March 15, 2012

World's 2011/12 wheat trade up three million tonnes

The world's 2011/12 wheat trade is projected to rise three million tonnes this month to 141.8 million, just 1.1 million tonnes short of the 2008/09 record which have been stimulated by record world production and stocks, as shown by the USDA's Wheat Outlook.

There is also an increase in trade of low-quality wheat for feed use. Iran's projected 2011/12 wheat imports are up 1.8 million tonnes this month to two million. Reports suggest Iran has been buying extensively from various countries in an effort to spread the risk of cancellation. Financial sanctions resulting from the country's nuclear programme are limiting its ability to pay for imports. And indeed some cargoes initially directed to Iran were diverted to such countries as Iraq, Yemen, Sudan, and Egypt.

Iran is reported to be negotiating grain purchases with Russia, Pakistan, and India using letters of credit denominated in roubles and rupees to bypass Western banking sanctions. Other countries that reported sales to Iran include Australia, EU-27, the US, and Brazil.

Changes in wheat trade for many countries have been made this month. By this time of the year, there is sufficient trade data and information to update current forecasts based on the pace of shipments. Import prospects for South Korea in 2011/12 are up 0.3 million tonnes to a record of five million, reflecting its growing demand for feed quality wheat and its recent tenders (in large part white wheat from the US).

Algeria has purchased wheat at a faster pace than expected, holding several tenders last month, and its 2011/12 imports are up 0.3 million tonnes this month to 6.4 million. Imports for Uzbekistan, Azerbaijan, and Georgia – all parts of the former Soviet Union - are also up based on increased flows from Kazakhstan. There are small pace-based increases this month in projected imports by Chile, Angola, Eritrea, Ghana, New Zealand, and Ukraine, which are partly offset by reductions in wheat imports by Syria and Mongolia.

The three biggest 2011/12 revisions in export prospects are for Australia, Brazil, and Kazakhstan. In Australia, higher exportable supplies and the pace of exports boost prospects by 0.5 million tonnes to 21.0 million. In Brazil, exports are also up 0.5 million tonnes to 1.5 million, tracking the pace of auction sales within its subsidised programme, as well as its reported sales to Iran.

Kazakhstan's wheat exports are up 0.5 million tonnes to nine million, as the country managed to accelerate the pace of trade to about 1.2 million tonnes per month by subsidising grain transportation to ports and improving the efficiency of rail car use. Exports are raised for Turkey and Serbia by 0.3 and 0.2 million tonnes, respectively, reflecting trade data. With a continuing stronger-than-expected pace for wheat sales and shipments, US exports are projected one million tonnes higher to 26.5 million for the international July-June trade year.

Projected US exports are up 25 million bushels to one billion for the June-May local marketing year. The US continues to sell additional wheat, both hard and feed quality wheat (mainly white), to Asia (South Korea, Philippines, and China) and Mexico. With commitments (shipments plus outstanding sales) standing at 22.4 million tonnes as of March 1, down 25% on the year, US wheat exports are on pace to reach the new forecast of 9.5 million tonnes, which is 26% lower than last year's final results.