Wheat Exports in Slow Start

Exports of U.S. wheat promise to be down significantly for 2009-2010, according to the USDA, as projections are for about 925 million bushels of wheat to export during that time period, where the marketing year began on June 1.

Assuming this is accurate, which it seems it's close, that would be 90 million less bushels of wheat exported this year over last, and a huge 339 million less than the 2007-2008 year.

At this pace it'll be the third worst year of wheat exports in 25 years.

Wheat export inspections for the first 9.6 weeks show that they're at 130.7 million bushels; almost 100 million bushels under last year at this time. The weekly average wheat inspection has been at an anemic 13.7 million bushels.

This is even far below the USDA export projection of 925 million bushels, as the average needed to reach that is 18.7 million bushels for the rest of the year, which will be difficult to attain.

While some say this isn't a good comparison over the very quick rate of wheat exports last year, it still is far behind what would be needed to reach projections. As fo the end of July, the USDA said outstanding export sales of wheat stood at 148 million bushels, while last year it was at 276 million bushels.

The USDA’s weekly U.S. Export Sales report breaks down exports and export sales by where the wheat is headed and by class of wheat. Through July 30, export commitments compared to those of last year plunged by 60 percent for hard red winter wheat, 63 percent for soft red winter wheat, and 26 percent for hard red spring wheat. Export commitments were 17 percent larger for white wheat and 15 percent larger for durum wheat. Commitments for all classes of wheat were down by a huge 46 percent.

Among its largest wheat trading partners, commitments have dropped significantly; 27 percent to the Philippines, 45 percent to Japan, 48 percent to Mexico, and 87 percent to Egypt. Egypt buys only soft red winter wheat from the U.S.

Exports of wheat globally are down this year because a number of countries have significantly increased wheat production domestically, so diminishing the amount of wheat needed for its citizenry outside the countries.

Much of the recent low wheat prices has been attributed primarily to the decline in export demand for soft red winter wheat, which doesn't look to change this year.

As far as wheat inventories globally, they are expected to grow by 8 percent this year, which equals 512 million bushels. Of that, China will account for 80 percent of the wheat inventory increase.

India's Wheat Exports Limited by High Domestic Prices

India wheat exports down in fiscal year

In the midst of high local prices, projections are it will limit India's wheat and wheat product exports in the fiscal year ending March 2010, although the country has eased an earlier ban on exports this month to allow limited shipments.

On July 3, the federal government allowed three state-run firms - MMTC, STC and PEC - to export 300,000 tons each of wheat by March 31, 2010. In addition, private companies were allowed to export another 650,000 tons in wheat products, also by the same date.

But that is unlikely to lead to a surge exports.

"International prices are around $195 to $198/ton and Indian wheat costs around $232/ton," said Veena Sharma, secretary of Roller Flour Millers Federation (RFMF) of India.

She said exports are feasible only if international prices rise in the coming months.

"Unless there is a government subsidy of $30-$40/ton, (wheat exports are) not feasible," said Ajay Goyal, president of Maharashtra Roller Flour Millers Association (MRFMA).

However, the formal government order allowing the exports made it clear that "no subsidy will be given" to exporters.

India's federal government had imposed a ban on exports of wheat and wheat products in December 2007 to help curb inflation.

Since then, domestic wheat stocks have reached comfortable levels following two bumper crops and on carryover stocks from previous imports.

Even if some exports take place now, those could mainly be to neighboring countries, traders said.

"We may have to look to export to countries like Bangladesh, Nepal, Bhutan and Maldives to save on freight costs," said a state-run trading firm official, who did not want to be identified.

However, industry officials ruled out the possibility of wheat exports to Pakistan because there is no supply shortage there.

Meanwhile, state procurement of wheat has been on the rise following higher support prices.

Farmers sold more wheat to government agencies, rather than to private companies, as the state-fixed price of 10,800 rupees ($223)/ton was attractive, and relatively higher than even global prices, traders said.

Latest government data showed local wheat purchases by government agencies have already touched a record 25.06 million tons since purchases started in April, and more was trickling into state granaries.

In its annual budget announcement Monday, the government said it would step up subsidized sale of grains to poor consumers in the coming months.

With the chance of wheat exports looking slim, industry officials were more hopeful about exports of wheat products such as flour and semolina.

