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USDA Grains: World Markets and Trade

11 July 2013

USDA Grains: World Markets and Trade July 2013USDA Grains: World Markets and Trade July 2013

USDA Grains: World Markets and Trade Reports

China is now forecast to import 8.5 million tons of wheat in 2013/14, the highest in 18 years. The sharp increase comes on the heels of reports that disease and adverse weather affected quality significantly in both 2012/13 and 2013/14. As a result, government reserves of millingquality wheat have fallen. Government reserve programs are designed to provide stability in the market by buying, selling, and storing wheat.

China’s wheat import Tariff-Rate-Quota (TRQ) is 9.6 million tons, of which the private sector has access to only 960,000 tons, while the government controls the rest. China has already purchased nearly 3.0 million tons of U.S. wheat, most of which is Soft Red Winter, along with reported purchases of Canadian, French, and Australian wheat. The imported wheat will likely be used for blending with lower quality domestic wheat for milling, for feed in the southeast provinces, and for rebuilding government reserves.

China also imported large quantities in 2003/04 and 2004/05. At that time, exporter supplies were more abundant. This year, however, exporter stocks are projected to be significantly tighter. Soft Red Winter wheat export prices are already rising, in part, because of China’s recent purchases and expectations of future sales.



Global production for 2013/14 is up modestly and trade is significantly higher, driven mostly by a boost in China’s imports. U.S. exports are boosted sharply this month, supported by China’s large purchases of Soft Red Winter (SRW) wheat and expanding opportunities in South America. The season-average U.S. farm price is up from last month because of projected strong demand. For 2012/13, trade and U.S. exports were raised slightly.



 Domestic: Over the past month, prices dropped as winter wheat harvesting continued to pressure markets. Hard Red Winter (HRW) fell $25/ton to $300 and SRW dropped to a low of $258/ton before rising to $265/ton based on recent large sales to China. Soft White Wheat (SWW) fell $9 to $290/ton and Hard Red Spring (HRS) shed $24/ton to $329/ton.



Selected Exporters - based on trade data

•Australia is raised 800,000 tons to 21.3 million.

•Kazakhstan is raised 300,000 tons to 6.8 million.

Selected Importers - based on trade data

•Japan is raised 300,000 tons to 6.6 million.

•Morocco is up 300,000 tons to 3.6 million.

•Russia is up 400,000 tons to 1.4 million.



Global production in 2013/14 is still a record but is down from the previous month, largely due

to revisions to U.S. production - the smallest planted area since 1987. Trade is down slightly, on

account of lower Pakistani and U.S. exports. Global production for 2012/13 is down, with

smaller crops in Pakistan and Vietnam. Trade is reduced on lower demand from traditional



In contrast to historical price movements in tandem, the U.S. and Thai export quotes have

recently moved in opposite directions. While the United States nears the end of the marketing

year of a smaller-than-normal crop, Thailand seeks to sell its plentiful supplies. The Thai

government supports domestic procurement prices through the Paddy Pledging Program, but

recently attempted to lower the prices. However, pressure from farmers reversed the decision,

and prices for the next season have not been finalized. Additionally, the government announced

that it will sell some of its massive stocks. Meanwhile, the U.S. crop will be harvested in the

coming months, but it is even smaller than the previous year. Estimates for total U.S. supplies

for 2013/14 are the tightest in over a decade, and the projected season-average farm price is up

from last month.


Selected Exporters

•Thailand is slashed 500,000 tons to 7.0 million in 2013 on the slow pace of exports as

the high support prices have kept export prices uncompetitive.

•Pakistan is reduced 200,000 tons to 3.0 million for 2013 on a lower crop due to flooding;

it is also reduced 200,000 tons to 3.0 million for 2014 as a lack of reliable power supplies

continues to hamper the entire export chain.

•China is raised 150,000 tons to 450,000 in 2013 and to 350,000 in 2014 as exports to

East Asia have been stronger than expected.

United States is lowered 100,000 tons to 3.1 million in 2014 on tighter supplies.

Selected Importers

•Indonesia is lowered 500,000 tons to 1.0 million in 2013 on slow shipments to date.

Nigeria is cut 100,000 tons to 2.3 million in 2013 as high tariffs continue to impede





World corn production in 2013/14 is down slightly with smaller forecast crops in the United

States and China. Global trade is mostly unchanged and the U.S. season-average farm price

remains the same as the prior month’s. For 2012/13, U.S. exports are lowered but the seasonaverage

farm price is unchanged.


Since the release of the June WASDE report, U.S. corn quotes have mostly risen, gaining

$17/ton through the first week of July to nearly $311/ton. The retreat following USDA’s

Grain Stocks and Acreage reports was short-lived as tight old-crop domestic supplies continue to

outweigh weak foreign demand. Argentine quotes collapsed after the USDA reports and

remain at sizeable discounts to both U.S. and Brazilian corn. Argentina’s harvest is nearing

completion and an export window of opportunity looms between Brazil’s second crop and U.S.

new-crop harvests. Ukrainian quotes were unchanged, reflecting slack old-crop trade.




Selected Exporters


U.S. corn is slashed 1.0 million tons to 17.5 million as the slow pace of shipments is

expected to continue through September;

Brazilian corn is boosted 500,000 tons to 27.0


Canadian corn is raised 400,000 tons to 1.4 million on strong shipments to the United


EU barley is boosted 200,000 tons to 4.2 million reflecting late-season export licenses.

U.S. sorghum is cut 200,000 tons to 1.9 million on tight feed supplies through late


Argentine sorghum is up 200,000 tons to 3.6 million on strong early season (new-crop)


Selected Importers

U.S. corn is boosted 200,000 tons to 4.0 million on imports from Brazil, Canada, and


Ecuadorian and Salvadoran corn are each cut 200,000 tons to 250,000 and 350,000,

respectively, on a slow pace of shipments.

Indonesian corn is raised 500,000 tons to 2.4 million on smaller old-crop production and

larger-than-expected trade from India

Mexican corn is down 500,000 tons to 6.5 million due to the slow pace of shipments

from the United States.

Chinese barley is cut 200,000 tons to 2.2 million on weak demand from the brewing


Saudi Arabian barley is boosted 200,000 tons to 7.7 million based on trade data.


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