High world grain production and supplies are lowering prices making grain imports for many countries more attractive. World wheat trade for 2011/12 (July-June international trade year) is projected to reach 136.6 million tons, up 2.0 million this month, but 6.3 million tons below the 2008//09 record. At the projected level, 2011/12 world wheat trade would be the second-highest in history. Imports of wheat by China are projected up 0.5 mil ion tons this month to 1.5 million as Australian wheat is competitive in China (as confirmed by a recent purchase of 0.5 million tons of feed-quality wheat) and wheat feeding increases in large corn-deficit provinces of southeastern China.
Wheat imports by Morocco are raised 0.4 million tons to 3.0 million, reflecting the poor quality of the wheat crop and additional need for food-quality milling wheat. Imports are also increased for Algeria, up 0.3 million tons to 6.1 million due to a smaller crop, and Brazil, up 0.3 million tons to 7.0 million as persistent rains in Parana during the wheat harvest reduced the quality of domestic wheat supplies and is expected to push more domestic wheat into feeding.
Even smaller increases are made for three countries in the Horn of Africa–Ethiopia, Kenya, and Eritrea– following their pace of wheat imports and an increased need to replenish insufficient grain supplies, and for three Central Asian countries–Kyrgyzstan, Tajikistan, and Uzbekistan– reflecting increased availability of cheap Kazakhstan wheat in the region. Imports are also adjusted up for Armenia.
Wheat imports are down 0.5 million tons in South Korea to 4.2 million, as a swap (mentioned above) is made between corn and wheat in the country’s feeding. The swap reflects increased competitiveness of corn versus wheat feeding, demonstrated by the strong pace of early-season corn imports and sluggish wheat imports. Imports are also down 0.1 million tons in Mexico, reflecting a larger reported wheat crop.
Export prospects are increased for Russia, up 1 million tons to 19 million, due to a very strong pace of recent sales following robust demand for abundant and competitively priced wheat of Russian origin, despite appreciation of the ruble against other currencies. There are concerns that Russia will impose grain export restrictions when total grain exports reach 24 million tons. In an attempt to export before restrictions are imposed, producers are shipping a lot of output to ports, creating railroad jams.
Ironically, these jams lowered the pace of exports in October, provoking governmental concern. The government is considering levying fines for keeping grain-loaded railcars idle. Another recent development is that the Russian Federal Tariff Commission has established a new set of subsidized tariffs for rail transportation of grain for export from the Urals, Siberia, and Far East (with the new tariffs apparently to be 50 percent lower than current levels).
Although current export license sales are low, EU-27 exports are increased 1 million tons to 17 million. The higher export projection reflects the larger wheat crop, which should put pressure on domestic wheat prices, and the weakening of the euro vis-à-vis other currencies which makes EU wheat more price competitive.
U.S. 2011/12 wheat exports remain projected at 26 million tons (975 million bushels for June- May), down 28 percent from a year earlier (down 24 percent for June-May local marketing year). Census data for July through September show exports just 10 percent below earlier-year levels, and October inspection data practically matched a year ago. On the other hand, at the end of October outstanding export sales were down almost 45 percent on the year.
It is expected that for the rest of 2011/12, large supplies in the Black Sea countries, Australia, Europe, and Argentina, combined with reduced supplies in the United States, will curb U.S. sales, especially compared with a year ago, when late-season sales were unusually strong.