HRS Wheat Exports Up, But Overall Sales Disappointing

U.S. wheat sales for the 2002/03 marketing year that ended May 31 were generally disappointing, although there were a couple of bright spots, according to U.S. Wheat Associates.

Hard red spring wheat exports were up 20%, thanks largely to sales growth in Latin America. Countries coming in with at least a 50,000 ton increase over last year include Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru, and Venezuela. Sales growth also occurred in Europe, south Asia, and sub-Sahara Africa.

White wheat exports also experienced growth, coming in 11% higher in 02/03. A large reason for the increase from 3.17 million metric tons to 3.5 MMT was Egyptian sales of 412 TMT, up from 182.5 TMT last year. Egypt requires a certain percentage of white bran wheat that is available only from the U.S. and Australia.

Durum sales were down 36% in 02/02, with only 727 TMT in export sales.
Sales to the European Union, where a window was closed to U.S. wheat because of tariff issues for the first half of the marketing year, were down 61% from last year. Sales elsewhere remained fairly steady.

The hardest hit class was soft red winter wheat, where exports were cut nearly in half. While the 22% reduction in total supply accounted for much of the decrease, the resulting higher prices tended to discourage several major buyers. Sales to Egypt dropped by nearly 1.5 MMT this year, accounting for over half of the drop in sales for soft red winter wheat. Reduced sales to the Philippines and Sri Lanka—both of whom purchased large amounts of cheaper Indian wheat—also contributed to the decrease.

Hard red winter wheat sales were 21% lower than in 2001/02, despite a healthy increase in sales to Latin America. Again, Egyptian sales (or lack thereof) proved troublesome, as the 1.5 MMT drop in sales to Egypt nearly accounts for the total drop of 1.8 MMT in this class. Primary factors in the loss of HRW sales to Egypt and some other destinations were the large exports and low prices of wheat coming out of the Black Sea ports.

Total wheat donations at 2,209,200 tons for 02/03 are down nearly 11% from 2001/02, according to USDA’s preliminary summary of wheat donations for the last marketing year. While the difference is relatively small, it continues a downward pattern since 1999/00, when 3,858,300 tons of U.S. wheat was donated. Wheat donations have dropped 43% in the last four years.

The largest amount of donations in 02/03 was of hard red winter wheat totalling 1,464,700 tons, which went to 29 countries around the world.  Ethiopia was the largest single recipient country. About a quarter of a million tons of hard red spring wheat went to 12 countries, with Mozambique and Ghana receiving the largest donations. As usual, no durum was donated.

Total commercial sales in 02/03 were 20.8 million metric tons (MMT), compared to 24.1 MMT last year, a 13.7% drop. This follows a 17% drop in total domestic wheat production, from 1.96 million bushels in 2001/02 to 1.61 million bushels in 2002/03. With lower anticipated stocks, prices rose for U.S. wheat, and higher prices ration demand. Both U.S. wheat production and exports are anticipated to rebound over the course of 2003/04.