Washington, DC
December 13, 2007
Source:
U.S. Wheat Associates
by Joe Sowers, Senior Market Analyst
In its World Agricultural Supply and Demand Estimates (WASDE)
release this week, the U.S. Department of Agriculture (USDA)
increased the forecast for U.S. wheat exports to 32 million
metric tons (MMT), the highest level since 1995/96. With
production problems limiting supplies in every major exporter,
U.S. wheat exports are expected to account for 31 percent of
global trade – an outcome that will squeeze ending stocks down
to bare minimums and sustain record high wheat prices.
With weather problems this year and stocks already low,
production in the five major exporters – the U.S., Canada,
Argentina, Australia and the EU-27 – is 21 MMT below the 10-year
average. Global imports are only expected to fall 2 MMT below
average and that is forcing importers to scramble for supplies.
As wheat buyers turn to the U.S. USDA predicts U.S. exports will
grow 7 MMT (29 percent) above last year and exceed domestic use
for the first time since 1995/96. Export sales in the first half
of the marketing year (June 1 to Nov. 29) were brisk with the
U.S. selling 28.2 MMT or 88 percent of exportable supplies.
The large jump in exports will leave the U.S. with its tightest
wheat supply since 1947. U.S. production in 2007/08 was 2 MMT
below the 10-year average and beginning stocks were 6 MMT below
average. USDA projects stocks at the end of the marketing year
will fall to 7.6 MMT, which is 11 MMT below the 10-year average.
The U.S. will hold only 24 percent of its annual domestic use,
our lowest stocks-to-use ratio since records were first kept in
1934.
The tight supply situation has spurred U.S. prices to new highs.
USDA estimates the annual average farm gate price will rise to a
record $6.60 per bushel ($243 per MT), up from $4.26 last year
and $3.42 in 2005/06. Export prices, of course, are also up with
the most dramatic rise seen in durum and soft white (SW). SW
offers from the Pacific Northwest were $12.55/bushel ($461 per
MT) last Friday, two and a half times higher than this week last
year and nearly four times higher than in December 2005. Hard
red spring (HRS) futures sold on the Minneapolis Grain Exchange
hit a high of $11.15 ($410 per MT) today. |
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