"Although there is not so much of demand for wheat products in the global market now, there could be some demand coming from the Middle East," said A N Gupta, chairman of Wheat Products Promotion Society of India.

He said demand for value-added wheat products from India is likely to be much more than the demand for the grain itself in global markets.

India wheat exports down in fiscal year

Wheat News | Wheat Inventories in India to Remain Huge

Wheat

Wheat inventories in India are likely to remain large given the expectation of another bumper crop this year and limited export opportunities, said the Food and Agriculture Organization (FAO) of the United Nation in its latest report.

Inventory in India, another major producer and stockholder, is forecast to remain unchanged at a five-year high of 17.8 million tonnes. But another bumper year for wheat in 2010 may increase the inventory further, said the report. The forecast assumes significance as the country has not opened wheat for exports despite excessive supplies in the domestic market.

Since, the United Progressive Alliance government has been formed without any alliance pressure and most importantly, the inflation remains under control, trade sources estimate the government may allow wheat exports in near future primarily because of global trade deficit.

FAO’s first forecast for wheat trade in 2009-10 stands at 114 million tonnes, down as much as 8 per cent, or 10 million tonnes from the estimated 2008-09 record volume.

Wheat export was suspended in May 2007 to control inflation that shot up over 13 per cent. The government also suspended futures trading in wheat due to the fear of price rise on traders’ speculation.

Meanwhile, FAO has estimated India’s wheat production to decline marginally by one per cent to 77.6 million tonnes in 2009 on favourable climatic condition throughout the season.

The specialised agency of the United Nations, which leads international efforts to defeat hunger, has forecast global wheat output to decline by 4 per cent to 655.8 million tonnes in 2009 compared with 684.6 million tonnes in the previous year.

The agency estimates total course grains’ output to remain rangebound at 37.8 million tonnes this calendar year compared with 38 million tonnes in the last year.

But, the global coarse grains production is likely to decline by 4 per cent at 1,098.5 million tonnes this year compared with 1,142.3 million tonnes in the previous year.

The 2008 paddy season has just been completed with the harvesting of secondary crops in Asia. Boosted by excellent results of these crops, global paddy production is now estimated at 689 million tonnes, equivalent to 460 million tonnes of milled rice, well above earlier expectations and 4.3 per cent more than in 2007.

But the sector’s attention is now turning to the 2009 season, which is already well advanced in all but the critically important south-eastern Asian region, where farmers are awaiting the imminent arrival of the monsoon rains to plant their crops.

Preliminary information on plantings and crop development over the 2009 season has been favourable. As a result and assuming a normal rainfall pattern in Asia in the coming months, world production in 2009 could gain a further 1 per cent and reach 696 million tonnes (465 million tonnes, milled equivalent), FAO said.

The relatively moderate increase expected in 2009 reflects less attractive prospects for producer returns. However, in spite of financial constraints, many governments have maintained their support to the sector through input subsidies, investment programmes and direct price incentives, which, barring any major setback, is likely to sustain production growth.

Trade sources estimate India’s rice output to remain rangebound at 147 million tons in 2009 provided monsoon arrives in time and distributed evenly.

Wheat

Wheat: Argentina Wheat Market Crumbling

Although a number of crops are failing in Argentina, including corn and soy, wheat is also participating in the destructive drought that is crushing the entire agriculture sector of Argentina.

The commodity grain sector hasn't moved with the metals market, as demand for everything is down, even though people still need to eat, as well as their livestock.

This is particularly difficult for Argentina, who is one of the top exporters of grains in the world, and so depend on so much on it for the welfare of the country.

At this time things are so bad that farmers have given up trying to salvage their wheat crop, and instead are focusing on saving their cattle. Even if the cattle are saved, they will be difficult to breed because of the lack of food for them.

According to farmers in Argentina, wheat fields are as dried as they can be, with little hope of salvaging a wheat crop, as there is little to put in storage.

Unfortunately for everyone involved, the wheat planting, wheat yield and wheat harvest around the world has been huge, and so the drought in Argentina is hurting them without benefiting anyone else.

Even though farmers in the U.S. were hoping to get some of the trade usually done by Argentina with Brazil, it looks like it won't have much impact on wheat exports from the U.S., and so Argentines will be the ones to suffer.

