Pre-Opening Wheat Market Report for 8/13/2010
Related Keywords: Agriculture Email Print | December wheat was 10 1/4 cents higher overnight. The dollar was mixed. Yesterday’s Crop Production and supply and demand reports from the USDA were considered bullish in wheat with substantial production losses reported in the former Soviet Union and the EU and a significant bump upward in projected US exports. This comes as importers continue to step up their purchases of wheat amid fears that prices could move even higher and set off damaging ripple effects in terms of food inflation. For example, traders in Europe report that Algeria bought about 200,000 tonnes of wheat on a recent tender for at least 50,000 tonnes. No origin was indicated. Yesterday, Jordan reportedly bought 100,000 tonnes of German wheat for delivery in September-October. This was said to be its first non-Black Sea wheat purchase by Jordan in several years. Also, the USDA also announced a sale of 275,000 tonnes of hard red spring wheat to Canada yesterday although this is not actually going to Canada. Rather, it is simply stopping at a Canadian port on its way out of the St. Lawrence Seaway. On the negative side, another sale of 80,000 tonnes of wheat to Bangladesh has been cancelled according to traders. Hungary’s agriculture minister pegged this year’s wheat crop at 3.72 million tonnes, down 16% from last year with 99% of the crop now harvested. Traders and analysts are still trying to assess damage to Pakistan’s wheat crop due to recent flooding. Losses are expected in the hundreds of thousands of tonnes at this point. One analyst noted that this would not be considered a significant amount under normal circumstances, but this comes on the tail of large-scale losses in a number of countries that have importers scrambling to cover needs and stave off food inflation. The buying scramble was evident on this week’s Export Sales report from the USDA as wheat sales came in at a whopping 1,329,700 tonnes for the current marketing year and 20,500 for next year for a total of 1,350,200. Sales need to average 515,000 tonnes each week to reach the revised USDA export forecast. On yesterday’s August reports, the USDA raised US all-wheat production estimate above trade expectations to 2.265 billion bushels versus 2.216 billion in July. Expectations were for a rise of about 15 million bushels. Wheat exports were raised by 200 million bushels to 1.2 billion which resulted in a drop of 141 million bushels in 2010/11 US ending stocks to 952 million. This was about 10 million bushels below expectations. The overall US wheat yield was raised by a substantial 1 bushel per acre to 46.9 bushels per acre. On the world report, all eyes were on the Russian wheat number, and the USDA lowered its estimate to the low end of trade expectations to 45.0 million tonnes. This compares to 53.0 million tonnes in July, 61.7 million last year and 63.7 million two years ago (2008/09). Kazakhstan was lowered to 11.5 million from 14.0 in July and Ukraine was lowered to 17.0 million from 20.0 million in July. In all, the producers of the former Soviet Union were lowered by nearly 13 1/2 million tonnes. The EU was lowered to 137.51 million from 141.82 in July. This resulted in an overall drop in world production to 645.7 million tonnes from 661.07 last month. World ending stocks were lowered to 174.7 mmt from 187.05 million last month and this leaves world stocks/usage at 26.3% as compared with 29.8% last year. This is still well short of the tightness seen in the 2007/08 season with ending stocks at 122.6 million tonnes and stocks/usage at 19.9%.