2013/14

Selected Exporters

• Argentina is cut 500,000 tons to 3.0 million because of a smaller crop, and lack of Government-issued export permits to date.

• EU is boosted 1.0 million tons to 26.0 million due to recent large sales to North Africa (Algeria, Egypt, and Morocco) and Iran.

• Russia is raised 500,000 tons to 16.5 million. The export pace has been quite strong, and the upward adjustment in production is providing additional exportable supplies.

• United States is up 500,000 tons to 30.5 million as a smaller crop in Argentina and quality issues in Paraguay are providing opportunities for additional sales to Brazil.

Selected Importers

• Egypt is raised 500,000 tons to 10.5 million. The Government’s purchases of just over 1 million tons in the last month have raised expectations of additional needs.

RICE: WORLD MARKETS AND TRADE

OVERVIEW

Global production for 2013/14 is projected up from last month’s record, largely due to Pakistan. Both ending stocks and consumption are up as well. Already a record, 2014 trade is boosted again and expected to surpass 40 million tons for the first time.

TRADE

Global rice trade is forecast to reach 40 million tons for the first time. Rising demand is driven mainly by China and Sub-Saharan Africa. China’s imports have expanded dramatically in recent years because of relatively low Vietnamese prices. In Sub-Saharan Africa, imports are driven by rural-to-urban migration and changing consumption patterns. Consumers are switching from traditional foods (e.g., cassava and millet) to rice, which is viewed as a “fast” food because of its shorter preparation time. The expansion in these price-sensitive markets has been supplied largely by India and Vietnam.

TRADE CHANGES

Selected Exporters

• Pakistan is boosted 300,000 tons (to 3.3 million) in 2013 and 400,000 tons (to 3.4 million) in 2014 on the expectation that strong sales will continue.

• Thailand is cut 300,000 tons to 6.7 million in 2013, the lowest in more than a decade, as the sale of government stocks was slower than expected.

Selected Importers

• Cuba is lowered 125,000 tons (to 400,000), Indonesia is cut 350,000 tons (to 650,000), and Malaysia is down 150,000 tons (to 900,000) in 2013 on trade data.

• Philippines is up 200,000 tons to 1.4 million in 2014 on a recent purchase from Vietnam to replenish government buffer stocks.

COARSE GRAINS: WORLD MARKETS AND TRADE

OVERVIEW

World coarse grain production is up on a larger corn crop in China, more than offsetting lower production in the United States, Argentina, and Russia. Additionally, global barley production is up in the European Union, Argentina, and Russia. Global corn trade is down because of diminished demand from China, despite greater demand from Mexico. The U.S. corn export estimate and the season-average farm price are unchanged.

PRICES

Since the release of the December WASDE report, U.S. corn quotes have edged lower on record U.S. supplies and recent cancellations of U.S. shipments to China. Since mid-December, U.S. prices ($205/ton) have been consistently below South American quotes and about even with Black Sea quotes.

TRADE CHANGES IN 2013/14

Selected Exporters

• Argentine corn is slashed 2.0 million tons to 14.0 million because of declining crop prospects and very slow shipments in recent months.

• Brazilian corn is up 500,000 tons to 21.0 million based on continued strong shipments.

• Argentine barley is raised 400,000 tons to 3.0 million because of greater exportable supplies.

• EU barley is cut 400,000 tons to 4.1 million as export licenses taper off and new-crop Southern Hemisphere supplies enter the market.

• U.S. sorghum is down 500,000 tons to 4.0 million on lower exportable supplies.

• Argentine sorghum is boosted 500,000 tons to 2.0 million because of reduced competition from the United States amidst firm global demand.

Selected Importers

• Chinese corn is down 2.0 million tons to 5.0 million because of rejected U.S. cargoes and cancelled sales. (Sorghum is raised 500,000 tons to 2.5 million based on strong sales and shipments.)

• Mexican corn is boosted 500,000 tons to 11.0 million because of strong purchases and shipments. (Sorghum is cut 500,000 tons to 1.0 million because of sluggish sales and shipments.)

• Philippines corn is up 250,000 tons to 300,000 based on quality issues with domestic production (wet corn) and data showing trade with Thailand