So in spite of this, wheat futures aren't moving much because of this, although there was a slight move upward recently based on wheat news from the country. But it's not sustainable.

Weather predictions in the country are, as usual, contradictory, and so some say the drought will end with rain coming, and others say it won't amount to much. Either way, wheat farmers in Argentina, and its people, are in for a long struggle as grain prices continue to fall.

For Argentina, this is the worst year for drought and lack of rain since 1971, and even if there is a major change in the weather patterns, the wheat harvest will be way down, as wheat production grinds to a halt.

Along with the wheat crop, other crops suffering are corn and soy, with silos there to store the crops are in many cases empty or half full.

Even though soy is down, it is still on the positive side, and is projected to increase in production by 7 percent. The corn harvest will fall by about 27 percent, and wheat production will be hit the most from the poor growing season projected to plunge by 44 percent over the 2008-2009 harvesting season.

Grains are so scarce in the country, that the Argentine government is has even lowered the minimum weight requirements to slaughter cattle so the farmers can make some money off them before they are worthless or die.

It'll take some time to recover from this wheat disaster, as Argentina will suffer probably for a couple years or more trying to come back from this natural disaster.

In a normal year this would have boosted wheat prices tremendously, but the wheat harvest has been so plentiful globally, that it will easily absorb the losses without making a difference in wheat prices.

Wheat Prices Will Fall as Demand Dries Up

Some traders are looking for any tidbit of information to keep the wheat prices up, but I don't think they can hold for too long.

Much of the argument for wheat prices holding is the dry weather in a couple regions in South America.

But with prices higher now than the fundamentals warrant, it's hard to believe people seriously think losing a little bit of the global crop will really make much difference. There's so much wheat available that it would take something of epic proportions to keep prices up.

Even add in the possibility that the cold front in the U.S. may damage some wheat crop if there isn't any snow cover, and that still doesn't change the fact of the huge global supply available.

Most of what's been driving the prices up over the last couple months has been the re-entry of some funds into the market, along with the soybean rally. Over the last 6 weeks wheat futures have risen approximately 25 percent.

With demand so low, I don't see that being able to continue in any sustainable way in the months ahead.

The one unknown is when the U.S. dollar will start collapsing under the weight of the huge amounts of money being used to stimulate the U.S. economy. That would of course make exporting wheat much cheaper, and could increase sales.

The problem is there's no way of knowing how long that will take, so it can only be watched for, not counted on, as far as timing goes. When it does happen though, it will be a boon to commodity producers in the U.S.

Concerning demand, the USDA on Monday projected the ending stocks for U.S. wheat in 2008 - 2009 stand at 655 million bushels, an increase of 32 million from December's estimates. With nowhere to really send that wheat, as demand is so soft and wheat so plentiful, it will stay in storage until there's someone to sell it to.

Even that will continue to be a challenge as for the same time period, wheat consumption accroding to the USDA estimates, are being lowered.

Livestock markets have no interest at this time in buying either, as they're struggling as much as anyone else, with exports down and profits under pressure. Cost inputs and lower priced global wheat remains major factors in these decisions.

While there's nothing that can be done about it now, the real problem stems from last years' prices, where everything went right for U.S. wheat farmers, and supply was down globally. Farmers responded predictably by putting more wheat in the ground for this season, contributing in part to the current glut.

This wasn't too smart, as the chances of having two years in a row like that are almost nil, and they knew foreign farmers would respond the same at lower costs. Farmers, as well as anybody in business must learn if they missed it this time around, there's not much guarantee they hit it the next.

It's expected that spring wheat acreage planted this year will drop, especially if prices don't come back, which they are highly unlikely to do.

Wheat Prices Slightly Up on Dry Weather, Investment Funds

Although wheat was able to post gains of about 1 percent, primarily on the dry weather pattern in South America, overall poor demand still weighs on upward movement, and should cause the grain to fall.

Another help for prices this week were some investment funds reentering the commodities market.

Global wheat supplies are abundant this year, and most are less expensive than American wheat, which should continue to put downward pressure on the price.

For the week, U.S. wheat exports plunged from the expected 300,000 to 400,000 tons, to only 41,800 tons.

Unless the number of acres planted for wheat goes down significantly, wheat prices could fall to lows as spring breaks in.

