OVERVIEW

Global wheat production remains at a record, but is reduced this month mainly on lower crops for India and Kazakhstan. Global trade is boosted to a new record with higher imports for China, Morocco, and Vietnam more than offsetting cuts for Ethiopia, EU, and South Korea. Larger exports for Argentina, Ukraine, and the United States are partially offset by reductions in Kazakhstan and Russia. The U.S. season-average farm price is raised $0.05 to $3.85 per bushel.

U.S. PRICES:

Prices for most wheat classes were up during the month of January, underpinned by 2017/18 U.S. crop prospects as well as a weakening dollar. On January 12, USDA released its Winter Wheat and Canola Seedings report, which estimated U.S. winter wheat area to be the lowest in over 100 years. Hard Red Winter (HRW) was up $11/ton to $202, while Soft Red Winter (SRW) gained $10/ton to $184. Soft White Winter (SWW) surged $33/ton to $220, while Hard Red Spring (HRS) jumped $29/ton to $284, both supported by adverse weather conditions which slowed deliveries to Pacific Northwest ports. Furthermore, the growing gap between HRS and most other wheat classes is indicative of tight supplies of high-protein wheat in the global market.

SOUTHEAST ASIAN WHEAT IMPORTS RISING

Southeast Asian wheat imports have more than doubled over the past decade. Milling-quality wheat demand has grown as diets have shifted towards more wheat products. Furthermore, feed and residual use in the region has more than doubled due to rapidly rising demand from the livestock, poultry, and aquaculture sectors. While food use is expected to continue rising, the growth of feed and residual use for the region is forecast to slow in 2016/17. Indonesia and Thailand are forecast to import less feed-quality wheat than the previous year due to policy restrictions on feed wheat imports in both countries. Also contributing to Thailand’s reduced use of wheat is higher rice feeding from non-food-grade rice stocks. However, lower imports for Indonesia and Thailand are offset by surging imports for Vietnam, where demand for feed grains continues to rise.

TRADE CHANGES IN 2016/17

Selected Exporters

  • Argentina is up 500,000 tons to 9.5 million on a faster pace of shipments.
  • Kazakhstan is lowered 1.0 million tons to 7.5 million on tighter exportable supplies.
  • Russia is reduced 500,000 tons to 28.5 million based on the slower-than-anticipated pace of trade.
  • Ukraine is raised 800,000 tons to 16.5 million based on lower domestic use and strong demand from Asian markets.
  • United States is boosted 1.5 million tons to 27.5 million on the brisk pace of sales and shipments.

Selected Importers

  • Bangladesh is raised 200,000 tons to 5.5 million on a stronger pace of trade and higher expected food use.
  • China is up 500,000 tons to 4.0 million as high-quality wheat is in strong demand for blending with the lower-quality domestic crop.
  • Ethiopia is cut 500,000 tons to 1.5 million based on slow pace of imports and the reduced size of the government’s recent tender.
  • European Union is cut 500,000 tons to 6.0 million on the slow pace of trade.
  • Indonesia is raised 200,000 tons to 9.0 million on stronger demand for milling-quality wheat.
  • South Korea is lowered 500,000 tons to 4.5 million based on the declining competitiveness of wheat in feed rations.
  • Morocco is up 500,000 tons to 5.5 million based on recent purchases, which signal an effort to rebuild stocks.
  • Vietnam is up sharply by 1.4 million tons to 5.0 million based on strong feed demand.