OVERVIEW

Global wheat production, already at a record, is raised this month mainly on larger crops in Argentina and Australia. Global trade is boosted to a new record with higher imports for Bangladesh, India, Mexico, and the Philippines more than offsetting a cut for the EU. Higher exports for Argentina and Australia are partially offset by lower trade for Canada. The U.S. season-average farm price is unchanged at $3.85 per bushel.

U.S. PRICES:

Overall, wheat prices were mixed during the month of February as the impact of accelerating U.S. export sales was mitigated by large global supplies. Hard Red Winter (HRW) gained $4/ton to $206, while Soft Red Winter (SRW) edged $1/ton higher to $185 based on growing export demand. Soft White Winter (SWW) eased $8/ton to $212, while Hard Red Spring (HRS) plummeted $18/ton to $266, but still maintains a large premium over the other wheat classes. SWW and HRS prices fell mid-February on growing competition from other exporters.

ARGENTINA’S WHEAT EXPORTS FORECAST AT FIVE-YEAR HIGH

Argentina’s 2016/17 wheat exports are forecast to reach the highest level in 5 years, supported by a bumper crop and competitive prices. This comes a few years after the removal of government policies that limited export opportunities, resulting in low prices, which turned some producers away from wheat. Consequently, wheat exports hit a 40-year low in 2013/14, recovering only slightly the following year. However, exports began to move more freely last year, spurred by the elimination of export restrictions and the depreciation of the Argentine peso. In 2016/17, producers responded favorably to the changes in market dynamics by producing the largest crop in 6 years.

Argentina’s re-emergence as a prominent exporter has implications for the global wheat market, which is already dealing with bin-busting supplies in many exporting countries. The United States benefited from Argentina’s reduced supplies in recent years, briefly becoming the largest wheat exporter to Brazil in 2013/14. Since then, Argentina has not only regained its place as Brazil’s major supplier, but has also expanded exports to many countries in Africa and Asia, where import demand is rapidly growing.

TRADE CHANGES IN 2016/17

Selected Exporters

  • Argentina is boosted 1.5 million tons to 11.0 million on larger production and strong recent shipments.
  • Australia is up 500,000 tons to 24.0 million on large exportable supplies and large shipments for January.
  • Canada is down 500,000 tons to 20.5 million due to slower trade to date.
  • Turkey is raised 200,000 tons to 5.8 million based on fast pace of flour exports.

Selected Importers

  • Bangladesh is raised 300,000 tons to 5.8 million on a stronger pace of trade and higher expected food use.
  • European Union is down 500,000 tons to 5.5 million because of abundant domestic supplies of feed-quality wheat.
  • India is raised 1.8 million tons to 5.5 million based on large purchases of wheat after elimination of the import tariff policy in December 2016.
  • Lebanon is up 200,000 tons to 1.4 million due to slower-than-expected imports.
  • Mexico is boosted 300,000 tons to 4.9 million on stronger purchases from the United States.
  • Philippines is raised 500,000 tons to 5.5 million as the pace of trade signals growing consumption for food and feed.
  • South Africa is reduced 200,000 tons to 1.5 million based on slower–than-expected trade.
  • Turkey is cut 200,000 tons to 4.8 million on the slow pace of trade. Wheat feeding is expected lower, offset by surging imports of non-grain feed ingredients.
  • Venezuela is down 200,000 tons to 1.3 million on slow trade to date as poor economic conditions dampen demand.