Wheat

The government is likely to give importers some more time to comply with mandatory methyl bromide fumigation of all grain cargo at the port of origin. The current exemption from the compliance will expire on Jun 30. Indian plant quarantine norms stipulate methyl bromide fumigation of all cargoes at the port of loading to prevent foreign insects and pests from reaching Indian shores. In 2005, the government had relaxed this norm, allowing importers to either use alternative fumigants or fumigate imported grain shipments with methyl bromide once they enter Indian waters. The move had helped India import wheat and pulses from the US, Canada, Australia and European countries, where use of methyl bromide is banned due to environmental and health concerns. The government now wants to re-instate the mandatory use of methyl bromide at the port of origin, as the chemical is the best bet so far against eggs and pupae of insects, which other fumigants fail to tackle. There are concerns that India move to tighten fumigations norms would slow the import of pulses and wheat from Australia, Canada, France, Ukraine, Russia and a host of other countries that have banned the use of methyl bromide. The government has already issued a draft notification allowing the use of phosphine on grain shipments from Canada.

The Pune district office of Food Corp of India has ordered a probe into shortage of 111 tonne of wheat stocks meant for supply through public distribution system. We are likely to have received 111 tonne less wheat from 3,500 tonne of wheat bought from the Patti region in Punjab, and the fault is probably from dispatching end. The Food Corp official in Pune has advised food storage depot in-charge of Ahmednagar and storage superintendent Maharashtra State Warehousing Corp, Ahmednagar, to freeze the stocks and update all records pertaining for investigation. A committee of three officers has been formed for conducting the physical verification of stocks. The wheat rake (1rake=60,000-70,000bags) was placed for unloading in Ahmednagar depot of the FCI in Maharashtra.

Wheat prices remained unchanged in major wholesale markets. The key market of Indore remained shut due to unrest in Madhya Pradesh.

The US Department of Agriculture has reduced its forecast for India wheat production in 2017-18 marketing year (Apr-Mar) to 96.0 million tonne. In the previous forecast released in May, the US agency had projected wheat production of 97 million tonne in India. Production is still seen at a record high and over 10% higher from 87 million tonne a year ago. The government has estimated India wheat output in the 2016-17 crop year ending June to a record 97.4 million tonne. Despite the record crop and a custom duty of 10%, the department sees India wheat imports in 2017-18 at 4.0 million tonne.

USDA weekly crop progress report is expected to show lower condition ratings for spring wheat crops. Spring wheat was expected to be rated 53 percent in good to excellent condition, off 2 percentage points from last week as hot temperatures and limited rainfall in the central United States stressed developing corn and wheat plants. The winter wheat harvest likely advanced to 22 percent done, up from 10 percent a week ago.

Saudi Arabia main state wheat buying agency the Saudi Grains Organization bought 805,000 tonnes of hard wheat in an international tender. The purchase comprises 13 consignments to be shipped to the ports of Jeddah, Dammam and Jazan. Arrival dates range from August 1 to October 20. The purchase was made at an average price of $216.66 a tonne c&f.

European wheat prices fell following a sharp drop in U.S. prices on abundant global supplies and improved weather forecasts, and pressured by low export demand. December milling wheat on Paris-based Euronext, was down 0.7 percent at 172.00 euros a tonne.

A group of Israeli private buyers issued international tenders to purchase up to 30,000 tonnes of feed wheat and 20,000 tonnes of feed barley all of optional origins. Tenders close on June 13.

Wheat futures settled with losses of 1 to 4 cents in the KC and CBT contracts, as MPLS was up mostly a penny to 2 1/2 cent in the front months. The Commitment of Traders report had managed money lowering last week net short position in Chicago wheat futures and options by 7,624 contracts, to 106,136 contracts. They added 4,510 contracts in the MPLS wheat future and options contracts to a net long position of 9,486 contracts as of June 6. All wheat production for 2017 was hiked 4 mbu at 1.824 bbu over May crop production report. Winter wheat production saw a 4 mbu shift up to 1.250 bbu, as HRW was at 743 mbu up 6 mbu, with SRW at 298 mbu. US ending stocks for 2016/17 were at 1.161 bbu, showing a 2 mbu shift from May on larger imports, as 2017/18 stocks rose 10 mbu in this month’s report to 924 mbu. World ending stocks for 2016/17 were updated to 256.43 MMT, with 2017/18 stocks up 2.9 MMT to 261.19 MMT.

Egypt purchased 360 KMT of milling wheat from Russia and Romania for shipment during July 10–20, 2017 at an average price of USD 205.51/MT C&F. The price in the previous tender equaled USD 202.61/MT C&F. In the previous tender, on May 31, 2017, Egypt took 180 KMT of milling wheat from Russia and Romania for shipment during July 1–10, 2017.

Arrivals fell in Kota due to rains and concerns over damage to the stored crop, while farmers from other parts of north India could not transport their crops to Delhi due to rains. The key market of Indore remained shut due to prevailing unrest as protests by farmers.

