WORLD MARKETS AND TRADE:
COMMENTARY AND CURRENT DATA
WHEAT: WORLD MARKETS AND TRADE
MONTHLY HIGHLIGHTS:
EU Export Subsidies Climb: 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 tons against the 2 million ton open tender.
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 tons mostly in key exporters such as the EU-25, Canada, and
Argentina (See PDF version for chart).
PRICES:
Domestic: 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
downward on increased farmer sales and falling domestic demand (See PDF
version for chart).
For the week ending March 4, and compared to a month earlier, average HRW
prices were $6 a ton higher, while SRW was $11 a ton higher. HRS prices dropped
$7 a ton, while SWW remained flat.
TRADE CHANGES IN 2004/2005
Selected Exporters
- Canada down 500,000 tons 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 down 500,000 tons 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 up 500,000 tons to 1.5 million due to larger than expected exports
to Bangladesh.
- Kazakhstan down 300,000 tons to 3.2 million with a sluggish pace of
exports to date.
- Mexico up 100,000 tons to 400,000 with continued durum shipments to
markets such as Algeria.
- Romania down 100,000 tons to 200,000 because of slow sales and competition
from nearby suppliers.
- Turkey up 300,000 tons 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 tons to 28.0 million as continued strong
world import demand for high-quality wheats and less Canadian competition has
led to a robust shipment and sales pace.
Selected Importers
- Bangladesh up 200,000 tons to 2.0 million due to strong imports from India
and substantial purchases from Argentina.
- China down 500,000 tons 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 up 200,000 tons to a record 1.1 million due to recent large food aid
donations.
- Ukraine down 300,000 tons to 200,000 due to lower than expected imports
from Russia and Kazakhstan.
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Last modified: Thursday, November 13, 2003
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