Canada Markets

Today's USDA report projected higher wheat production in the United States in 2013/14, with total production forecast at 2.114 billion bushels, which is higher than June's estimate of 2.080 bbu and also higher than the 2.057 bbu which was the average pre-report trade estimate.

At the same time, the overall report may be viewed as bullish for wheat, with ending stocks for 2013/14 forecast at 576 million bushels, down from the June estimate of 659 mb and also below the average pre-report trade estimate of 624 mb. This tightening of stocks was largely due to a 100 mb increase in exports, with China being the primary target. A 5 million metric tonnes increase in projected exports to China, from 3.5 mmt to 8.5 mmt, represents the largest change in global demand. This would be the highest volume of wheat imported into China since 6.75 mmt was imported in 2004/05. In the past 10 years, China's wheat imports have been as low as 50,000 mt as seen in 2007/08, according to USDA data.

By class, soft red winter production in the U.S. is forecast to increase 28% from last year, while hard red spring production is forecast to fall 5.75%, hard red winter production is set to fall by 21% and durum production is forecast to fall by 29.3%, as seen on the attached chart.

Ending stocks for all classes are expected to fall except for hard red spring, which is to increase by 9.7% to 181 mb (4.93 mmt). Ending stocks for hard red winter are forecast to fall by 39% to 209 mbu, soft red winter is forecast to see ending stocks fall 8.9% to 113 mbu and durum ending stocks are seen as falling to 20 mbu (544,306 mt), a drop of 13%.

USDA data reveals opportunity for Canadian durum exports to the U.S., given the setback in production. Total supplies for durum in the 2013/14 crop year are reported at 126 mb, which includes imports of 45 mb (1.2 mmt). This could mean the highest level of durum exported to the U.S. ever, with the highest volume of durum imports currently reported at 41 mb in 2006/07, which converts to 1.12 mmt. Forecasts for 2012/13 currently indicated U.S. imports of durum at 36 mb or .980 mmt.

Canada's all-wheat production was left at 29 mmt, while our country's export potential is increased by 500,000 mt as the global wheat exporters fight for a share of the increased global export potential. Canada's wheat carryout is forecast to fall to 5.2 mmt, 500,000 mt tighter than the June estimate and slightly higher than the 4.91 mmt forecast for the 2012/13 crop.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

(ES)

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