THE latest snapshot of world wheat prices from the United States Department of Agriculture (USDA) gives an insight into wheat trade flows globally, as between December 2018 and February 2019 US and Russian Black Sea wheat prices fell, prompting small but significant adjustments to the USDA World Agricultural Supply and Demand Estimates (WASDE) February estimates.

As the 2018/19 wheat season grinds to its conclusion, the bulk of the sales having been made during calendar 2018, there’s apparently a Russian factor at play in the competitiveness of main wheat origins.

Table 1 explains why.

Table 1. Month-end prices major wheat exporters. US$/t fob. Source: International Grains Council. Month Ending Prices for Major Wheat Exporters Source: IGC. Note; Argentina 12.0 per cent protein, up river; Australia average of APW; Fremantle, Newcastle, and Port Adelaide; Black Sea milling; Canada CWRS 13.5pc St. Lawrence; EU France grade 1, Rouen; US HRW 11.5pc Gulf

Since early last season Russian Black Sea wheat was cheaper than EU, its nearest regional price rival.  Russian export shipments each month ran at a fast pace until stocks dwindled and freeze conditions loomed slowing movements late in the year.  Meantime EU became more competitive than Black Sea wheat.  US also became cheaper but only by half as much, which explains why USDA this month adjusted its estimate of EU export for the past year up 1 million tonnes (Mt) and the US export estimate down by 1Mt.

Australia failed to gain business into competitive markets much of the year while drought premiums then, as now, ration supply in favour of Australian local consumption over export trade.

Adjustments from January to February report were also made by USDA to;

• lower non-feed wheat usage (98Mt down to 95Mt) in India leading to higher wheat carry-out stock, to 17.5Mt, and
• higher production in Australia (17.3Mt), higher usage feed (5.7Mt) and ending stock (4.12Mt).

Corn (maize) export trade was reduced from the US (60Mt from 62Mt) and increased from Argentina, 29Mt to 30Mt; Brazil remained unchanged 29Mt.

Of the world soybean production around 360Mt, USDA in this report changed little in its current crop projection, none of the individual country parameters altering by more than a million tonnes.

Trade sources said the report overall was slightly more bearish than had been anticipated.

While the February WASDE report showed only minor rebalancing of the past crop year wheat numbers, the first forward-looking USDA document on prospects for the world’s wheat regions will be published late March.

Source: USDA