"International Competition Builds
After Quick Export Sales Start
by Joe Sowers, USW Senior Market Analyst
Export sales of U.S. wheat have started the 2008/09 marketing year much faster than normal. As the first exported supplies harvested in the Northern Hemisphere, U.S. wheat typically has an advantage in international markets into August. But because many other producers restricted exports to keep domestic prices low in 2007/08, they still have wheat to sell and that is keeping the pressure on export prices.
Total sales of all U.S. wheat classes to date in 2008/09 are 8.6 MMT. That is 45 percent higher than at this point last year, 68 percent higher than the ten-year average and the highest level since 1996. Sales of all major U.S. wheat classes are stronger than normal with hard red winter (HRW) leading the way with sales of 4.1 MMT, which is more than 110 percent higher than last year and the ten-year average. Sales of HRW to Iraq currently total 1.2 MMT compared to 300,000 MT by this time last year. Sales to Brazil exceed 500,000 MT largely because Brazil cannot rely on adequate supplies from Argentina where a political dispute has limited exports. Last year, U.S. wheat exports greatly exceeded USDA’s early export estimates. We have yet to see if that situation will repeat itself in 2008/09.
The demand for soft red winter (SRW) has also been strong with export sales currently 38 percent higher than last year and 141 percent higher than the ten-year average. The outlook for SRW export sales, however, is a concern. Because SRW is harvested before wheat in Russia and Ukraine, it often has an advantage during June, July and August in North African markets. The supply situation in those countries is not typical this year as all of the Black Sea exporters began restricting exports last winter to protect domestic supplies and control price inflation, leaving their export customers scrambling for supplies elsewhere. As a result, these exporters currently have more wheat to sell than they might have had. Recent tenders in Egypt show U.S. SRW priced about $30 per MT above Black Sea supplies on a delivered basis due to a $45 per MT differential in freight rates.
The decreased export demand just as the SRW harvest gets into full swing has depressed export basis to record lows. Currently SRW (FOB basis) at Gulf ports is $1.20 per bushel below Chicago July delivery futures. The previous low had been $0.15 per bushel below futures with the basis averaging $0.34 per bushel over the Chicago futures in the past ten years.
With export demand for SRW expected to be limited this summer for a crop that may be 60 percent larger than last year at the same time corn prices are at record levels, increased wheat feeding is expected. In fact, the BNSF Railway Company this month released a new freight rate for wheat originating in Illinois, one of the largest SRW producing states, with a destination in the western Kansas feedlot region. SRW prices climbed through mid-week supported by statements by Japanese and South Korean importers that they may switch from corn to wheat for feed into 2008/09."
Transgenic Advancements Shared at BIO 2008 Conference News
Australian researchers at the BIO 2008 Conference in San Diego, CA, this week shared early trial results from genetically modified wheat lines showing that two lines exceeded yields of conventional varieties by 20 percent. In addition, the Biotechnology Industry Organization announced that the Excellence Through Stewardship (ETS) program, developed to meet product stewardship objectives and to provide a strong quality management program for biotech plants and plant products, will begin operating as a BIO affiliate.
http://www.uswheat.org/justReleased/doc/1C19FEBDB7BD510D85257474006F6D61?OpenDocument#
After Quick Export Sales Start
by Joe Sowers, USW Senior Market Analyst
Export sales of U.S. wheat have started the 2008/09 marketing year much faster than normal. As the first exported supplies harvested in the Northern Hemisphere, U.S. wheat typically has an advantage in international markets into August. But because many other producers restricted exports to keep domestic prices low in 2007/08, they still have wheat to sell and that is keeping the pressure on export prices.
Total sales of all U.S. wheat classes to date in 2008/09 are 8.6 MMT. That is 45 percent higher than at this point last year, 68 percent higher than the ten-year average and the highest level since 1996. Sales of all major U.S. wheat classes are stronger than normal with hard red winter (HRW) leading the way with sales of 4.1 MMT, which is more than 110 percent higher than last year and the ten-year average. Sales of HRW to Iraq currently total 1.2 MMT compared to 300,000 MT by this time last year. Sales to Brazil exceed 500,000 MT largely because Brazil cannot rely on adequate supplies from Argentina where a political dispute has limited exports. Last year, U.S. wheat exports greatly exceeded USDA’s early export estimates. We have yet to see if that situation will repeat itself in 2008/09.
The demand for soft red winter (SRW) has also been strong with export sales currently 38 percent higher than last year and 141 percent higher than the ten-year average. The outlook for SRW export sales, however, is a concern. Because SRW is harvested before wheat in Russia and Ukraine, it often has an advantage during June, July and August in North African markets. The supply situation in those countries is not typical this year as all of the Black Sea exporters began restricting exports last winter to protect domestic supplies and control price inflation, leaving their export customers scrambling for supplies elsewhere. As a result, these exporters currently have more wheat to sell than they might have had. Recent tenders in Egypt show U.S. SRW priced about $30 per MT above Black Sea supplies on a delivered basis due to a $45 per MT differential in freight rates.
The decreased export demand just as the SRW harvest gets into full swing has depressed export basis to record lows. Currently SRW (FOB basis) at Gulf ports is $1.20 per bushel below Chicago July delivery futures. The previous low had been $0.15 per bushel below futures with the basis averaging $0.34 per bushel over the Chicago futures in the past ten years.
With export demand for SRW expected to be limited this summer for a crop that may be 60 percent larger than last year at the same time corn prices are at record levels, increased wheat feeding is expected. In fact, the BNSF Railway Company this month released a new freight rate for wheat originating in Illinois, one of the largest SRW producing states, with a destination in the western Kansas feedlot region. SRW prices climbed through mid-week supported by statements by Japanese and South Korean importers that they may switch from corn to wheat for feed into 2008/09."
Transgenic Advancements Shared at BIO 2008 Conference News
Australian researchers at the BIO 2008 Conference in San Diego, CA, this week shared early trial results from genetically modified wheat lines showing that two lines exceeded yields of conventional varieties by 20 percent. In addition, the Biotechnology Industry Organization announced that the Excellence Through Stewardship (ETS) program, developed to meet product stewardship objectives and to provide a strong quality management program for biotech plants and plant products, will begin operating as a BIO affiliate.
http://www.uswheat.org/justReleased/doc/1C19FEBDB7BD510D85257474006F6D61?OpenDocument#
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