NORTH AMERICAN WHEAT ACREAGE TO EXPAND
With winter wheat seedings for 2018 essentially flat, current price strength in spring wheat suggests some expanded area in the Northern Plains, with the domestic harvest forecast at 50mt. Recognizing some considerable setback from the dry conditions affecting winter wheat crops in major growing areas in the southern Plains, with wheat prices to rise modestly to $4.70/bu and slightly above last year. Canadian plantings are also anticipated to rise helped by a more competitive currency
EU WHEAT OUTPUT PROJECTED LOWER
Several parts of Europe recorded a rain deficit this year, but this does not represent an immediate concern for crops according to the EU’s Monitoring Agricultural Resources (Mars), but the possibility of a cold-snap and a plunge in temperatures below –12° Celsius may threaten large parts of Europe where crops have not acclimatized sufficiently, particularly in Hungary, Romania, Bulgaria and the Iberian Peninsula. EU winter wheat crop is forecast lower at 142mt.
FEWER PLANTINGS, SCANT RAINFALL TO REDUCE INDIA’S WHEAT CROP
India’s wheat crop is forecast to fall to 92mt in 2018. Fewer plantings and lack of adequate rain is expected to cut India’s wheat output to 92mt in 2018/19 with imports expected to double to 4mt according to the IGC.
RISE IN WHEAT PLANTINGS BUOYED BY EXPORTS
Argentina’s wheat plantings are expected to rise in 2018/19 buoyed by a record export campaign. On the back of a large wheat harvest, low-priced Argentine sup- plies are challenging US exports not only in Brazil and Central and South American but also in other markets including, Sub- Saharan Africa and Southeast Asia.
RECORD WHEAT CROP BOOSTS SUPPLIES
Boosted by a huge crop in Russia, India and better crops in the EU and Turkey offset the steep fall in US production, with global wheat output forecast at a record 758mt in 2017/18.
STRONG GLOBAL GROWTH PROPELS TRADE TO 184MT
Consumption growth especially for food/industry and feed in developing countries has pushed global trade to a record 184mt, the top importers for wheat in 2017/18 include, Indonesia, Egypt, Iraq, Bangladesh and the US. In the current marketing year, Indonesia has surpassed Egypt as the largest single wheat buyer. Imports are forecast to rise by 2.5mt to 12.5mt, mostly in response to growing food and feed needs as population/incomes rise, and diets move towards western trends for bread, noodles, poultry and aquaculture products. Additionally, importing low- quality milling wheat for use in feed rations, helps feed millers circumvent the government’s ban on imports of corn and feed wheat.
BLACK SEA WHEAT DOMINATES TRADE
Russia and other Black Sea countries continue to dominate global trade with offers $50–60/t below their rivals and increasing market share at the expense of other major exporters. Russian wheat exports are forecast at 36mt in 2017/18 and together with the Ukraine 17mt and
Kazakhstan 7.5mt, Black Sea exports total almost 61mt, one-third of the global wheat trade. Record wheat production, better infrastructure and transportation subsidies have improved Russia’s competitive edge, reflected in Egypt’s GASC tender (2 February 2018) for 180,000/t wheat at prices $202–204/t FOB (free on board) basis.
Drought in Argentina and in the southern US Plains, robust export demand contributed to price gains in some countries. CBOT (Chicago Board of Trade) May 2018 wheat contract closed up at $4.642/bu ($170.55/t), Paris May contract milling wheat E164.50/t ($202.24), UK May contract feed wheat £139.25/t ($194.50/t) (23 February 2017)
LARGER CORN, BARLEY AND SORGHUM IN 2018/19
USDA forecast a modest increase in US corn plantings c.90m/acres and a crop of c.366mt with pressure from soybeans expected to impact corn and other soybean acreage and with a rebound in South America’s, likely to boost the global corn output higher in 2018/19. For other coarse grains, barley and sorghum lower inventories and improved profitability point to above-average global harvest. US corn output due to lower yields is anticipated to fall to c.366mt, with a small increase in domestic consumption and fewer exports of 48mt, US corn stocks are expected to close down to 58mt.
DEMAND FOR COARSE GRAINS OUTPACES SUPPLY IN 2017/18