October 8, 2003

Global Wheat Outlook

US wheat futures are called to open 2- 3 cents per bushel lower and extend Monday's sharp fall amid news that Egypt has made another large purchase of Australian wheat and bought none from the US.

Early Tuesday, Egypt's General Authority for Supply Commodities (GASC) bought 240,000 metric tons of Australian wheat for November-December delivery.

No purchase of U.S. wheat was made despite the steep fall in U.S. wheat prices Monday. That fall had been sparked by GASC's purchase for 180,000 tons of Australian wheat over the weekend.

Canada issued an offer to sell wheat in GASC tender. Even though the offer was not accepted by GASC, those traders saw it as a sign of increasing competition.

Both Australia and Canada are expected to be aggressive marketers of wheat this year after poor crops left them out of the world wheat market last year. Canada has recently harvested its crop, while Australia's wheat harvest is expected to move into full swing in about a month.

Australian Wheat Forecasters estimated the Australian 2003 wheat crop at 24.4 million tons. This is more than double last year's crop and up from the currently U.S. Department of Agriculture forecast of 24 million. These forecasts are not far from the record of 24.9 million produced in 1999-2000.

In the U.S. 63% of the winter wheat crop is now planted, which is up from 49% last week and the five-year average. Emergence has now reached 31%, which is also slightly ahead of 29% for the average.

India is expected to export 1 million tons of wheat to Iraq over the next six months. Large portions of those exports are seen made under the oil for food program.