WORLD MARKETS AND TRADE:
COMMENTARY AND CURRENT DATA
WHEAT: WORLD MARKETS AND TRADE
Brazilian Wheat Imports to Climb to 6-Year High: With
sharply lower production this year, Brazil is expected to boost imports and
become the world’s second largest market after Egypt. Production is expected to
fall as a result of smaller area. Returns to farmers have been poor, reducing
the attractiveness of planting wheat, and this has been exacerbated by dry
conditions in some areas. Also, strong competition from imported flour/pre-mix
flour supplies from Argentina has also helped depress wheat prices. These
imports have been climbing steadily and have nearly doubled during the past 5
years to around 400,000 tons (grain equivalent). In addition to necessitating
larger imports, tight domestic supplies will likely curtail exports by Brazil,
which in 2005/06 were about 750,000 tons and were facilitated by government
support (See PDF version for chart).
Domestic: Hard and soft wheat prices diverged in June
reflecting differing supply situations between classes. For hard wheat, prices
surged on tight supplies of Hard Red Winter (HRW) and deteriorating crop
conditions of the Hard Red Spring (HRS) crop. For the month, HRS prices climbed
$11 per ton and HRW prices were up $10 per ton. For soft wheat, however,
production prospects looked favorable, which pressured prices. For the month,
Soft Red Winter (SRW) prices fell $6 per ton while Soft White Wheat (SWW) prices
were unchanged (See PDF version for chart).
TRADE CHANGES IN 2006/2007
- Australia is down 1.5 million tons to 17.5 million as production is
reduced this month due to continued dryness.
- Canada is up 500,000 tons to 18.5 million on very large exportable
supplies and strong recent sales to India.
- China is up 1.0 million tons to 2.0 million as larger production is
expected to allow greater exports of feed-quality wheat to nearby markets.
- Turkey is down 500,000 tons to 2.0 million as smaller production and a
lower quality crop is expected to reduce the amount of flour exports.
- Ukraine is up 1.0 million tons to 2.5 million with the harvest
expected to be larger than previously anticipated.
- Brazil is up 600,000 tons to 6.8 million--a 6-year high--as sharply
reduced production necessitates increased imports.
- China is down 800,000 tons to 700,000 tons. Production is expected to
reach a 7-year high, reducing the need for imports.
- Turkey is up 500,000 tons to 700,000 on smaller domestic production
and increased need to import high quality supplies.
- United States is up 100,000 tons to 2.8 million, the highest in 5
years. Tight supplies of hard wheat are expected to result in larger imports
TRADE CHANGES IN 2005/2006
- Argentina is raised 300,000 tons to 7.5 million due to stronger than
anticipated late-season exports.
- China is raised 300,000 tons to 1.4 million on recent large shipments
of wheat for feeding to Philippines.
- Turkey is raised 400,000 tons to 2.9 million with strong exports of
- Ukraine is raised 500,000 tons to 6.0 million. Despite the prospects
of a short new crop, shipments during the last few months of the marketing
year were larger than expected.
- Iraq is raised 400,000 tons to a record 4.7 million with strong
late-season shipments from Canada.
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Thursday, July 13, 2006