If weather continues to be dry in South America, it could help the prices hold for a little longer.

DJ US Export Sales: Commodity Highlights - Dec 26

Kansas City, Dec 26, 2008 (Dow Jones Commodities News via Comtex) -- USDA Thursday released the following export highlights in its Export Sales report for week ended Dec 18.

Wheat: Net sales of 253,600 metric tons were down 3 percent from the previous week and 12 percent from the prior 4-week average. Increases reported for Mexico (58,600 MT), Egypt (57,800 MT), Taiwan (56,000 MT), Japan (53,700 MT), Guatemala (30,900 MT, including 30,200 MT switched from unknown destinations), Yemen (28,000 MT), and South Korea (23,800 MT), were partially offset by decreases for unknown destinations (50,800 MT) and Spain (40,000 MT). Exports of 290,900 MT--a marketing-year low--were down 30 percent from the previous week and 34 percent from the prior 4-week average. The primary destinations were Mexico (96,900 MT), Egypt (57,800 MT), Japan (46,500 MT), Guatemala (30,900 MT), Morocco (19,600 MT), and Colombia (15,400 MT).

Corn: Net sales of 551,400 MT were down 10 percent from the previous week and 6 percent from the prior 4-week average. Increases reported for Japan (263,900 MT), Taiwan (90,500 MT, including 79,000 MT switched from unknown destinations), Mexico (81,000 MT), Venezuela (80,000 MT), Guatemala (22,400 MT), and Syria (18,000 MT), were partially offset by decreases for South Korea (24,600 MT), Egypt (16,300 MT), unknown destinations (12,000 MT), and Colombia (5,800 MT). Exports of 831,300 MT were up 17 percent from the previous week and 7 percent from the prior 4-week average. The primary destinations were Japan (289,200 MT), Mexico (119,000 MT), Taiwan (117,200 MT), South Korea (114,300 MT), Colombia (69,100 MT), Canada (28,900 MT), and Egypt (24,100 MT).

Barley: There were no sales reported during the week. Exports of 5,600 MT were for Japan (4,900 MT) and Mexico (700 MT).

Sorghum: Net sales of 88,900 MT were for Mexico. Exports of 12,800 MT were for Mexico (12,700 MT) and Canada (100 MT).

Rice: Net sales of 23,300 MT were down 77 percent from the previous week and 71 percent from the prior 4-week average. Increases were reported for Venezuela (20,000 MT), Mexico (1,400 MT), Canada (1,200 MT), Jordan (600 MT), and the Bahamas (200 MT). Decreases were for Japan (600 MT). Exports of 61,800 MT were down 34 percent from the previous week and 5 percent from the prior 4-week average. The primary destinations were Costa Rica (33,000 MT), Mexico (16,500 MT), Canada (2,600 MT), Honduras (2,500 MT), South Korea (2,000 MT), Jordan (1,900 MT), and New Guinea (1,400 MT).

Soybeans: Net sales of 584,800 MT were down 35 percent from the previous week and 18 percent from the prior 4-week average. Increases reported for China (374,400 MT, including 167,000 MT switched from unknown destinations), the Netherlands (129,800 MT, including 120,000 MT switched from unknown destinations), Indonesia (114,500 MT), Egypt (60,000 MT), and Taiwan (59,600 MT, including 56,000 MT switched from China), were partially offset by decreases for unknown destinations (232,000 MT) and Morocco (23,800 MT). Net sales of 6,100 MT for 2009/10 delivery were for Japan. Exports of 951,500 MT were down 18 percent from the previous week and 13 percent from the prior 4-week average. The primary destinations were China (609,200 MT), the Netherlands (129,800 MT), Japan (57,000 MT), Mexico (39,900 MT), Morocco (31,200 MT), Israel (23,300 MT), and Taiwan (23,000 MT).

Soybean Cake and Meal: Net sales of 145,700 MT were up two and three-tenths times from the previous week and nearly two and two-fifths times from the prior 4-week average. Increases were reported for Mexico (33,300 MT), Venezuela (23,000 MT), Turkey (16,700 MT, including 15,000 MT switched from unknown destinations), Canada (16,200 MT), the Dominican Republic (15,700 MT), and Guatemala (11,900 MT). Exports of 229,700 MT were up 77 percent from the previous week and 44 percent from the prior 4-week average. The primary destinations were Venezuela (56,200 MT), Mexico (43,600 MT), Ecuador (27,400 MT), Canada (23,300 MT), Turkey (16,700 MT), and the Dominican Republic (16,300 MT).

