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COMMERCIAL SALES UP, YEAR TO DATE
The latest sales figures show that commercial sales of U.S. wheat are up nearly half a million
tons, compared to sales at the same time last year. SRW is up 476 thousand metric tons, HRS is up 229 TMT, white is up 626 TMT and durum is up 132 TMT. These four classes, together, account for an increase, to
date, of almost 1.5 million metric tons. HRW, however, is down 980 TMT (from 4.5 MMT last year to 3.5 MMT this year).
SRW strength is evident in increased sales to Mexico, with double the amount of SRW purchases over last year, the Philippines, 122 TMT as compared to only
25 TMT this time last year, and Sri Lanka, which has doubled their SRW purchases as well.
The success story with HRS, thus far, has to be Europe. Export sales of HRS to the EU are 510 TMT, up dramatically from 351 TMT last year. Sales of HRS to
the EU are traditionally strong, with total HRS sales to the EU for the entire 1999/00 marketing year ending at 963 TMT.
Sales of white wheat are up in most every country that purchases SWW, including Egypt, where purchases are up 326 TMT more than the same time last year.
Because of a record crop in Pakistan, sales to that destination continue to languish.
A large part of the HRW picture is the situation of reduced sales to South America, most particularly to Chile, Colombia and Peru. HRW export sales to
those three countries are less than half of what they were this time last year, totaling 305 TMT this year compared to 797 TMT last year. USW assessment is that this is a direct result of aggressive price
undercutting by the Canadian Wheat Board.
Thursday's USDA export sales report shows a slight decrease in total year to date export shipments. The decrease is explained by the fact that last year
at this time, a far greater amount of food aid, particularly the large donation to Russia, had occurred by now.
U.S. WHEAT SALES TO EGYPT UP 92%
"Awesome" is not too mild a word to describe Egyptian purchases from the U.S. so far
this year. Total marketing year to date wheat sales are almost double, 2.2 million metric tons (MMT) this year compared to 1.1 MMT last year. Sales are up in HRW (from 691 TMT to 969 TMT), SRW (259 TMT to 684 TMT),
and HRS (8 TMT to 24 TMT). The increase in soft white wheat (SWW) really stands out, increasing from 180 TMT at this time last year to more than half a million tons this year.
Indications from Egypt are that they have enough domestic stocks to cover their needs well into next year, but they will continue imports that are needed to
blend with the domestic wheat. Although all U.S. export sales can ultimately be attributed to superior U.S. quality and price advantages, we cannot overlook the hard work by USW staff in Cairo who have done a superb
job in pointing out the advantages of all classes of U.S. wheat compared to wheats from other origins.
In another development in Egypt, we note the Canadians will be once again be offering on tenders, after a thirteen year absence from the market. USW is
confident that we will continue to demonstrate the superior suitability of U.S. wheats for the Egyptian market.
EU MILLERS AND WORLD IMPORTERS PREPARE FOR EU QUALITY PROBLEMS
It's no secret that quality concerns continue to haunt the
European Union wheat crop. Taking action to protect domestic millers, the European Union has limited exports of EU-controlled intervention wheat stored in France and Germany as it takes stock of available wheat
quality in the 15-member bloc. Most recently, the EU's cereals management committee canceled several tenders for intervention in order to stop milling wheat from leaving the region.
As reported earlier, persistent rains may have caused sprout damage and low falling numbers in some EU crops. The head of the French millers association
reportedly reaffirmed the impact of poor harvest weather on the quality of this year's French wheat crop. "Today there is no indication that we overestimated the difficulties this year," ANMF President
Paul Couesnon said yesterday.
Importers are also looking for ways to protect their milling industries. Already, the Morocco buyers have indicated that they will not lower is quality
specifications, and that it would likely reduce French wheat purchases during this marketing year.
North American wheats are in a position to meet the demand caused by EU quality problems. In particular, the U.S. wheat crop of 62 million metric tons is
exhibiting high quality characteristics, with generally high test weight and high falling numbers. And unlike the EU, which by their recent actions are telling world importers that European consumers come first, an
importer seeking U.S. wheat has an equal opportunity to compete with domestic users.
CLINTON VETOES DEATH TAX REPEAL
Proving earlier statements by the Administration, President Clinton vetoed legislation to
eliminate the federal inheritance tax, or what some have called the "death tax," on Thursday, August 31, 2000.
In his veto message, Clinton referred to the growing U.S. economy and government surpluses and commented, "[I]f you look at its merits, it [the estate tax
elimination bill] would take us off the path that has brought us here this past eight years. It fails on grounds of fiscal responsibility - it costs too much - and it fails on grounds of fairness."
Reaction to the veto was quick and pointed. According to Pro Farmer, representatives from the office of House Speaker Dennis Hastert (R-Illinois)
commented that they will "make an override of the president's death tax veto our first priority."
NAWG, which strongly supports legislation to eliminate the federal inheritance tax, will continue to work with its allies in Congress to resolve this issue
before Congress adjourns for the year in October.
CANADIANS UP TO OLD TRICKS
What in the heck is going on with hard red winter wheat sales in South America, US Wheat Associates
wanted to know earlier this summer. Exports were down, for no readily apparent reason. Crop quality was good, prices were right, etc. So USW marketing experts, touring South American countries giving crop quality
seminars, started delving. The answer, from customers the length and breadth of the continent, was the same: the Canadians are back in South America this year, undercutting prices set by a free and open
market, and giving protein away.
