U'S' Wheat Associates World Wheat Supply and Demand Situation

1
U.S. Wheat AssociatesWorld Wheat Supply and
Demand Situation

• February 2008

Major data source USDA World Agricultural
Supply and Demand Estimates February 8, 2008
2
Top 10 Factors Affecting the Global Wheat Market

• World stocks at 30 year low export origin
  holdings down 29 stocks-to-use at historic low.
• U.S. exports up 61 from last year. With 17 weeks
  in the marketing year to go, exportable supplies
  are dwindling.
• Import demand explodes, despite record prices
• Importers remove import restrictions/subsidize
  consumption
• Global food use demand sets a new record
• Exporters impose export restrictions
• Ukraine/Russia/Argentina impose export
  restrictions
• U.S. winter wheat seedings below expectations.
• Planted area increased for SW and SRW while HRW
  fell from last year. HRW entered dormancy in very
  dry conditions.
• HRS area is also expected to fall while durum is
  expected to rise. High protein supplies seen
  limited through 2008/09
• Global plantings to rise. EU and Black Sea
  planted area up.
• Biofuel production strengthens competing crop
  prices globally.
• Ocean freight rates at record highs
• 2008/09 beginning stocks at bin bottoms
• Dollar exchange rate plummets

3
Production 2007/08

• World - 604 MMT, up 2 (10 MMT) from 2006/07
• Exporter production diminished by poor weather
• U.S. up 14 (7 MMT) despite freeze and persistent
  rains in winter wheat regions
• Canadian down harvest off 21 (5 MMT)
• Australia suffers second year of drought harvest
  down 7 MMT from 10-year average.
• Argentina late season freeze
• 2008/09 Plantings forecast up
• EU 10, Black Sea 20, SW/SRW
• HRS, Canadian CWRS acreage to fall

4
Consumption and Trade2007/08

• World food use sets new record
• Up 9 MMT to 520, mainly in developing countries.
  Not deterred by high prices
• Feed use down 6 (6 MMT)
• Exports
• Up US (8 MMT)
• Down Canada (-6), EU (-4), Australia (-1)
• China to export 3 MMT (mostly feed quality)
• Imports
• India down to 2 MMT from 6 MMT last year
• North African imports up

5
Stocks and Price 2007/08

• World stocks tighten
• Beginning stocks lowest since 1982
• Stocks to decline 15 MMT this year, lowest level
  in 30 years
• Stocks in 5 major exporters to end year 27 (10
  MMT) lower than 2006/07
• U.S. farm gate prices rise
• 6.45 to 6.85/bushel (237-252/MT)
• Record high
• 4.26 (157/MT) in 2006/07
• World export prices much stronger
• Average U.S. farm gate price, marketing year
  weighted average

6
World Production and Use
7
Supplies in Top Five Exporting Countries
Includes U.S., Canada, Australia, Argentina,
and EU-25
8
World Wheat Supply and Demand
9
World Beginning Stocks- lowest since 1982
Five Major Exporters include U.S., Canada,
Australia, Argentina, and the EU-25
10
Global Stocks-to-Use Ratio
Ending stocks
11
World Ending Stocks and Price
Prices are marketing year averages2007/08
current year-to-date average
Top 5 Exporters include U.S., Canada, Australia,
Argentina and EU-25
12
Chinese vs. Rest of the World Ending Stocks
China accounted for 49 of world stocks in
1999/2000, down to 29
13
World and U.S. Wheat Supply and Demand

• Major Exporters
• Import Demand
• U.S. Situation by Class
• Outlook

14
Canada Situation
15
Canada Ending Stocks
16
Australia Situation
17
Australia Ending Stocks
18
Argentina Situation
19
Argentina Ending Stocks
20
EU-27 Situation
21
EU-27 Ending Stocks
22
Black Sea Region Situation

• The Black Sea Region includes the Former Soviet
  Union, excluding the Baltic States
• Russia, Ukraine and Kazakhstan are the most
  important wheat producers in the Black Sea Region

23
Black Sea Exports
24
Black Sea Ending Stocks
25
U.S. Situation
26
U.S. Ending Stocks
27
U.S. Share of Wheat Export Market
28
World and U.S. Wheat Supply and Demand

• Major Exporters
• Import Demand
• U.S. Situation by Class
• Outlook

29
Major World Wheat Importers(from all origins)
30
Top 10 Customers for U.S. WheatPrior Marketing
Years 2005/06 vs. 2006/07
31
Top 10 Customers for U.S. Wheat2006/07 vs.
2007/08(year-to-date)
Source USDA FAS export sales report February 7,
2008
32
Change in U.S. Wheat Sales2006/07 vs.
2007/08(year-to-date)
33
World Wheat Imports
Trend in other importers denoted ( )
34
China Wheat Situation
35
India Beginning Stocks and Production
36
India Net Trade
Net Exports
Net Imports
37
World and U.S. Wheat Supply and Demand

• Major Exporters
• Import Demand
• U.S. Situation by Class
• Outlook

38
U.S. Hard Red Winter
39
U.S. Hard Red Spring
40
U.S. Soft Red Winter
41
U.S. White
42
U.S. Durum
43
U.S. Winter Wheat Planted Acreage

• 2008/09 estimates USDA, January 11, 2008
• 4 increase SRW 21, SW 7, HRW -1

44
U.S. HRS planted area to falldurum up

• 2008/09 forecast average of trade estimates
• Strong competition in HRS region barley, canola,
  dry beans

45
U.S. Wheat Sales by Class(year-to-date)
Source USDA FAS export sales report February 7,
2008
46
U.S. Year to Date Sales vs.USDA Export Forecast
Sales to January 10, 2008 Marketing year is
June 1 to May 31 HRW 91 of forecast, SRW 96,
HRS 96, SW 93, durum 100
47
U.S. Year to Date Sales and Exports vs.USDA
Export Forecast
Sales to January 10, 2008 Marketing year is
June 1 to May 31
48
U.S. Wheat Ending Stocks by Class
49
U.S. Stocks to Use Ratios
50
U.S. Wheat Supply and Demand
51
U.S. Wheat Supply and Demand
52
U.S. FOB Gulf Prices
53
U.S. FOB PNW Prices
54
SRW and Soft White Prices
55
U.S. Gulf Basis Prices
56
U.S. PNW Basis Prices
57
World and U.S. Wheat Supply and Demand

• Major Exporters
• Import Demand
• U.S. Situation by Class
• Outlook

58
U.S. Wheat Area and Production
59
U.S. Crop Planted Area Comparison
60
Corn/Wheat Price Spread
Friday closes at the CBOT
61
World CornProduction, Use and Trade
62
World SoybeanProduction, Use and Trade
63
World WheatProduction, Use and Trade
64
Ocean Freight Rates for Grains
65
Summary

• 2007/08 global production hurt by weather
  problems
• Consumption exceeds production again
• Stocks, already tight, shrink further
• World stocks-to-use ratio to historic low 18
• Prices strengthen dramatically
• World exporters
• Exports fall Canada, EU-27, Argentina, Black Sea
  and Australia
• U.S. exports nearly tapped out
• 2008/09 planted area
• UP SRW and SW, Europe, Black Sea
• DOWN HRS and Canada