March 14, 2005

 

Wheat world markets and trade report

 

 

The European Commission has raised wheat export subsidies from 4 to 6 to 8 to 10 euros in the past four weeks on licenses now covering about 1.2 million tonnes against the 2 million tonnes open tender, according to the USDA.

 

Paradoxically, Argentina's wheat prices, which had been very competitive in Mediterranean markets, have jumped by more than $20. Much of Argentina's exportable surplus has been sold out and most of what remains likely will be sold to Brazil. Even with higher subsidies and less competition, the EU-25 export estimate is reduced this month as buying by Mediterranean markets is seasonally limited and the pace of exports has been slow.

 

Record Production Boosts World Wheat Stocks
 

Global ending stocks are expected to grow over 10 percent this year, reversing a 4-year decline which had pushed stocks to a 21-year low. This month, global stocks were raised another 1.4 million tonnes mostly in key exporters such as the EU-25, Canada, and Argentina.

 

Domestic Prices
 

Short covering, spillover buying from soybeans on news of drought-stricken South American crops, and larger export forecasts helped to push winter wheat prices higher for most of the month. Prices for HRS trended downwards on increased farmer sales and falling domestic demand.

 

For the week ending March 4, and compared to a month earlier, average HRW prices were $6 a tonne higher, while SRW was $11 a tonne higher. HRS prices dropped $7 a tonne, while SWW remained flat.

 

TRADE CHANGES IN 2004/2005

 

 

Selected Exporters
 

Canada was down 500,000 tonnes to 15.0 million due to an expected slowdown in demand during the second half of the season from its two largest markets, China and the EU-25.

 

EU-25 went down 500,000 tonnes to 14.5 million. Despite rising export subsidies, the Commission has approved relatively few export licenses and buying by Mediterranean markets should be limited before new crop.

 

India was up 500,000 tonnes to 1.5 million due to larger than expected exports to Bangladesh.

 

Kazakhstan was down 300,000 tonnes to 3.2 million with a sluggish pace of exports to date.

 

Mexico up 100,000 tonnes to 400,000 with continued durum shipments to markets such as Algeria.

 

Romania went down 100,000 tonnes to 200,000 because of slow sales and competition from nearby suppliers.

 

Turkey up 300,000 tonnes to 1.3 million with continued strong shipments of flour as well as sales of durum and milling wheat.

 

United States up 1.0 million tonnes to 28.0 million as continued strong world import demand for high-quality wheat and less Canadian competition has led to a robust shipment and sales pace.

 

Selected Importers

 

Bangladesh went up 200,000 tonnes to 2.0 million due to strong imports from India and substantial purchases from Argentina.

 

China went down 500,000 tonnes to 7.5 million as shipments from Australia and the United States fade. Imports during the second half of the season are expected to be down considerably from the first half.

 

Sudan went up 200,000 tonnes to a record 1.1 million due to recent large food aid donations.

 

Ukraine was down 300,000 tonnes to 200,000 due to lower than expected imports from Russia and Kazakhstan.