WHEAT
OVERVIEW FOR 2023/24
Global production is forecast down, though still at a record, with smaller crops in China, the European Union, and Canada more than offsetting larger crops in Ukraine and Kazakhstan.
Global trade is also forecast down from the previous year’s record as reduced exports for Canada and the United States more than offset higher exports for Russia. Imports are forecast lower with reduced demand in Indonesia and Turkey.
Global consumption is forecast lower on declining food, seed, and industrial (FSI) use in China and lower feed and residual use in the EU.
The U.S. season-average farm price is unchanged at $7.50 per bushel.
WHEAT PRICES
Domestic: U.S. quotes have been mixed since the July WASDE.
Soft White Wheat (SWW) had the largest increase, up $18/ton to $281, with dry conditions affecting some key production regions in the Pacific Northwest.
Soft Red Winter (SRW) prices were virtually unchanged.
Hard Red Winter fell $13/ton to $322 as winter wheat harvest progressed to 87 percent complete, up slightly from the previous year.
Despite a lower spring wheat condition rating, Hard Red Spring prices dipped $8/ton to $335 on beneficial rains in the Northern Plains. HRS prices received further downward pressure from a higher than anticipated spring wheat yield estimate from the Wheat Quality Council’s tour in North Dakota.
Global: Major exporter quotes have been mixed since the July WASDE with growing uncertainty surrounding the future of Black Sea exports.
Argentine quotes experienced the largest decline of $17/ton as rains in late July alleviated some drought impacts.
U.S. quotes dropped $13/ton on winter wheat harvest progress.
Russian quotes rose $14/ton on increased export risk following the strike on Novorossiysk port, paired with strong import demand from North Africa.
Australian quotes rose $13/ton in line with its major competitors.
EU quotes rose $12/ton as a result of increased risk in the Black Sea and smaller-than-expected production. Canadian quotes rose $10/ton on continued dry conditions in the Prairie Provinces.
RICE
OVERVIEW FOR 2023/24
Global rice production is forecast slightly higher, with larger crops in Russia, Uganda, and the United States. Global consumption is forecast down as an increase for India is offset by lower consumption in several countries affected by India’s recent export ban, particularly in Sub-Saharan Africa.
Exports and imports are forecast lower due to the impact of India’s export ban.
OVERVIEW FOR 2022/23
Global rice production is up slightly with larger crops in Brazil and Uganda.
Global consumption is up marginally with India more than offsetting reductions in Nepal, Nigeria, and Vietnam. Exports are down following the ban on India’s non-basmati white milled rice.
Imports are also lower as numerous countries are impacted by the ban, especially in Sub-Saharan Africa.
RICE PRICES
In the past month, U.S. export quotes remained at $760/ton, while Uruguayan quotes rose $35 to $635/ton. Both Thai and Vietnamese quotes skyrocketed by $125 to $657/ton and $644/ton respectively following India’s ban, to the highest levels in 15 years.
Pakistani quotes bounced back from last month’s decrease, up $70 to $565/ton on limited supplies.
Quotes were not available for India following India’s export ban on July 20 but previously had been the lowest in the world at $485/ton.
MARKET FEATURE
India Bans Non-Basmati Rice Exports
On July 20, 2023, India, the largest rice exporter, placed an immediate export ban on non-basmati white milled rice. This is India’s second-largest category of rice exports, accounting for a quarter of 2022 rice exports and 11 percent of global rice exports.
India contributes roughly 40 percent of global rice exports, selling to more than 140 countries. As a result of this ban, the forecast for total rice exports is lowered to 20.5 million tons from 22.5 million for 2023 and 19.0 million tons from 23.0 million for 2024.
The Government of India clarified the reasoning for the ban was to ensure the domestic availability of non-basmati rice and prevent higher domestic prices. In September 2022, India attempted to slow exports by banning 100-percent broken rice and applying 20-percent tariffs on paddy (100610), brown (100620), and nonbasmati rice (10063090). However, despite the tariff, exports of non-basmati rice have remained strong and rice prices in Asia rose roughly 20 percent so that Indian rice prices remained the cheapest globally.
January-May 2023, India exported 9.6 million tons of rice, with 3.0 million being non-basmati rice. For non-basmati, India’s largest markets have been Kenya, Benin, and Togo. Many top buyers, especially in Africa, are not self-sufficient in domestic production and rely on low-cost and abundant supplies of India rice. In an effort to ensure food security, India has agreed to work with other governments and allow for diplomatic exceptions to the ban. Similarly, even after India’s broken rice exports were banned, India continues to export broken rice, but at lower volumes.
Many countries are likely to switch to other major suppliers, including Vietnam and Thailand, to help fulfill domestic demand. However, exportable supplies from Vietnam and Thailand are limited as both countries produce far less rice than India and have lower stocks available. Thai and Vietnamese export quotes jumped $125/ton to $657/ton and $644/ton respectively following India’s ban.
Along with non-basmati rice, India exports large amounts of basmati and parboiled rice which are not banned nor face any tariffs. Basmati rice is a fragrant rice that sells at a premium and is primarily exported to the Middle East, Europe, and North America. As a higher cost option, basmati exports are not expected to see any major shifts. On the other hand, it is possible that the new ban may encourage more shipments of parboiled, India’s largest rice export category. Parboiled rice is produced by steaming regular paddy rice under pressure and then milling it, resulting in a more nutritious option. Numerous countries are impacted by the ban.
COARSE GRAINS
OVERVIEW FOR 2023/24
Global corn production is lowered, falling from record high to second highest on record, with cuts to China, the European Union, Russia, and the United States more than offsetting production gains in Ukraine and Canada. Global exports are down, with cuts to the United States and the European Union more than offsetting stronger exports from Brazil.
