January 24, 2011

 

US wheat exports may continue to be "massively bullish"

 

 

US weekly wheat export sales leapt to a record that is "massively bullish" during January in six years, projecting a possible increase in North American orders, according to analysts.

 

The USDA said that America's weekly export sales, for the 2010-11 or "old" crop jumped sevenfold last week to 1.05 million tonnes, beating some market expectations threefold. The figure has been beaten only once, in a January week, in 15 years.

 

Corn and soy statistics beat expectations too, prompting talk that, even current prices may not have gone high enough to choke demand sufficient to avoid a tighter squeeze ahead.

 

"Rationing is not occurring yet on the export front," broker US Commodities said.

 

However, analysts spared most comment for the wheat figure, which was viewed by Benson Quinn Commodities as "rather impressive" and by Societe Generale analyst Emmanuel Jayet as "very strong" and "massively bullish".

 

"This is not a record high in absolute terms, but it is very high for the season," Jayet said.

 

US exports rarely rise above one million tonnes during the first five months of a calendar year, with the arrival of southern hemisphere crop taking demand from the northern hemisphere shippers.

 

Friday's figure was viewed as evidence that in the early months of 2011, with the quality of Australia's crop compromised by rain, Russia banning exports after drought and European supplies drying up, the US is set for larger-than-usual trade.

 

"The US is becoming the global wheat supplier," Jayet said, and at a time when Northern African demand has been whetted by the presidential ousting food riots ended up bringing to Tunisia.

 

"Note that the demand which recently emerged in northern Africa is not yet accounted for in Friday's (Jan 21) data, and should therefore keep exports strong in the coming weeks."

 

Benson Quinn said: "Demand for wheat remains quite strong, as Iraq and Saudi Arabia are expected to make additional purchases in the relatively near future."

 

Iraq, meanwhile, is reported to have "reverted to dealing with more reliable shippers" largely from the US - after disappointments with the processing of import orders.

 

Separately, the USDA on Friday (Jan 21) confirmed an order from Jordan for 150,000 tonnes of American hard red winter wheat, to be delivered this crop year.

 

On the futures markets, the data helped Chicago wheat for March recover early losses to close 2.6% higher at US$8.24 a bushel its best since August 2008.

 

Kansas wheat closed up 1.6% at US$9.00 a bushel, also a two-year high.