Soybean Oil: Net sales of 5,400 MT were mainly for Canada (2,200 MT), Mexico (2,000 MT), Nicaragua (600 MT), the Dominican Republic (300 MT), and Guatemala (200 MT). Decreases were for Saudi Arabia (100 MT). Exports of 7,400 MT were up 23 percent from the previous week, but down 43 percent from the prior 4-week average. The destinations were primarily Mexico (2,600 MT), Costa Rica (1,500 MT), El Salvador (800 MT), Canada (700 MT), Barbados (700 MT), and Nicaragua (600 MT).

Cotton: Net Upland sales of 118,900 running bales were up 52 percent from the previous week and 7 percent from the prior 4-week average. Increases reported for Turkey (26,700 RB), Morocco (17,100 RB), Indonesia (16,400 RB), China (13,700 RB), Bangladesh (10,200 RB), and Malaysia (9,700 RB), were partially offset by decreases for Pakistan (7,700 RB), El Salvador (1,900 RB), and unknown destinations (1,800 RB). Net sales of 1,000 RB for delivery in 2009/10 were for South Korea. Exports of 210,700 RB were up 18 percent from the previous week, but down 1 percent from the prior 4-week average. The primary destinations were China (54,600 RB), Turkey (47,700 RB), Vietnam (29,500 RB), Mexico (12,600 RB), and Thailand (10,400 RB). Net American Pima Sales of 100 RB resulted as increases for Indonesia (600 RB), Thailand (400 RB), and Japan (400 RB), were partially offset by decreases for China (1,300 RB). Exports of 400 RB were for India.

Hides and Skins: Net sales of 689,400 pieces were up 7 percent from the previous week and 24 percent from the prior 4-week average. Whole cattle hide sales of 719,500 pieces were primarily for China (352,900 pieces), South Korea (142,700 pieces), Taiwan (118,700 pieces), Mexico (30,300 pieces), and Japan (25,500 pieces). Exports of 455,700 pieces were up 12 percent from the previous week and 14 percent from the prior 4-week average. Whole cattle hide exports of 443,400 pieces were primarily to China (224,300 pieces), South Korea (77,900 pieces), Thailand (39,500 pieces), Taiwan (34,800 pieces), and Mexico (27,100 pieces).

Net sales of 81,100 wet blues were down 9 percent from the previous week and 46 percent from the prior 4-week average. Increases were mainly for Thailand (52,300 unsplit), Taiwan (28,400 unsplit), China (4,800 unsplit), Mexico (2,400 grain splits), and Hong Kong (1,800 unsplit). Exports of 78,800 hides were up 3 percent from the previous week and 17 percent from the prior 4-week average. The primary destinations were China (35,600 unsplit), Hong Kong (16,600 unsplit), Italy (14,700 unsplit), and Mexico (4,900 grain splits). Net sales of splits totaling 419,200 pounds were primarily for China (405,000 pounds). Exports of 128,200 pounds were down 63 percent from the previous week and 65 percent from the prior 4-week average. The destination was China.

Beef: Net sales reductions of 6,200 MT resulted as increases for Mexico (1,900 MT), Canada (800 MT), and the Philippines (100 MT), were more than offset by decreases for South Korea (7,100 MT), Vietnam (900 MT), Japan (600 MT), and Russia (400 MT). Net Sales of 13,000 MT for delivery in 2009 were primarily for South Korea (6,400 MT, switched from marketing year 2008), Vietnam (2,400 MT, including 900 MT switched from marketing year 2008), Mexico (2,400 MT), and Japan (1,100 MT, including 400 MT switched from marketing year 2008). Exports of 8,200 MT were primarily to Mexico (3,900 MT), Canada (1,500 MT), Japan (800 MT), South Korea (600 MT), and Taiwan (400 MT).

December 26, 2008

FOREIGN AGRICULTURAL SERVICE/USDA
SUMMARY OF EXPORT TRANSACTIONS
Reported Under the Daily Reporting System
For Period Ending December 18, 2008
Commodity Destination Quantity (MT) Marketing
SOYBEANS 1/ CHINA 116,000 2008/09

1/ Export sales.

