By Lisa Kallal
CHICAGO (B)--As U.S. wheat export shipments lag 5% behind year-ago levels, many analysts are skeptical about meeting the U.S. government's projection to export 1.125 billion bushels in 2000-01. Some perceive that the goal is within reach given world market dynamics, but a pick-up in sales is needed very soon.
Most expectations are for U.S. wheat export demand to increase in the next several months because of tight world milling-quality wheat supplies, but many are uncertain whether it will be soon enough to boost 2000-01 U.S. exports or whether it will instead get 2001-02 off to a strong start. In the December supply/demand report, the U.S. Department of Agriculture surprised the industry by raising its export estimate by 25 million bushels, reversing a cut by the same amount in the November report.
The current USDA projection equates to more than a 3.0% increase from final 1999-2000 shipments, in contrast to the lagging pace seen through week 28 of the marketing year.
USDA reported that shipments through Nov. 30, the end of the second quarter, were 564 million bushels, or 50.0% of the year's export goal. Through Dec. 14, loadings had advanced to 615 million bushel. Although wheat shipments in the second half of the marketing year have equaled or been greater than those of the first half before, this has not been the trend seen in the past five marketing years. The last time second-half wheat shipments were close to 50.0% of the year's total was in 1994-95. Since then, second-half shipments have ranged from 35.9 to 47.3% of the year's total campaign.
In 1999-2000, exports in the second half of the year accounted for less than 44.0% of the total sales for the year. However, many analysts assess that 2000-01 could be different. U.S. wheat demand is seen picking up from February forward because of an overall low supply of milling-quality wheat in the world. As a result, those analysts consider the USDA estimate to be a fairly modest goal that is reachable if exports can pick up by only a few million bushels a week in the final months of the marketing year. Shipments in the next 24 weeks need to average 21.26 million bushels.
The projected 2000-01 world wheat stocks-to-use ratio, at 18.4%, is at a historical low. On top of this, high quality world wheat stocks are seen as even smaller.
This is due to quality problems reported in the EU, Canada and Australia. Rain caused extensive damage to grain in those countries during harvesting, leading to larger-than-usual amounts of wheat being downgraded.
Brian Anderson, analyst with Anderson Commodities and Consulting in Kansas City, said that because of the quality problems, the USDA export target still was very obtainable. Final exports could be 10.0 million bushels higher than the current USDA forecast, at 1.135 billion, he said.
Anderson cites the fact that stocks held by the top five exporters are down to 47.9 million tons from 53.5 million two years ago and that because of more feed wheat supplies--especially in Australia--and StarLink corn problems, global wheat feeding recently has increased.
"World wheat stocks are the lowest that I have ever seen and my data goes back to 1950," said Sid Love of Kroft and Love Consulting. "Meeting the USDA's goal is possible, but it is a little overoptimistic."
Analysts at The Linn Group also see the USDA forecast as too high and estimate 2000-01 exports coming in closer to 1.055 billion bushels.
"World wheat stocks don't mean anything right now; wheat is there in the exporters' hands if people want it," said Linn Group analyst Curtis Jones.
"The problem is that foreign buyers continue to buy wheat hand-to-mouth and this system continues to work for them," said Doug Hjort of Hjort and Associates in Adel, IA. "By doing this they can kept a lid on prices and they don't have to pay a storage cost. It will take a major supply scare for importers to step in and start buying aggressively."
One Chicago Board of Trade wheat floor trader focused on the sluggish export sales pace.
"It's possible to meet the USDA goal; we still have a half a year left," he said. "However, not when you have been selling less than 500,000 tons of wheat per week for the past couple of weeks."
For the week ended Dec. 7, USDA reported net export sales at 482,800 tons. Year-to-date sales are 17.513 million tons, compared with 18.209 million at the same point a year ago and higher levels in recent years.
Some traders joke that maybe USDA knows something that no one else does--how much wheat the United States will donate over the next few months.
"Wheat is a political grain," one analyst said. "Recently, the United States donated wheat to Pakistan when they were exporting their own wheat, but it is to keep that country stable."
A comparison of weekly export inspections issued each Monday, which include donated wheat, and those shown each Thursday, where only commercial cargoes are reflected, shows donations remain a potent force this season, but are down slightly from a year ago.
Through Dec. 7, year-to-date shipments in the Monday series were 593.0 million bushels, but in the Thursday report were 525.0 million. This suggests donations accounted for roughly 68.0 million bushels of wheat shipments.
At the same point in 1999-2000, "commercial" shipments lagged total loadings by about 95.0 million bushels.