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

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

• July 2008

The major source for the data in this
presentation is the USDA World Agricultural
Supply and Demand Estimates released July 11,
2008, which include early projections for the
2008/09 marketing year. The forecast remains
dependent on weather conditions and may change
significantly over the course of the year. U.S.
Wheat Associates does not warrant the accuracy of
the USDA forecast.
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Top 10 Factors Affecting the Global Wheat Market

• World beginning stocks at 30 year low.
• Stocks-to-use at historic low.
• Export origin supplies 38 below 10-year average.
• Global plantings much higher on strong prices.
• Weather mostly favorable, global yields forecast
  up 6
• Drought has decreased yields in North
  Africa/Middle East
• Record production prospect forecast up 9 (53
  MMT) from last year
• Softer gluten origins up Ukraine (51), Canadian
  Eastern SRW (300), U.S. SRW (70)
• Imports also expected to increase 7 (8 MMT) to
  record 118 MMT
• Stock rebuilding, increased consumption
• Prospects for increased production seen
  increasing export competition
• Ukraine up 6 MMT, Australia up 6 MMT, EU-27 up 5
  MMT
• U.S. exports forecast to fall 21 (7 MMT),
  Kazakhstan -2 MMT, Argentina -0.5 MMT
• Ocean freight rates at record highs
• Floods in the U.S. Midwest threaten corn yield
  potential
• U.S. corn prices expected to give support to
  wheat.
• SRW/corn price ratio currently 1.2 vs. 2.0 in
  March 2008 and 1.8 2007/08 average
• Global consumption to set new record forecast up
  4 (24 MMT)
• Increased feed use expected in the U.S. and
  Europe

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Production, Consumption and Trade 2008/09

• USDA forecasts global production at record 664
  MMT
• 9 (54 MMT) over 2007/08, 12 (72 MMT) higher
  than10-year average
• Largest producers up EU (19), China (4), Black
  Sea (10), India (1)
• Up in North America U.S. 19 (11 MMT), Canada
  22 (5 MMT)
• Australia seen up 92 (12 MMT) several months
  remain before harvest
• Argentina expected to reduce plantings on
  political problems, harvest down 9
• Consumption forecast to set record up 4 (26
  MMT)
• Wheat feeding forecast to increase 22 (21 MMT)
• High corn prices expected to shift wheat to feed
  use
• Food use also forecast to rise (5 MMT)
• Trade expected to increase 6 (7 MMT) to new
  record
• Import projections
• India to fall to near 0 from combined 8 MMT over
  last 2 years
• EU-27 purchases seen down 1.5 MMT on higher
  production
• Iran forecast up 4 MMT, Syria up 1 MMT, Algeria
  .8 MMT
• Export forecasts
• Forecast up Australia up 8 to 15 MMT, EU up 5 to
  16 MMT, Ukraine up 6 to 8 MMT
• US seen down 7 to 27 MMT, Kazakhstan down 2 to 7
  MMT, Pakistan down 1.2 to 1 MMT
• Canada unchanged

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Stocks and Price 2008/09

• World stocks expected to rebound
• Beginning stocks lowest since 1978
• Stocks projected to rebound 17 MMT this yearif
  production meets forecast
• Would remain the second lowest stocks to use
  ratio in history
• Stocks in 6 major exporters (including Black Sea)
  expected to end year up 43(12 MMT) over 2007/08
• U.S. ending stocks projected to double
• U.S. farm gate prices forecast to continue rising
• 6.75 to 8.25/bushel (248-303/MT)
• Record high on forward selling
• 6.48 (238/MT) in 2007/08
• Average U.S. farm gate price, marketing year
  weighted average

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World Production and Use
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Supplies in Top Five Exporting Countries
Includes U.S., Canada, Australia, Argentina,
and EU-27
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World Wheat Supply and Demand
8
World Beginning Stocks- lowest since 1978
Five Major Exporters include U.S., Canada,
Australia, Argentina, and the EU-27
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Global Stocks-to-Use Ratio
Ending stocks
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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-27
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World and U.S. Wheat Supply and Demand

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

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Canada Situation
13
Canada Ending Stocks
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Australia Situation
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Australia Ending Stocks
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Argentina Situation
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Argentina Ending Stocks
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EU-27 Situation
19
EU-27 Ending Stocks
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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

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Black Sea Exports
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Black Sea Ending Stocks
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U.S. Situation
24
U.S. Ending Stocks
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U.S. Share of Wheat Export Market
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World and U.S. Wheat Supply and Demand

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

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Major World Wheat Importers(from all origins)
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Top 10 Customers for U.S. WheatPrior Marketing
Years 2005/06 vs. 2006/07
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Top 10 Customers for U.S. Wheat2006/07 vs.
2007/08(year-to-date)
Source USDA FAS export sales report July 10,
2008
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Change in U.S. Wheat Sales2007/08 vs.
2008/09(year-to-date)
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World Wheat Imports
Trend in other importers denoted ( )
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China Wheat Situation
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India Beginning Stocks and Production
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India Net Trade
Net Exports
Net Imports
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World and U.S. Wheat Supply and Demand

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

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U.S. Hard Red Winter
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U.S. Hard Red Spring
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U.S. Soft Red Winter
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U.S. White
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U.S. Durum
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U.S. Winter Wheat Planted Acreage

• SRW up 24, SW 9, HRW -1

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U.S. HRS and durum planted area rise

• HRS seedings up 6, durum 22

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U.S. Wheat Sales by Class(year-to-date)
Source USDA FAS export sales report July 10,
2008
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U.S. Wheat Ending Stocks by Class
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U.S. Stocks to Use Ratios
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U.S. Wheat Supply and Demand
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U.S. Wheat Supply and Demand
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U.S. FOB Gulf Prices
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U.S. FOB PNW Prices
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SRW and Soft White Prices
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U.S. Gulf Basis Prices
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U.S. PNW Basis Prices
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World and U.S. Wheat Supply and Demand

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

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U.S. Wheat Area and Production
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U.S. Crop Planted Area Comparison

• Wheat up 5 (11 over 2006/07)
• SRW (24), durum (22), SW (9), HRS (7), HRW
  (-1)
• Soybeans up 17, corn to fall 7.

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Corn/Wheat Price Spread

• Friday closes at the CBOT
• SRW/corn ratio falls to 1.2 vs. 2.0 in March

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World CornProduction, Use and Trade
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World SoybeanProduction, Use and Trade
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World WheatProduction, Use and Trade
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Ocean Freight Rates for Grains
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Summary

• Global production forecast to rebound in 2008/09
  on higher plantings
• Weather has been generally favorable
• Southern Hemisphere harvest still months away
• Consumption expected to continue to expand, set
  new record
• Food, feed, biofuels
• Stock rebound expected
• Even with large production increase, world
  stocks-to-use ratio would remain low at 19
• World exporters
• Production and exports forecast to rebound in
  Canada, EU-27, Black Sea and Australia
• Stocks in major exporters expected to rise