Canada's week 23 wheat exports, covering activity through the week ending Jan. 10, was reported by the Canadian Grain Commission at 448,900 metric tons, the largest volume moved in nine weeks, assuming the combined movement in week 20/21 was shipped evenly across these two weeks. Durum movement slipped to 49,300 mt in the same week, an expected slowing due to the closure of the eastern seaway.
Earlier this week, the USDA increased its forecast for Canada's all-wheat exports to 26.5 million metric tons, the agency's second consecutive upward revision. Since August, the beginning of the Canadian crop year, the USDA has revised its forecast for Canada's exports higher by 2 mmt, while Agriculture and Agri-Food Canada has revised its forecast higher by 670,000 mt over the same period. The most recent estimate released by AAFC in December showed a forecast for all-wheat exports at 24.970 mmt, which would be record movement but by a narrow margin.
As of week 23, cumulative shipments of all-wheat are 409,777 mt ahead of the steady pace needed to reach the current AAFC forecast of 24.970 mmt.
When we look at the seasonality of wheat movement, we see that past movement is slightly weighted to the last half of the crop year. During the past five years, export movement over the first 26 weeks of the crop year averaged 44.8% of total crop year shipments. Of these five years (2015-16 through 2019-20), the smallest percentage shown is calculated for the 2019-20 crop year, where just 42% of crop year exports were reported in the first 26 weeks. This is based on licensed exports only as reported by the Canadian Grain Commission.
Should exports of all-wheat total a conservative 300,000 mt/week during the next three weeks to reach a cumulative volume of 12.354 mmt as of week 26, with exports to continue at the average pace, or 44.8% of total exports realized in the first half of the crop year, total movement would total 27.575 mmt. The 2019-20 pace would result in even higher exports.
This week could be viewed as a perplexing one for wheat market watchers. The U.S. dollar strengthened. Egypt cancelled a tender without making a purchase which is viewed as a signal from the world's largest buyer that price is viewed as too high. The USDA reported winter wheat acres planted to be above the average of pre-report estimates.
At the same time, it has been confirmed that Russia is not only implementing an export tax on wheat as of Feb. 15 of 25 euros/mt, but Russia is also doubling that tax to 50 euros/mt ($60.40/mt USD or $76.90/mt CAD based on today's currency exchange) as of March 1 and have included an option for a variable or floating tax for the 2021-22 crop year.
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Cliff Jamieson can be reached at firstname.lastname@example.org
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