Global wheat trade down 11%: USDA

The United States Department of Agriculture (USDA) ‘Grain: World Markets and Trade’ report was released yesterday.

“Global wheat trade is down 11% as a result of tightening supplies and higher prices,”​ it said.

“Supplies in most major exporting countries are tightening, with stocks expected to be down 15 million tonnes from last year,”​ it added.

In the Black Sea region, overall wheat exports are anticipated to be half of last year’s total, with market share slumping to 14% from 25%. Tightened supplies have been put down to production-related shortfalls and export constraints in Ukraine, the USDA said.

“As Black Sea supplies dwindle, importers are already turning to higher-priced suppliers,”​ it said.

The report noted that US exports are up amid trade dips globally.

Eyes on India​

“In an unusual development, India is providing needed supplies to global markets. India can now effectively compete as a result of tight global supplies and rising prices,”​ the USDA said.

The country is expected to export 5 million tonnes this year – the most it has done in nine years.

“This could be the tip of the iceberg as the country is currently saddled with a huge surplus and inadequate storage facilities,”​ the report said.

Hedging the costs…​

In August prices of all wheat surged, with Soft White Winter (SWW) posting the largest gain, up $19 to $355 per tonne.

Francisco Redruello, senior food analyst at Euromonitor International, previously told BakeryandSnacks.com that US grain volatility would knock bakery and snack manufacturers in September.

“If price rises continue in August, it will increase in-put costs for bakery and snack manufacturers,”​ he said, and ultimately become a “significant”​ problem for firms. (See HERE​)

However, manufacturers should invest in forward contracts to hedge volatility, Jack Watts, a senior market analyst for the Argiculture and Horticulture Development Board (AHDB) and the Home Grown Cereals Association (HGCA) said. 

Trading: On the horizon​

The USDA report identified some future changes in export and import trends across the globe.

USDA's forecast for the 2012/13 trading year on wheat exports and imports:​