Foreign Countries' Policies and Programs

Exportable Wheat Supplies Tighten in Canada and Australia

But FSU Supplies Abound

Adverse growing and harvesting conditions for wheat are expected to result in a dramatic fall in exportable supplies in Canada and Australia. Smaller crops in these countries, coupled with tight U.S. supplies, have led prices to soar over the past few months. However, very large crops in the FSU will allow even greater exports than last year, thereby dampening the impact created by tighter supplies among the major exporters. Bar graph of ending stocks of top five exporters from 1987 to 2003 is a gradual decread.

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 Bar graph of Exports of leading suppliers. The FSU is increasing since 2000 and Australia wiht Canada are decreasing since 2000.

Bar graph of Exports of leading suppliers. The FSU is increasing since 2000 and Australia wiht Canada are decreasing since 2000.

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 exporters’ 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 Trend chart from May 9 to September 9 of prices for hard red winter wheat FOB Gulf increasing

Trend chart from May 9 to September 9 of prices for hard red winter wheat FOB Gulf increasing

, 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.