We recall very clearly that the CWB claims that they don't undercut prices. Even though they sell spring wheat, at a higher guaranteed protein, which is
often even higher when delivered, cleaned at no charge, shipped farther, for less than U.S. offers for HRW, that's not undercutting. And when they also pay the full two port loading charge when a vessel from
Vancouver adds a partial cargo in Portland, that's not undercutting. Canadian university economics classes must use their own specialized definitions these days...
USW has brought the South American findings to the attention of U.S. government officials. And we're certain that the CWB is telling Canadian wheat growers that
they are getting "full value" for the sales in South America.
SHAKING IT UP IN BRAZIL
Brazil is certainly making news recently. Last week, there was a substantial amount of market and media
speculation on their purchases of U.S. wheat: did they or didn't they??? The answer, according to the USDA export sales desk, was that they did, and they didn't. Leading Brazilian food producer Predileto
announced that they bought 50,000 metric tons of HRW and expects shipment in September. Another food group canceled its order for 25,000 HRW after Argentina lowered its prices.
In another Brazilian development, we hear that the government is "willing to negotiate" the lowering of tariffs on Canadian wheat as part of a package
to avert trade sanctions on another matter. The U.S. wheat industry is watching this potential development with a fair amount of interest since WTO rules provide that all trading partners must be treated the same.
Thus, if Canada negotiates a lowered tariff with Brazil, WTO rules provide that
Brazil would have to offer that same lowered tariff to the U.S. How this all plays out, especially since the tariff reduction could cause problems with
Argentina, Brazil's Mercosur partner and main wheat supplier, is anybody's guess right now.
Current estimates have Brazil producing 1.526 million metric tons (MMT) in 1999-2000, down 36.5% compared with 2.402 MMT in 1998-99. Expectations are that the
country will have to import 7-8 MMT in the 2000-01 marketing year to meet demand.
THINGS ARE SHAKING IN AUSTRALIA, TOO
Wow! That's quite a battle going on Down Under. The Australian Wheat Board is undergoing a
review under their country's National Competition Policy, and the two sides for and against reform of the AWB couldn't be further apart. In the "for reform" column is the Productivity Commission, an
independent agency of the Australian government, who "considers it unlikely that Australia possesses sufficient market power in world markets to justify continuation of the export monopoly."
Coming out against reform is the Grains Council of Australia, who claims that if the AWB loses its export powers, growers could lose up to $2 billion over the
next 20 years. They also assert that "a recent problem of overseas buyers reneging on grains contracts had not hit AWB because its single desk blocked buyers from canceling an order with one Australian exporter
to switch to another Australian exporter." The spokesperson for the GCA threatens to "conduct a major campaign if it believed it had to demonstrate to retain the single desk." We
understand that this is a message aimed straight at Australian politicians who would not like to see such a development.
AWB BRAGS THAT IT USES MONOPOLY TO "EXTRACT PREMIUMS"
AWB reportedly told Reuters news service on Monday that it
extracted a price premium of significantly more than A$3 per metric ton from the world market because of its export monopoly.
"AWB has had independent economic analysis of the price premium of the single desk and has identified a premium significantly higher than that
(A$3 a tonne)," AWB's spokesman told Reuters.
Australian wheat customers must be delighted to hear that they are paying premiums to support the monopoly operations of the AWB.
On the other hand, a key trade group, favoring AWB reform, points out that reform could save at least A$120 million a year across the Australian industry
and would mean, on average, an increase of at least 27% in growers' farm business profit.
COUNTY SOYBEAN AND CORN PLOT TOURS SCHEDULED
The Norman County Corn Variety Plot Tour starting at 3:00 p.m. on Sept. 5th.
Location is one mile west of Perley, MN and ¼ mile south on the Bryan Hest Farmland. Over thirty conventional and Bt corn varieties of 80-85-90 day maturity.
Clay County's Soybean Plot Tour of the Minnesota Reseach Soybean Variety Trials will be held at 4:30 p.m. on Sept 5th at the Alvin Swanson farmland, one mile north of Kragness, MN Co. Rd. # 99 and 1 ½ miles west.
Mahnomen County Soybean and Corn Variety Plot Tour will be on Sept 6th starting at 12:00 noon with lunch sponsored by participating seed companies. The location is on the Paul & Bill Donner Farmland, one mile east of the Norman - Mahnomen County line on County Road # 6 or 5 ¼ miles west of Hwy # 59.
The University of Minnesota Research Variety Plot Tour will be on Sept. 6th starting at 4:30 p.m. at the Swenson Brother Farmland, two mile south of Shelly, MN and ¾ mile west on Rd. # 119. Soybean Research Plots have Public and Private varieties.
Norman County Soybean Plot Tour will be at 6:45 p.m. at the Doug Nelson farmland, three miles north of Ada, MN along Highway # 9. A number of Public
and Private, and Roundup Ready varieties will be viewed.
Norman County Soybean Plot Tour will be at 7:30 p.m. at the Jason Gilbertson Famland, south of Ada, MN ½ mile east of quansets along Highway #9.
The tour will conclude with Brats, Beans and Beverage at the 4-H Building, sponsored by participating seed companies.
Speaker for each plot tour will be Dr. Jim Orf, University of Minnesota Soybean Breeder, St. Paul, MN, variety performance; Ross Rehder, MN Soybean Council
Representative and Mark Beedy, Farmer and Clay County Soybean Grower Member with lobbying efforts in the State and Washington D.C. Corn and Soybean Company Representative are invited to cover their varieties
at each location.
USDA RELEASES EXPORT SALES REPORT 08/31/00
http://www.fas.usda.gov/export-sales/esrd1.html
USDA RELEASES OUTLOOK FOR AG TRADE 08/30/00
http://usda.mannlib.cornell.edu/reports/erssor/trade/aes-bb/2000/
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