OVERVIEW

Global production for 2014/15 is projected at a new record. Production is raised for Argentina, Kazakhstan, EU, Turkey, and Ukraine. Global trade is nearly unchanged as import cuts for Bangladesh, Brazil, Turkey, and the United States are more than offset by increases for Egypt, Philippines, Saudi Arabia, and Sri Lanka. Exports are cut for Australia and the United States but raised for Brazil and the EU. The U.S. season-average farm price is lowered slightly.

BRAZIL'S IMPORTS OF U.S. WHEAT LIKELY TO DROP AFTER RECORD YEAR

U.S. wheat exports to Brazil are likely to drop significantly in 2014/15 compared to last year on competition from traditional South American suppliers. Brazil also has record production, and imports are forecast slightly lower than last year. Argentina, Paraguay, and Uruguay have recently harvested larger crops and are expected to export more to Brazil. Mercosur exporters have freight and logistical advantages in addition to tariff-free access, while others, including the United States, are subject to a 10% import duty. The situation is very different from last year, when U.S. wheat filled an unusual gap left by short crops in both Argentina and Paraguay.

U.S. PRICES:

Export prices for all wheat classes continued their downward trajectory in January. Abundant global supplies, strengthening currency, and expectations of large crops again in 2015/16 pressured prices. Hard Red Spring (HRS) plunged $38 to $269/ton, Hard Red Winter (HRW) prices slid $28 to $246/ton, Soft Red Winter (SRW) fell $31 to $232/ton, and Soft White Winter (SWW) tumbled $22 to $239/ton.

TRADE CHANGES IN 2014/15

Selected Exporters

  • Australia is cut 500,000 tons to 17.5 million because of slow early-season shipments.
  • Brazil is up 500,000 tons to 1.5 million in light of recent large shipments of lower-quality wheat.
  • EU is boosted 1.0 million tons to 31.0 million on the recent surge of sales to Algeria, Egypt, and Saudi Arabia. The EU is now the most competitive supplier to the Middle East and North Africa.
  • United States is cut 500,000 tons to 25.0 million on slow shipments and reduced competitiveness.

Selected Importers

  • Bangladesh is lowered 300,000 tons to 3.3 million on a slower-than-expected shipment pace.
  • Brazil is trimmed 300,000 tons to 6.7 million as shipments have been below historical levels over the last several months.
  • Egypt is raised 500,000 tons to 10.5 million on continued large purchases despite the bread subsidy change.
  • United States is cut 500,000 tons to 4.2 million on slow shipments to date