Canadian wheat production is forecast to be the lowest in 28 years and exports, forecast at just 9.5 million tons, are expected to be the lowest in 33 years. Supplies of hard spring wheat are particularly low and thus many traditional importers of Canadian supplies will be forced to look to other sources. The United States should not only import less spring wheat as a result of the tight Canadian situation but also export nearly the same total amount as last year despite a much smaller U.S. crop. Among the markets expected to replace Canadian wheat with U.S. wheat is Latin America where purchases from the United States are up significantly from last year. The United States will also make additional sales to those Asian markets that import hard spring wheat.
Supplies from Australia are also expected to be ve ry low with production estimated at just 15 million tons, 9 million lower than last year. Consequently, exports are forecast at 10 million tons, the lowest in 8 years. As with Canada, reports of tighter exportable supplies have driven domestic prices up, leaving many foreign customers searching for cheaper wheat. Markets in Southeast Asia and the Middle East will likely further increase imports from India and the FSU (Kazakhstan, Russia, and Ukraine).
Production in Canada, Australia, Argentina, and the United States is forecast down 23 million tons from last year. Meanwhile the top five exportersí stocks are forecast down 30 percent to just above that of 1995/96, when prices also skyrocketed. However, the emergence of the FSU as a major exporter is partially compensating for the tighter supplies.
Last year, ideal growing conditions led to the largest FSU wheat harvest since the breakup of the Soviet Union. As a result , Kazakstan, Russia, and Ukraine emerged as significant exporters by shipping nearly 13 million tons. This year, the FSU is expected to have an even larger harvest, with exports forecast at 15.5 million tons. These exports consist of low- to medium-quality milling and feed-quality wheat and are trading at significant discounts to Australian, Canadian, and U.S. shipments. Primary markets last year for feed-quality wheat were the EU, South Korea, North Africa, and the Middle East. However, North Africa and the Middle East also imported significant quantities of milling quality wheat. With even more milling quality supplies this year, the FSU is expected to gain market share in these regions, thus compensating for the tighter situation in Canada and Australia. Milling quality wheat from Kazakstan and the Ukraine, in particular, are gaining wider acceptance among millers in the region as they seek to cut costs.
For more information, contact: Oliver Flake, 202-690-4200
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