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Global high wheat stocks temper prices to farmers

 

By MATTHEW D. ERNST

Missouri Correspondent

 

ST. LOUIS, Mo. — High global wheat stocks tempered market impacts of a soggy harvest season in parts of the Eastern Corn Belt, even while low moisture in Canada and the Pacific Northwest could impact spring wheat yields.

Meanwhile, U.S. wheat groups again recently urged Canadian regulators to revisit how U.S. wheat imports are classified.

The world is awash in wheat. June’s global Cereal Price Index, released last week by the Food and Agriculture Organization of the United Nations, reported cereal grain prices up to one-third lower than a year ago, depending on the crop. While the global index increased from May to June because of unfavorable harvest weather in some regions, the price rise "was contained, amid abundant carryover stocks and generally good production prospects."

In its recent World Agricultural Supply and Demand Estimates report, the USDA raised its ending U.S. wheat stocks projection 842 million bushels, the highest since 2010/11. Global wheat stocks are a record 219.8 million tons, due mainly to higher wheat stocks in China.

China entered the soft red winter (SRW) market in a big way in 2013/14, when it imported more than 125 million bushels of U.S. product. That was up to 10 times past annual SRW exports to China. During the marketing year, from June 2013 to May 2014, China accounted for almost half of SRW exports, according to USDA.

Egypt and Mexico were the biggest SRW export markets until the 2013/14 marketing year, when Egyptian imports dropped. Mexico is still a major destination for SRW, importing between 40 million-50 million bushels. In Africa, U.S. SRW exports to Nigeria have picked up some of the loss from the Egyptian market.

Canada’s farmers planted more durum wheat this season; about 1 million more acres than last year. "The world is going to be happy that Canadian farmers have planted that durum," said John Duvenaud, Wild Oats Grain Advisory, in Winnipeg.

Strong export demand continues for durum, used to make pasta and couscous.

As in the Eastern Corn Belt, western hard red winter wheat producers also had harvest headaches. "A lot of wheat producers are really glad to get this wheat harvest over with," said Cody Miller, Kansas State University agronomist in northwestern Kansas.

Winterkill created thin stands early in the spring, he said. Stripe rust and leaf rust created headaches later in the spring, especially in fields where fungicides did not get applied. Spotty rains and freezes created great yield variation in western Kansas, even within counties.

Fairer trade with Canada

 

The U.S. wheat industry hopes for change in part of Canadian wheat trade policy. American wheat growers seized upon a recent controversy over U.S. country of origin labeling regulations for meat, to highlight a wheat trade practice the U.S. wheat industry would like to stop.

Wheat exports to Canada are automatically downgraded to the lowest grade designation. The United States, Canada’s top wheat export market, allows Canadian wheat to be graded and traded the same here as in Canada. In May, the National Assoc. of Wheat Growers (NAWG) and U.S. Wheat Associates (USW) sent a letter to Canadian ministers calling for improvements in Canada’s treatment of U.S. wheat classes.

"Our concerns about the unfair regulatory environment that U.S. wheat faces in Canada closely parallel the arguments Canada successfully made in its WTO (World Trade Organization) complaint against U.S. country of origin labeling requirements," states the letter, signed by USW Chair Roy Motter and NAWG President Brett Blankenship.

7/16/2015