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U.S. eyes are on competing export countriesKansas As the 2008 wheat harvest is about to begin in Kansas, it's a good time to review the just-completed 2008 market year and glance at the wheat conditions in our major competitor wheat export countries. It appears likely that total U.S. wheat export sales in 2007-2008 will be more than 1.4 billion bushels (38.4 MMT) or 42 percent higher than in 2006-2007, which saw sales of 873.5 million bushels (23.8 MMT). A year ago, U.S. Department of Agriculture forecast U.S. wheat exports for 2007-2008 would be 972.6 million bushels (26.5 MMT), but as weather problems appeared around the world and demand increased, U.S. exports soared even during a time of unprecedented high prices caused by declining global stocks over the past several years, increased demand, increased speculative trading volume and weather problems. After responding to this demand, total U.S. wheat stocks will end the year at an estimated 256.9 million bushels (seven MMT), the lowest level in 60 years; but wheat production in the coming year is estimated to be up 16 percent, while worldwide production is shown up 8 percent. Ag exports across the board are forecast up significantly. USDA said, May 30, that U.S. agricultural exports will reach a record $108.5 billion in the 2008 fiscal year, $26.5 billion above the final 2007 export figure. Despite rising agricultural imports, the new forecast's realization would mean a $30 billion ag trade surplus. All eyes are on Australia as the specter of drought has returned to the world's second largest exporter. The planting season is coming to a close, as winter in the Southern Hemisphere officially begins in three weeks. Rabobank revised its production forecast for the country down 110.1 million bushels (3 MMT) this week. Giving hope to producers in the driest areas, the Australian Bureau of Meteorology forecasts the eastern part of the country will receive above average rainfall over the winter months while drier conditions are expected for the currently verdant southwest. Rains in Southern Europe cause quality concerns, raising fears of a repeat of last year's problems as continuing precipitation in Italy and Spain is not favorable for ripe wheat. Northern Europe reportedly looks good, with Germany's government estimating plantings up nearly 7 percent this year, thanks in large part to the temporary mitigation of set-aside requirements. Russia will not extend export taxes, with caveats. The Russian Agriculture Minister said, in early June, there is no reason to extend the 40 percent export tariffs beyond June as prices are declining and a record harvest expected. He also said Russia should focus on value-added exports, such as flour and meat products, rather than grains. Another government official outlined a government plan to buy up to 110.1 million bushels (3 MMT) of wheat to be sold later in the year to keep prices low, which would be accompanied by another round of export tariffs. In early June, neighboring Kazakhstan expanded its export ban on wheat to include flour; the ban is due to expire in September. Argentine problems continue as the government canceled talks with producer groups in early June. The government issued a revised tax structure, but the wheat export registry is expected to remain closed. Local reports indicate significant quantities of exportable supplies in the country, but the government wants to keep domestic prices low. The Buenos Aires Grain Exchange estimated area seeded with wheat will fall 8 percent below last year, due to low prices as well as dry conditions. High prices in Brazil are motivating higher plantings as the country is now starting winter wheat seeding. India may lift its ban on wheat exports, according to the country's Farm Minister, due to a bumper harvest and strong government procurement for its subsidized food programs. 6/23/08 Date: 6/19/08 Advertisement
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