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USDA Grains: World Markets and Trade


08 November 2013

USDA Grains: World Markets and Trade - 8 November 2013USDA Grains: World Markets and Trade - 8 November 2013


USDA Grains: World Markets and Trade Reports

India has emerged as a top exporter since the government lifted its export ban on non-basmati rice in 2011. India’s 2013 rice exports are expected to reach a record 10.5 million tons, nearly matching Thailand’s world record. With ample supplies and no constraints to exports, low prices have undercut competitors and helped fuel import demand.

Most notable is the rapid expansion in Africa – the world’s largest importing region – where buyers are price sensitive. From virtually nothing in 2010, India now supplies roughly one-third of the continent’s imports. As a result, traditional suppliers are exploring new markets in Asia and the Western Hemisphere.

WHEAT: WORLD MARKETS AND TRADE

OVERVIEW

Global production for 2013/14 is cut slightly, but still a record at 706 million tons, up 51 million from last year. Reduced production in Argentina, Kazakhstan, and Russia more than offset an increase in Canada’s now-record production. Trade is down slightly. Fewer imports for China and the EU more than offset higher demand in Algeria and the United States. U.S. imports are raised to a record 4.0 million tons, while exports are unchanged. The season-average farm price remains the same.

PRICES:

Domestic: In September, wheat prices spiked for several reasons: strong export demand for Hard Red Winter (HRW) and Soft Red Winter (SRW), reports of production problems in Argentina, and concerns over poor Black Sea planting conditions. Prices softened somewhat in October as foreign demand slackened for U.S. wheat, the Indian Government lowered the export price to a more competitive level, and Black Sea planting conditions improved. Over the last 2 months, both Hard Red Winter (HRW) and Soft Red Winter (SRW) spiked $14 and $18 to $326/ton and $286/ton, respectively. Hard Red Spring (HRS) jumped $17 to $340/ton on increased domestic demand and Soft White Wheat (SWW) increased $13 to $294/ton.

TRADE CHANGES IN 2013/14

Selected Exporters

• Argentina is down 1.5 million tons to 3.5 million on lower production.

• Canada is raised 1.0 million tons to 21.5 million, the highest in 22 years, on record production and increased export opportunities in the United States and South America.

• European Union is up 1.0 million tons to 24.0 million on the fast pace of export licenses and opportunities for future sales to North Africa and the Middle East.

• India is boosted 1.0 million tons to 6.0 million as the Government lowered the floor price for exports from $300/ton to $260/ton, making it more competitive.

• Kazakhstan is cut 1.0 million tons to 8.0 million due to a smaller crop.

• Russia is down 1.0 million tons to 16.0 million on lower production.

Selected Importers

• Algeria is up 500,000 tons to 6.5 million based on expectations of larger purchases from France.

• China is cut 1.0 million tons to 8.5 million on lower-than-anticipated pace of recent purchases.

• European Union is down 500,000 tons to 4.5 million based on the slow pace of import licenses. Russia and Ukraine are currently not competitive with intra-EU trade.

• Libya is up 300,000 tons to 2.1 million due to the strong import pace.

• The United States is up 250,000 tons to a record 4.0 million due to tight U.S. supplies of milling-quality wheat and a record Canadian crop.

RICE: WORLD MARKETS AND TRADE

OVERVIEW

Due to smaller crops in India and China, global production for 2013/14 is projected down from last month, though still at a record level. Ending stocks are down marginally, though at the same level as the previous year. Trade in 2014 is now projected at a record, with larger expected exports from India and imports by Nigeria. U.S. production and exports are up compared to the September report.

PRICES

In recent weeks, Thai export quotes have declined precipitously in comparison to U.S. quotes. The Thai government has accelerated the release of plentiful stocks accumulated during the current rice support program, accepting lower prices that are more in line with neighboring Asian competitors. Meanwhile, relatively tight supplies in the United States result in a marginal drop in quotes to levels that mirror other Western Hemisphere exporters.

The current difference between the two origins, over $175/ton, is the largest in nearly a decade. The last major disparity occurred in 2004, when the United States faced a smaller crop and tight stocks.

The United States and Thailand and are not generally competing for the same long-grain markets. Thailand is primarily shipping to Asia and Africa, while the United States is focused largely on the Western Hemisphere.

TRADE CHANGES

Selected Exporters

• India is boosted 500,000 tons to a record 10.5 million in 2013 on the pace of shipments and hiked 700,000 tons to 10.0 million in 2014 on demand from Nigeria.

• Pakistan is down 100,000 tons to 3.0 million in 2014 as floods damaged part of the crop.

• Vietnam is cut 200,000 tons in 2013 and 300,000 tons in 2014 to 7.2 million and 7.5 million, respectively, on increased competition from India and Thailand and lackluster demand in traditional markets.

Selected Importers

• Colombia is lowered 150,000 tons to 250,000 in 2013 on the pace of shipments and 75,000 tons to 275,000 in 2014 as a larger crop reduces import demand.

