Grain: World Markets and Trade Dec. 12, 2012
India is seizing the opportunity to export record quantities of competitively priced wheat. As global exportable supplies tighten, particularly from Russia and Ukraine, India’s wheat is effectively replacing Black Sea wheat in several Middle East and East African countries. It is also replacing Australian wheat (milling and feed-quality) in Asian markets, and even displacing Turkish wheat flour in Indonesia.
Ironically, India had a wheat export ban prior to September 2011, but now it is saddled with burdensome stocks and inadequate storage facilities. The government is now permitting limited exports from its huge reserve stocks.
Further export increases from India are expected to be constrained by transportation bottlenecks and limited port capacity.
Wheat: World Markets and Trade
Global wheat production for 2012/13 is raised due to larger crops in Australia, Canada, and China. Global trade is boosted primarily on higher demand from Brazil, China, Iran, and Russia. U.S. exports are cut on account of greater competition from Australia, the EU, and South America. The midpoint of the season-average U.S. farm price is lowered $0.10 to $8.00/bushel.
Domestic: Wheat prices for all classes were slightly lower in November. Although 2013 crop conditions continue to deteriorate, Hard Red Winter (HRW) prices were down $6/ton to $372. Hard Red Spring (HRS) was down $10/ton to $374, Soft Red Winter (SRW) dipped $2/ton to $343, and Soft White Winter (SWW) was down $3/ton to $336.
Trade Changes in 2012/13
• Australia is up 500,000 tons to 19.5 million because of larger crop expectations.
• EU is raised 500,000 tons to 18.0 million due to growing competitiveness and increased sales to North Africa and the Middle East.
• India is boosted 500,000 tons to a record 7.5 million, as a result of the strong pace of shipments to date, and additional wheat made available from government stocks.
• Paraguay is up 500,000 tons to 1.6 million as a result of the strong shipment pace.
• United States is cut 1.0 million tons to 29.5 million owing to slow sales and shipments to date and increased foreign competition.
• Brazil is up 500,000 tons to 7.5 million resulting from a smaller, poor-quality crop.
• China is boosted 500,000 tons to 3.0 million attributable to recent purchases and strong deliveries to date.
• Iran is raised 500,000 tons to 2.5 million as a result of the strong pace of deliveries.
• Russia is up 500,000 tons to 1.5 million on expected imports from Kazakhstan.
• Turkey is cut 500,000 tons to 3.5 million as the strong early-season purchases are expected to taper off as Russian exports dwindle.
Rice: World Markets and Trade
Global rice production in 2012/13 is forecast at a record and essentially on par with the previous year. Consumption continues to climb to new record levels. Stocks are forecast down but still at the second highest level in a decade. Trade is forecast at comparable levels to 2010/11. U.S. production and trade are up from the previous year.
In 2012, changes in policies and prices, as opposed to production shortfalls, have helped global rice trade to rise to a new record of 38.5 million tons.
In the case of Nigeria, traders reacted to the announced imposition of future higher import levies by stockpiling. The levies are designed to protect and stimulate domestic production in response
to the government’s declared goal of self-sufficiency.
China quadrupled imports to become the second-largest importer, a massive leap from the eighteenth position in 2011. Despite record production in China, rising demand has helped make
Vietnamese imports more competitively priced in southern China.
Selected Trade Changes
• Vietnamese exports are up 300,000 tons to a record 7.5 million in 2012 on the pace of shipments. Vietnamese imports are halved to 200,000 tons in 2013 as relative prices reduce the demand for Cambodian rice.
• Iranian imports are down 150,000 tons to 1.8 million in both 2012 and 2013.
• Iraqi imports are up 100,000 tons to 1.4 million in 2012 on account of higher shipments, especially from Thailand.
Coarse Grains: World Markets and Trade
Global corn production is up, mainly due to a larger crop in China. Global corn trade is boosted nearly 1.5 million tons this month, and 4.0 million tons over the past 2 months, largely on higher import demand from the EU. Despite slow sales and shipments, U.S. corn exports remain unchanged. The season-average farm price is again projected lower from last month (although it remains a record) on strong early-season marketings at relatively lower prices.
Corn export quotes for all major suppliers rose since the release of USDA’s November WASDE
report. U.S. quotes are up over $8/ton to $330, despite sluggish sales, due in part to a strong basis
as a result of low water levels in the Mississippi River which have been restricting barge traffic. In recent days, however, prices have eased on continued weak sales. Since reaching lows in late September, South American quotes have been rising steadily and have gained over 15 percent to about $300/ton, but remain $30/ton cheaper than U.S.
Trade Changes in 2012/13
• Canadian corn is raised 500,000 tons to 1.5 million because of a substantial boost to exportable supplies (larger crop).
• Paraguayan corn is up 200,000 tons to 1.6 million on account of robust early-season shipments.
• Russian corn is raised 500,000 tons to a record 2.3 million based on greater exportable supplies and strong demand, especially from the EU.
• South African corn is up 200,000 tons to 2.5 million with greater exportable supplies (2011/12 crop, harvested May 2012).
• Russian barley is boosted by 200,000 tons to 2.2 million on strong early-season shipments.
• Argentine sorghum is raised 200,000 tons to 2.6 million on stronger demand from Colombia. (Colombian imports are raised 200,000 tons to 600,000).
• EU corn is boosted sharply by 1.5 million tons again this month to 8.0 million based on the pace of import licenses in response to tighter supplies of other feed grains