Global imports are also forecast to decrease, with cuts to Egypt and Algeria more than offsetting gains for Canada and Zimbabwe.
The U.S. season-average farm price is up 10 cents to $4.90 per bushel.
OVERVIEW FOR 2022/23
Global corn production is raised, with increased production from Brazil more than offsetting a cut to the European Union and Uruguay.
Global exports are down slightly, with stronger exports from Canada, the European Union, Russia, and Zambia more than offset by cuts to Brazil and the United States.
Imports are forecast to decrease, with cuts to Egypt, Vietnam, Algeria, and Morocco more than offsetting gains in Brazil, Canada, the United Kingdom, and the United States.
The U.S. season-average farm price remains unchanged at $6.60 per bushel.
CORN PRICES
Since the July WASDE, bids for all major exporters have softened. U.S. bids were down $23 to $216/ton on favorable weather conditions during July for most corn producing areas and subjective assessments of crop conditions by NASS.
Brazilian bids were little changed since July.
Argentine bids were $216/ton, down $5 from last month.
Competition with large crops in the United States and Brazil and a new preferential exchange rate are supporting lower prices. Ukrainian bids have not been published since July 21.
MARKET FEATURES
South Korea Posts Record Barley Imports
Through the first 9 months of 2022/23, South Korea shattered previous records for MY barley imports. South Korea imported 86,000 tons of barley imports through June, breaking the 2021/22 record of more than 74,000 MT for the full 12 months.
The surge in imports can be attributed to an expansion of a tariff-rate quota (TRQ) for barley. Australia, South Korea’s largest supplier, also has large exportable supplies this year. The TRQ’s expansion from 40,000 tons to 250,000 tons in 2022 has facilitated greater barley imports as a feed substitute. In 2023, the TRQ is set at 100,000 tons.
South Korea imports of barley have benefitted from more competitive prices. Unhulled barley for feed in South Korea, primarily for cattle and horses, is substitutable with wheat and corn. FOB barley bids from Australia have trended down over the past year, dropping from $342 on August 1, 2022 to $234 on August 1, 2023. Australia barley prices were consistently below average FOB prices for U.S. corn ($319/ton) and Australia wheat ($359/ton) over the same period, due in part to lower demand from China for Australia barley and a bumper Australia barley crop in MY 2022/23. Continued price competitiveness of barley is expected to support South Korea imports for the remainder of MY 2022/23. However, South Korea barley imports for MY 2023/24 are forecast to decline to volumes similar to those seen in 2021/22 on reduced exportable supplies from Australia, renewed demand from China for Australia barley, and lower prices for other feed grains.
Argentina Expands “Agro-Dollar” to Corn, Raises Export Limit
On July 25, 2023, Argentina’s Ministry of Agriculture, Livestock and Fishery (MAGyP) published resolution 295/2023, officially adding corn to the “Export Increase Program”, a policy which sets a preferential exchange rate of 340 Argentinian pesos/USD for specific agricultural commodities through August 31, 2023. The rate is a 25-percent devaluation against the official exchange rate of 270-283/USD and represents an effort by the Government of Argentina to support lagging corn sales and boost shipments. The Government of Argentina also raised the exportable limit for corn by 4.0 million tons to 26.0 million tons for 2022/23, though reporting from FAS/Buenos Aires indicates that local traders are skeptical that exports will reach that level by February 2024.
Since the beginning of the 2022/2023 marketing year, Argentina corn exports have been exceptionally weak owing to tight supplies, the lowest since 2017/2018. Exports are currently forecast at 22.0 million tons, the lowest volume since 2015/16. Prior to July 25, affidavits of foreign sales (DJVE) data on sales of corn indicate that total sales of the 2022/23 crop were at just 16.4 million tons, less than half the same period in 2021/22. Weaker demand in key markets such as Vietnam and Egypt have also weighed on Argentina trade.
Argentina’s official exchange rate has been kept artificially high by the government as one of several measures to combat soaring inflation, which reached nearly 114 percent for the year as of June. Requiring corn exporters to use the official rate discourages sales because farmers are aware that the peso is overvalued in the international exchange market. While the official exchange rate is 270 Argentinian pesos/USD, the “black market” rate can be as high as 500 pesos per U.S. dollar. By increasing the number of pesos received per each U.S. dollar denominated trade in corn, farmers can get much needed cash, which can be used to cover production costs expected to be incurred soon. This provides a better incentive to sell supplies.
Since the implementation of the policy, the Rosario Board of Trade (Bolsa de Comercio de Rosario, BCR) reported that Argentina domestic corn sales reached 6.4 million tons in July 2023, a 10-percent increase from the 5.8 million tons in July 2022, and the highest volume in 7 years for the month. More than half of those sales occurred in the short period after the decree was implemented, and almost all purchases of domestic corn were made by export-oriented trading groups. Per BCR, most purchasers since the implementation of the decree stipulated that any domestic corn purchased must be delivered to the trading groups by August 31, reinforcing the notion that these purchases of domestic corn are intended for export.
Argentina will need these sales to meet their current forecast – as of August 9 th, DJVE data indicates that the total volume of Argentina corn with a submitted export affidavit reached just 18.4 million tons, versus the 33.9 million for the same period in 2021/222. The current forecast for Argentina exports of corn from March-Feb of 2022/2023 is 22.0 million tons. Despite improved incentives for export, with fundamentally limited supplies, the 2022/2023 outlook for Argentina corn remains subdued.
Source: https://apps.fas.usda.gov/psdonline/circulars/grain.pdf