OVERVIEW FOR 2020/21

Global production is lowered this month as reductions for the European Union, Kazakhstan, and Turkey more than offset a larger crop in Russia. Global consumption is lowered mainly on feed and residual use for the European Union. Global trade is up, driven by stronger imports for Pakistan. Exports are raised for Russia, Ukraine, and the United States, more than offsetting lower exports for the European Union. The projected U.S. season-average farm price is lowered to $4.50 per bushel.

WHEAT PRICES

Prices for most U.S. wheat classes showed mixed direction following the release of the July WASDE. Hard Red Winter (HRW) dropped $12 to $215/ton based on good progress of the harvest as well as expectations for a larger global wheat crop. Export sales of this class have been robust, but not sufficient to overcome the effect of seasonal harvest pressure. Conversely, Soft Red Winter (SRW) climbed $7 and sits at $226/ton, supported by limited export capacity (amid competition with corn and soy shipments at the Gulf) as well as high domestic rail and barge costs. Strong sales to China also underpinned SRW prices during the month. Soft White Winter (SWW) and Hard Red Spring (HRS) were down slightly from the previous publication to settle at $224 and $241/ton, respectively. Weakness in HRW prices in the last week appears to have exerted downward pressure on the other classes, pulling them off their recent highs.

Global: Price movements for major exporting countries were mixed, but mostly rangebound in the last month. U.S. prices witnessed the steepest decline, pressured by winter wheat harvest progress. Currently, U.S. wheat supplies are more competitively positioned with other major exporters. Russian prices were up slightly despite a burgeoning crop that is expected to be the second largest on record. EU prices rose slightly based on smaller expected crops in France and Germany. Canadian prices were pressured by expectations of a bumper crop. Australian (new crop) prices climbed somewhat despite ongoing expectations of a large crop. Argentine prices edged lower this month, but seasonally tight supplies are keeping this origin mostly uncompetitive internationally

International FOB Export Bids, as of August 10th, 2020

Argentina

Australia

Canada

EU

Russia

U.S.

$240

$232

$227

$216

$205

$215

North Africa Projected to Be Top Wheat Importing Region

North Africa is poised to become the world’s leading wheat importing region for the first time in 3 years. Growing demand and reduced production is expected to push imports for the region to a record. Egypt, the world’s leading buyer, is projected to import a robust 13.0 million tons in 2020/21, down slightly from 2019/20, which was a record partly due to government stockpiling during the COVID-19 pandemic. Algeria, the world’s fourth largest importer, is forecast to import 7.0 million tons with continued growth in demand and flat production. Morocco is projected up significantly to a record 6.2 million tons as its crop has been ravaged by drought and the government is allowing duty-free wheat imports through the end of 2020. It is worth noting that Morocco’s imports at the end of 2019/20 were also large in anticipation of tighter new-crop supplies. Imports for Tunisia and Libya are expected to be nearly unchanged.

Historically, the Middle East and North Africa were the top importing regions, but this dominance waned significantly in the last decade as imports by Southeast Asia and Sub-Sahara Africa rose substantially. In the last few years, the major wheat importing regions have ebbed and flowed in terms of importance depending on market conditions. For instance, Southeast Asia briefly became the world’s leading import region in 2018/19, but has since lost that position as demand there has flattened with lower feed use roughly offsetting stronger milling demand. The Middle East was the world’s leading importer in 2019/20 as tightening supplies led to massive purchases for Turkey and Iran. Now, markets have shifted, and North Africa is once again the top importing region.