WORLD MARKETS AND TRADE:

COMMENTARY AND CURRENT DATA

WHEAT: WORLD MARKETS AND TRADE

Shift in EU-27 Trade: Surging internal prices are causing major market changes. Production is currently estimated to be flat because of rain, frost, and drought in different parts of the Union. Carryin stocks are down this year mainly due to low intervention stocks, which are now virtually depleted compared to 9 million tons just a few years ago. This tightening situation has caused internal prices to reach record levels, which likely will reduce exports. Moreover, because the crop’s quality has deteriorated due to fungus and rust damage, EU-27 will need to import more milling wheat for blending. As a result, this should provide opportunity for U.S. exports, particularly for higher protein wheat such as HRS.

Domestic: For July, wheat prices for all classes climbed on reports of lower HRW production due to weather conditions, higher than average July sales, as well as quality concerns on the EU-27 crop. For the month, Hard Red Winter (HRW) rose $13 per ton, Hard Red Spring (HRS) rose $3, Soft Red Winter (SRW) rose $20, and Soft White (SWW) rose $16.

• Australia is up 500,000 tons to 14.5 million on stronger demand for its high quality wheat.

• EU-27 is down 500,000 to 11.5 million on estimated lower production.

• Russia is up 500,000 tons to 11.0 million on estimated higher production.

• United States is up 500,000 tons to 29.0 million due to both stronger demand and weaker competition from some major suppliers.

• EU-27 is up 500,000 tons to 6.5 million on reduced production and tight stocks.

• Australia is down 500,000 tons to 11.5 million with weak late-season shipments.

• China is up 283,000 tons to 2.8 million based on final trade numbers.

• Kazakhstan is up 500,000 tons to 6.0 million with strong late-season exports.

• Egypt is down 300,000 tons to 6.7 million on slower buying patterns.

• Morocco is up 300,000 tons to 1.8 million with stronger than usual purchases due to drought which has cut supplies.

• Ukraine is up 325,000 tons to 400,000 on large late-season purchases from Kazakhstan.

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Last modified: Friday, August 10, 2007