WHEAT: WORLD MARKETS AND TRADE
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).
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
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