Milling & Baking News - November 26, 2013 - 23

Grain Market Roundtable
n Market Roundtable
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Differing views on wheat futures
price outlook as winter approaches
Continued from Page 1

demanded serious consideration, and
it lent support to the downtrend seen
in wheat futures prices from recent
highs set in mid-October. In the case of
Minneapolis wheat futures, contracts
set new season's lows in the wake of
the report while Kansas City and Chicago wheat futures traded close to but
not below their season's lows mostly
set in September.
While the U.S.D.A. raised its forecast
for wheat supplies in 2013-14, which
factored into its revised carryover forecast, the real surprise was in a smaller
projected wheat disappearance.
The U.S.D.A. forecast wheat supplies in 2013-14 at 2,998 million bus,
up 26 million bus from the September
projection but down 4% from 3,131
million bus in 2012-13. The U.S.D.A
raised its 2013 wheat production estimate by 16 million bus, to 2,130 million bus, and it raised its forecast for
wheat imports in 2013-14 by 10 million
bus, to a record 150 million bus.
The U.S.D.A. forecast wheat disappearance in 2013-14 at 2,433 million
bus, up 22 million bus from its September projection, despite an 8-million-bu reduction in the forecast food
use of wheat to 950 million bus. Wheat
disappearance in 2012-13 was 2,414
million bus.
Traders expected a smaller carryover
projection mostly because the Sept. 1
Grain Stocks report issued at the end of
September indicated a higher feed and
residual use of wheat in June-August
than the market had anticipated. On
the basis of that report, the trade expected the U.S.D.A. in its November
WASDE to raise its forecast for feed
and residual use by 50 million, 60 million or even 70 million bus from the
September outlook, which was for 280
million bus, observed Paul Meyers,
vice-president, commodity analysis,
Foresight Commodity Services, Inc.,
Stephenson, Va. Instead, the U.S.D.A.
raised its feed and residual forecast by
only 30 million bus, to 310 million bus.
In comparison, feed and residual use of
wheat in 2012-13 was 388 million bus.
Many also thought the U.S.D.A.
would raise its export forecast from the
1,100 million bus projected in September because wheat export sales from
September to November were stronger
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than generally expected.
Many had thought the
U.S.D.A. would raise its export forecast by 25 million or
even 50 million bus, Mr. Meyers noted, but the department left
its export forecast unchanged. U.S.
wheat exports in 2012-13 were 1,007
million bus.
Mr. Meyers indicated he thought
the final U.S. export number will be a
little higher than the U.S.D.A. projection. At the same time, he noted, the
Southern Hemisphere wheat harvest
was under way, and both Argentina
and Australia were expected to have
larger crops than a year ago.
The U.S.D.A. forecast the Argentine
crop at 11 million tonnes compared
with 9.5 million tonnes in 2012-13,
when drought exacted a vicious toll,
and 15.5 million tonnes in 2011-12. The
U.S.D.A. forecast Australian wheat
production at 25.5 million tonnes, up
from 22.08 million tonnes in 2012-13.
"Argentina has been out of the export market for several months (because of the drought-reduced 201213 outturn), and they are
not going to be a major
exporter in 2013-14, but
they should be able to export 3 million to 4 million
$3.00
tonnes," Mr. Meyers said.
$2.50
"Australia is expected to
$2.00
export 19 million tonnes."
Increased exportable
$1.50
supply, particularly in
$1.00
Australia, may slow de$0.50
mand for U.S. wheat, Mr.
$0
Meyers said, and he pointed to a recent Iraqi wheat
-$0.50
June
tender where Australian
2013
hard wheat offers were
about $20 a tonne below
those from the United
States.
"Overall, the U.S.D.A.'s
$8.80
wheat number (carryover)
surprised a lot of people,
including me," Mr. Mey$7.80
ers said. "My estimate of
the U.S. wheat carryover is
527 million bus, and that's
$6.80
based on a little higher
feed use and a little higher
export volume than fore$5.80
June
cast by the U.S.D.A." Mr.
2013
Meyers said when all is

said and done,
the 2014 wheat
carryover may be
closer to 500 million
bus to 525 million bus
than the 565 million bus
forecast by the U.S.D.A.
Steve Freed, vicepresident, ADM Investor
Services, Chicago, said the
fact the U.S.D.A. made no

Chicago wheat/corn spread
per bu

July

Aug.

Sept.

Oct.

Nov.

Wheat futures prices
per bu
Kansas City
Minneapolis
Chicago

July

Aug.

Sept.

Oct.

Nov.

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2013 23
13

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Milling & Baking News - November 26, 2013

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