WORLD MARKETS AND TRADE:
COMMENTARY AND CURRENT DATA
WHEAT: WORLD MARKETS AND TRADE
World Ending Stocks Shrink to 25-year Low: With wheat
production estimates for many of the world’s major suppliers continuing to
shrink, global ending stocks are forecast to drop considerably in 2006/07.
Stocks in exporting countries are projected to be down 25 percent, causing
prices to soar. For the United States, ending stocks are forecast to fall to the
lowest level since 1995/96, with the drawdown in hard wheat stocks even more
dramatic (see article). For the European
Union, smaller production will likely reduce free stocks, and intervention
stockpiles could also continue to shrink as high prices make sales out of
intervention attractive. High domestic prices will also likely discourage large
sales into intervention later in the year (See
PDF version for chart).
Domestic: For July, hard wheat prices fell while soft
wheat prices remained largely unchanged. Although the hard wheat situation
continues to be very tight, much of this was already factored into the run-up in
prices in June. Technical factors and harvest pressure helped push wheat futures
lower. For the month, Hard Red Spring (HRS) prices fell $16 per ton and Hard Red
Winter (HRW) fell $10 per ton, while Soft White (SWW) prices rose $2 per ton and
Soft Red Winter (SRW) rose $1 per ton (See PDF
version for chart).
TRADE CHANGES IN 2006/2007
- Argentina is down 700,000 tons to 8.8 million on smaller crop
- EU-25 is down 1.0 million tons to 15.5 million as production was
slashed this month by nearly 7.0 million tons, primarily in Germany and
France--the EU’s top two exporting countries.
- Russia is up 1.0 million tons to 7.5 million and Ukraine is up
1.0 million tons to 3.5 million with the harvests expected to be larger than
previously anticipated on good crop weather. Also, bumper barley crops will
likely encourage more feeding of that grain and allow greater exports of
- EU-25 is up 300,000 tons to 6.8 million on reduced production
and greater availability of feed-quality wheat from the Black Sea region.
TRADE CHANGES IN 2005/2006
- Argentina is raised 400,000 tons to 7.9 million due to stronger than
anticipated late-season exports.
- Canada is lowered 200,000 tons to 15.8 with nearly complete trade
- Ukraine is raised 400,000 tons to 6.4 million tons with very strong
late-season exports. Despite the prospects of a short new crop, shipments
during the last few months of the marketing year were larger than expected.
- EU-25 is raised 500,000 tons to 15.0 million on higher exports in May
- China is lowered 200,000 to 1.1 million on near year-end trade data.
- Egypt is raised 200,000 tons to 7.7 million making it once again the
world’s largest importer. For the second straight year, Russia has been the
largest supplier to this market.
- India is down 300,000 tons to 200,000. Although purchases were strong,
most of the imported wheat began to arrive shortly after the trade year ended.
- Philippines is up 200,000 tons to 3.1 million on near year-end trade
- Russia up 300,000 tons to 1.1 million based on strong late-season
imports from Kazakhstan.
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Monday, August 14, 2006