Egypt state grain buyer GASC bought 0.36 million tonnes of wheat in a purchase tender. GASC had bought 0.24 million tonnes of Russian wheat and 0.12 million tonnes of Romanian wheat, continuing the dominance of Black Sea-origin wheat, which made up the lion share of purchases in last year state tenders.

First 35,000 tonne shipment of wheat in the new Iranian year has been deployed to Oman. The country capacity to export two million tons of wheat in the current year (began March 21) and has no need for imports of the product; with careful planning, Islamic Republic of Iran can turn into a giant exporter of wheat and flour.

Russia Ag Ministry, grain exports totaled 33.3 MMT by May 31, 2017 that is up 1.7% year-on-year. 32.7 MMT was exported at the same time last season.

Projected U.S. wheat supplies for 2017/18 are higher this month on increased beginning stocks, production, and imports. Projected 2017/18 U.S. wheat production is slightly increased by 3.8 million bushels to 1,824 million. The NASS June Crop Production report indicates higher Hard Red Winter and Soft Red Winter wheat production forecasts, which more than offset a reduced White Winter wheat crop. All of the wheat use categories are unchanged this month. The net supply increase raises projected 2017/18 ending stocks by 10.8 million bushels to 924.3 million. Carryout remains 20 percent below last year. The 2017/18 season-average farm price is projected at $3.90 to $4.70 per bushel, up 5 cents on both ends of the range. The mid-point of this range is up $0.40 from 2016/17. High-protein wheat supplies are expected to remain constrained in 2017/18, resulting in relatively higher prices for this wheat. Global wheat supplies for 2017/18 are raised 2.8 million tons, primarily on higher forecast wheat production for Russia, which is up 2.0 million tons to 69.0 million. Conditions continue to be favorable for winter wheat in most areas since the crop emerged from dormancy. Turkey’s wheat production is also forecast higher, up 0.5 million tons to 18.0 million on improved crop conditions this spring. India’s wheat production forecast is reduced 1.0 million tons to 96.0 million but is still record large and 9.0 million tons above 2016/17. European Union wheat production is forecast modestly lower at 150.8 million tons on a smaller expected crop in Germany but still 4 percent above last year. Foreign exports for 2017/18 are fractionally higher this month with increases in Argentina and Iran more than offsetting a reduction for the EU. Imports are projected higher for Brazil, Chile, and South Africa but down for Iran. Total world consumption is marginally lower, as a 1.0-million-ton reduction in India is only partially offset by increases in Russia, Brazil, and Chile. Global ending stocks are projected at a record 261.2 million tons, up 2.9 million from last month.

Japan Ag Ministry bought a total of 159,610 MT of Aussie, Canadian, and US wheat, which included 81,115 of US wheat. During last week in wheat marketing year a reported 26,845 MT in net old crop sales. Sales for 2017/18 totaled 461,000 MT, with 1.88 MMT carried over from 2016/17. Weekly shipments for the final week of 2016/17 were 470,933 MT, with exports of 93,912 MT for the start of 2017/18. The U.S. Drought Monitor is showing level D2 Severe Drought covering the North Dakota/South Dakota border.

Government start selling wheat under open market sale scheme in non-procuring states from Jun 15 and in procuring states from July. The base price for the open market sale been set at 1,790 rupees per 100 kg for procuring state, adding that in non-procuring states, the reserve price will rise by an amount equal to ex-Ludhiana railway freight. The government is likely to offer 5.0 million tonne wheat for sale under open market sale scheme during 2017-18 (Apr-Mar).

The Food and Agricultural Organization has scaled up its estimate for global wheat production in 2017-18 to 743.2 million tonne from 740.4 million tonne projected earlier. While output is likely to rise in the European Union and North Africa, it is expected to fall in North America, Russia and Australia. The estimate for overall supplies was raised to 990.6 million tonne from 980.0 million tonne a month ago due to an increase in global stocks. Global wheat stocks in 2017-18 are estimated at a record high of 257.4 million tonne, up from 247.6 million tonne projected in May. The highest share in global stocks would be China at 108.5 million tonne. The FAO has cut its estimate for global wheat trade in 2017-18 to 171.0 million tonne from 170.0 million tonne due to lower imports from Asia and Africa.

Prices of wheat in the key wholesale market of Kota in Rajasthan rose due to concern about damage to the stocked grains following recent rains. In Kota, mill-quality wheat was sold up 10-15 rupees. In Delhi, the grain was sold up 5 rupees as arrivals from supplying states have come down. Futures contracts of wheat on the NCDEX were subdued, with the most active June contract ending down 0.1% from the previous close.

Russian wheat export prices have edged higher for a third consecutive week due to persistent concerns over wheat crops in Russia and Ukraine to be harvested this summer. Cold weather in central Russia is delaying crop development. Russia agriculture ministry downgraded its forecast for Russia 2017 grain crop to 100-105 million tonnes from a previous 110 million tonnes due to unfavorable weather. Russian prices have also been supported by demand from Egypt, the largest market for Russian wheat. Egypt state buyer agreed to buy 120,000 tonnes of Russian and 60,000 tonnes of Romanian wheat, for July 1-10 delivery.