-By Valena Henderson; Dow Jones Newswires; 913-322-5171;
csstat@dowjones.com

(END) Dow Jones Newswires
12-26-08 0832ET
Copyright (c) 2008 Dow Jones & Company, Inc.

Australia Aiming to Compete in the Lucrative Taiwanese Premium Wheat Category

With record-setting wheat production this year, prices have been plummeting, putting pressure on the U.S., the world's largest exporter.

If that's not enough, the high-end wheat market is now receiving potentially more competition, as Taiwanese wheat importers are visiting Australia to get a first-hand look at how they produce, handle and transport their wheat.

AgFarm, an Australian grain trading specialist, is hosting the event, where seven flour millers from Taiwan observe the practices.

In a trial run last year, the Taiwanese flour mills imported 8,000 metric tons of high protein wheat.

Taiwan is known for its fickleness concerning quality standards of wheat, and the exercise is for the purpose of learning how Australian wheat producers can meet those rigid standards.

The reward is a premium price paid for meeting their specifications.

Historically, the U.S. has been the dominating force in this premium market, and it could signal a significant new competition if Taiwan is convinced Australia can consistently deliver the high quality, high protein wheats.

At this time there is no commitment from the Taiwanese, but after the tour AgFarm is hoping to secure orders for the wheat.

U.S. Could Land Some Wheat Export Business from Brazil

There are some things that would have to be overcome in order for Brazil to import some U.S. wheat this year; something that has become rare since the agreement between several South American countries to sell grain between countries with no duty attached to the deals.

While Argentina usually supplies the bulk of wheat to Brazil, this year their production has fallen drastically from last year's 16 million tons to only 10.1 million this year. Of that, last year 10.5 million tons were exported to Brazil, and this year projections are for only 5.8 million tons to be available.

The major disruptions causing the lackluster production for Argentina has been dry weather and less acreage planted in wheat.

A key factor the attractiveness of exporting to Brazil for the U.S. is if Brazil drops its import tax. The U.S. is able to send a high quality wheat with low freight charges, giving them an advantage over its competitors.

If that doesn't happen, U.S. wheat exports don't look too good.

With India making over 2 million extra tons of wheat available for export in their region, and Russia winning North Africa and Middle East contracts, it makes it harder for the U.S. to compete, as there's an abundance of wheat available because of the record crop this year.

The USDA is once again expected to drop its wheat export estimates over the next several months.

Wheat Prices in European Union Fall on Recession Fears

Wheat prices in the European Union fell today, largely tracking the global markets and U.S. grain futures.

The emotional boost from the central banks' PR machine around the world is largely over, and even if bankruptcy on a global scale has been avoided, the fundamentals underlying the problem remain, and most commodities, including wheat, continue to feel the downward pressure as a result.

In Europe, November milling wheat futures dropped by 4 euros to 143.00 euros a ton, as of 1500 GMT on the Euronext.

Wheat futures in London fell as well, as the strength of the British pound against the U.S. dollar and euro is slowing down exports from the country. Wheat exports from Britain are down a huge 42 percent from last year, as competition, along with the stronger sterling hammers the export market.

Italy also experienced a significant drop in wheat prices, as they have fallen between 5-10 euros from last week's close.

There is an abundance of wheat, and that surplus, along with weaker demand, is pushing down prices.

Wheat Climbs to Eight-week High On Weak Dollar, Surge in Crude Oil

Wheat enjoyed a comeback on Thursday, as it reached an eight-week high, as crude oil helped lift it up, along with a weakening U.S. dollar. Corn and soybean increases also helped push the commodity upwards.

On the CBOT, December wheat ended the session up 22 3/4 cents at $9.22 1/4 a bushel. December wheat at the Kansas City Board of Trade finished at 23 1/2 cents higher at $9.50 3/4, while December wheat at the Minneapolis Grain Exchange ended the session at $9.82 1/4, a 27 1/4 cent increase.

U.S. wheat export demand should remain strong, as weekly export sales for 2008-09 for the U.S. is at a marketing year high of 916,500 tons. The average of 522 million bushels of export wheat sales is about 10 percent above the five-year average. Wheat shipments are running at about 37 percent higher than the five-year average.