A bumper domestic wheat crop, expensive US corn and lack of competition from Black Sea countries has got exports forecast at record levels. Even more remarkable this was done on the back of WA having their smallest wheat crop in eight years at 7.6mmt. So far this marketing year (Oct ’10 – April ’11) ABS has forecast total wheat exports at 10.7mmt, with the container trade representing 13% of this. This is in stark contrast with the world’s biggest exporter the USA, which during the same period exported 19.4mmt according to USDA data.
Looking forward to the stem out to September, 18.6mmt is forecast to be shipped and if we calculate an average of 210kt being shipped in containers per month this would mean 19.7mmt being shipped in our marketing year (unless there is slippage). This would be a 26% increase on last year and 40% increase on the five-year average. July appears to be a solid month, taking in slipping from June with a total bulk export program planned of 2.9mmt. Wheat accounts for 2.1mmt.
It is clearly evident that Asian customers are switching to cheaper feed quality wheat at the expensive of US corn. So far this marketing year the Philippines have bought a touch under half a million tonnes of Australian wheat, when last year they brought 100kt. Whilst Vietnam has nearly reached last years record purchases of 1.2mmt, with still 5 months of the marketing year to run.
Internationally the market place tread cautiously after the Russian let open the flood gate for their grain on 1st July, with many countries excluding Russian origin wheat from their tenders. However this soon diminished with recent tenders being awarded to Russian wheat. Recent orders appear to indicate that low prices are persuading buyers to overcome caution at buying from a country that left them in the lurch with last year's ban.
The USDA has forecast that Moscow is going to export 10.5mmt in their marketing year (July – June), however volumes will depend more on domestic prices and government policy than final size of the estimated 52.5mmt wheat crop. However some private analyst are predicting that the Russki’s may even export up to 15mmt. This is a far cry from the drought ravaged crops of last year when only 4.2mmt was exported before the ban was enforced.
According to ABS, domestic stocks stored by bulk handlers at the end of May was 15.3mmt, a 2mmt decrease from April. Of this 8.3mmt (55%) is milling grade and 6.9mmt (45%) is feed grade. Total stored on farm, BHC and end-users is estimated at 17.2mmt. So taking into account 5.7mmt 09/10 carry in, 27mmt production, 7.2mmt domestic consumption and a forecast record-shipping program of 19.7mmt (Oct ’10 – Sept ’11). Thus 2010/11 old crop carry into harvest could be around 5.9mmt or 22% of last harvest production. This will be the largest old crop carry in for the last couple of years, but still behind previous carry in under the single desk. Thus it is important further bulk export sales take place nation wide over the next quarter to make more of a dent in old crop carry over and place less pressure on a weakening basis leading into harvest.