Grain. World Markets and Trade. Mar 2013 March 13, 2013
EU Wheat Exports Boost Demand for Corn
EU corn imports are up sharply in 2012/13 as exports of wheat reduce domestic grain supplies. EU wheat exports are up nearly 20 percent, despite lower production. Ending stocks are also the tightest since Common Agricultural Policy (CAP) reform which effectively eliminated government (intervention) stocks. The vacuum created by the absence of exportable supplies from Russia and Ukraine is pulling wheat out of the European Union to fill demand in North Africa and the Middle East. Although French and German exports are expanding, eastern European countries, such as Bulgaria, Latvia, Lithuania, and Romania are benefitting the most from the reduced competition.
Meanwhile, a tight EU domestic feed-quality wheat situation and a nearly 20 percent drop in corn production has stimulated a surge in corn imports. Import licenses have more than doubled year-over-year with demand for corn coming mostly from southern European countries. This year, Ukraine has abundant corn supplies and limited feed-quality wheat resulting in a nearly tripling of corn exports to the EU (Oct-Dec). Brazil has also become a significant supplier.
WHEAT: WORLD MARKETS AND TRADE
Global wheat production for 2012/13 is raised nearly 2.0 million tons on adjustments to the EU and Indian crops. Global imports are raised due to revisions to Algeria, South Korea and Iran, which are partially offset by a cut in Egypt. Exports are up for Brazil, the EU, and Ukraine but down for the United States. The season-average U.S. farm price is lowered, but remains a record.
Domestic: Wheat prices for all classes dropped in February. Hard Red Winter (HRW) slumped $22 to $322/ton although drought conditions persist in some growing areas. Soft Red Winter (SRW) prices fell $19 to $293/ton, dropping below corn. Hard Red Spring (HRS) shed $11 to $353/ton and Soft White Winter (SWW) dropped $11 to $323/ton as supplies tighten.
TRADE CHANGES IN 2012/13
• Brazil is boosted 500,000 tons to 1.7 million on the shipment pace to date and as demand for feed-quality wheat strengthens from Israel, Spain, South Korea, and several other countries.
• EU is up 1.0 million tons to 19.5 million on strong licenses and sales.
• Ukraine is raised 300,000 tons to 6.5 million based on continued shipments.
• United States is cut 500,000 tons to 28.5 million on smaller-than-expected shipments and slow sales.
• Algeria is raised 300,000 tons to 5.5 million due to recent purchases of French soft wheat and Canadian durum.
• Egypt is cut 1.0 million tons to 8.5 million as a result of tightening foreign exchange reserves and the government’s intent to procure more domestic supplies.
• Iran is up 1.0 million tons to 4.0 million due to the strong pace of deliveries, particularly from the EU.
• South Korea is boosted 500,000 tons to 5.5 million as large purchases of Indian feed quality wheat continue.
• Yemen is raised 300,000 tons to 2.9 million due to a strong delivery pace.
RICE: WORLD MARKETS AND TRADE
Although global rice production for 2012/13 is forecast at a record, consumption is expected to outpace production. However, stocks are still ample, particularly in major exporting countries.
Global trade is virtually unchanged, though U.S. exports are estimated higher.
Over the past 5 months, the spread between U.S. medium- and long-grain rice export quotes has narrowed from nearly $250/ton to just under $60, the narrowest range since April 2010.
Medium-grain export quotes have been driven down as ample supplies face increased competition from Egypt in Middle Eastern markets, since the government ended a 4-year export ban in October 2012.
On the other hand, long-grain export quotes have been edging up in recent months as additional shipments to Latin America and the Middle East have led to tightening U.S. supplies.
SELECTED TRADE CHANGES
• India is raised 100,000 tons to 7.6 million in 2013 on account of larger exportable supplies.
• Cambodia is up 150,000 tons to a record 975,000 tons in 2013 as a record crop lowers prices, encouraging imports by regional partners.
COARSE GRAINS: WORLD MARKETS AND TRADE
Global corn production is largely unchanged; consumption is boosted only slightly as higher U.S. feeding is mostly offset elsewhere. Global corn trade is down on lower U.S. exports, despite higher expected shipments from Argentina. The season-average farm price is reduced but remains a record.
Following the release of USDA’s February report, U.S. export quotes dipped but have since risen to close about unchanged from last month. As Argentina’s new-crop harvest gets underway, prices have dropped $20/ton and are now about $40/ton under U.S. prices. Brazilian corn is not quoted as traders shift their emphasis to soybeans.
TRADE CHANGES IN 2012/13
• U.S. corn is cut 1.5 million tons to 22.5 million, the lowest in over 40 years, on slow sales and shipments and strong competition.
• Argentine corn is up 500,000 tons to a record 20.0 million, despite lower production, on competitive prices and expected strong early-season shipments as Brazil’s exports slow seasonally with an expected shift to soybeans.
• U.S. sorghum is raised 400,000 tons to 2.1 million on the pace of sales and shipments to Mexico. (Mexican imports are raised by the same amount to 2.2 million tons).
• U.S. corn is boosted 500,000 tons to a record 3.0 million because of continued strong shipments, largely from Brazil.
• South Korean corn is lowered by 500,000 tons to 7.5 million on purchases of Indian wheat for feeding