• Cote d’Ivoire is raised 150,000 tons in 2013 and 2014 to 1.3 million on the expectation that the strong pace of shipments will continue.

• Nigeria is spiked 500,000 tons in 2013 and 600,000 tons in 2014 to 2.8 million and 3.0 million, respectively, despite the government’s self-sufficiency scheme. Rice continues to pour through the borders, and the volume is expected to grow as elections draw near.

COARSE GRAINS: WORLD MARKETS AND TRADE

OVERVIEW

World corn production is up by over 6 million tons with larger crops in the United States, Russia, and India more than offsetting a decline in Brazil. Global trade is up strongly by nearly 5 million tons, led by robust demand from Mexico, Egypt, and the EU. China’s purchases of sorghum and softening U.S. corn prices are resulting in Mexico’s switch to corn. The U.S. export estimate is boosted sharply but the season-average farm price is lowered as a record crop continues to pressure prices.

HIGHLIGHT

China’s sorghum imports are boosted sharply by 1.3 million tons to 2.0 million on strong demand for feed grains. However, its recent, quick purchases (reportedly up to 2 million tons) have had limited impact on global sorghum trade. Softening U.S. corn prices have unexpectedly boosted U.S. corn exports to Mexico as a partial substitute for sorghum. Mexico could import sorghum from Argentina (and has done so in the past), but imports of U.S. corn are more competitive.

This results in Argentina’s sorghum carryout stocks now forecast at over 1 million tons as sales and shipments decline rapidly for the remaining months of the marketing year ending in February 2014. At the same time, Argentine sorghum planting prospects have declined, resulting in a sharp cut to exports. Hence, U.S. sorghum exports, with prices dampened by a record corn crop, should remain competitive enough to recover some trade to Japan and to supply the majority of China’s needs and all of Mexico’s.

PRICES

Since the release of the September WASDE report, U.S. corn quotes have continued to weaken, shedding another $10 during October. For the first week of November, prices are quoted at $211/ton as a record harvest hangs over the market. Since their peak in early July, U.S. quotes have tumbled by nearly one-third. The premium against all competitors has narrowed significantly, signaling the return of U.S. export competitiveness, as evidenced by the strong pace of U.S. export sales commitments in recent weeks.

TRADE CHANGES IN 2013/14

Selected Exporters

• U.S. corn is raised 3.5 million tons to 36.0 million on a record crop and a return to export competitiveness in major Asian markets.

• EU corn is boosted 500,000 tons to 3.0 million on a brisk pace of export licenses from Bulgaria and Romania.

• Russian corn is up 500,000 tons to a record 2.5 million on sharply higher exportable supplies.

• Canadian barley is raised 300,000 tons to 1.7 million, the highest in 6 years, on greater exportable supplies.

• EU barley is up sharply by 1.0 million tons to 5.3 million on a torrid pace of export licenses and a larger crop.

• Russian barley is lowered 800,000 tons to 2.5 million on sharply lower exportable supplies.

• U.S. sorghum is boosted 500,000 tons to 4.5 million, the highest in 6 years, on strong demand, especially from China.

• Argentine sorghum is halved to 1.5 million tons on diminished competitiveness for oldcrop supplies and a decline in prospective new-crop supplies, despite higher stocks. Selected Importers

• Colombian corn is raised 300,000 tons to 3.9 million (Colombian sorghum is cut 300,000 tons to 500,000) on larger purchases of U.S. corn and lower exportable supplies of Argentine sorghum.

• Egyptian corn is up 500,000 tons to 5.7 million on stronger demand and recent trade.

• EU corn is boosted 500,000 tons to 8.0 million on a strong pace of import licenses from southern European countries and greater Russian exportable supplies.

• Mexican corn is up sharply by 2.5 million to 10.5 million as feed compounders substitute for sorghum (Mexican sorghum is slashed 2.0 million tons to 1.5 million).

• South Korean corn is cut 400,000 tons to 9.0 million on a smaller hog inventory and higher wheat feeding.

• Saudi Arabian barley is raised 500,000 tons to 8.0 million.

TRADE CHANGES IN 2012/13

Selected Exporters – based on trade data

• United States corn is raised 800,000 tons to 18.3 million.

• Argentine corn is cut 300,000 tons to 22.7 million.

• Brazilian corn is lowered 500,000 tons to 26.0 million.

• Mexican corn is up 300,000 tons to 500,000.

• Paraguayan corn is boosted 500,000 tons to 2.9 million.

• Ukrainian corn is down 600,000 tons to 12.7 million.

• EU barley is raised 700,000 tons to 5.5 million.

• Argentine sorghum is cut 300,000 tons to 3.1 million.

• Australian sorghum is boosted 200,000 tons to 1.4 million. Selected Importers – based on trade data • China corn is down 300,000 tons to 2.7 million.

• Egyptian corn is raised 500,000 tons to 5.0 million.

• South Korean corn is lowered 300,000 tons to 8.2 million.

• Saudi Arabian barley is boosted 300,000 tons to 8.0 million.

Mexican sorghum is cut 200,000 tons to 1.8 million.

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