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Maltby Marketing News for November 6

Maltby Marketing News for November 6

Kansas Association of Wheat Growers

November 6 Dan Maltby Marketing Newsletter 

USA 11% protein hard red winter wheat is being sold to Iraq. At least 300.000 tonnes of wheat sales have been reported, with more coming. I expect we’ll ship half a million tonnes of wheat to Iraq this marketing year, and Iraq will also need to import about 2.5 million tonnes of wheat flour, mainly from Turkey. (I think most of the Turkish flour is made from Russian wheat). That would be a total of 3 million metric tonnes (mmt), up from recent years. Iraq’s weather was not ideal during wheat planting, and of course, most of their prime wheat growing region is a battlefield.

Way back in 2005/06, Iraq imported 3.5 million tonnes of wheat, and 1.5 million tonnes of flour. In that year, the USA shipped 2.2 million tonnes of HRW to Iraq. Maybe my .5 mmt estimate is conservative. Of course, Russia will weigh heavily on the import matrix, which means USA wheat exports to that region are dependent on Russian capacity being maxed, and USA wheat prices must be competitive. Russia does not ship wheat directly to Iraq, but their wheat goes to Turkey for flour which goes to Iraq.

For reference purposes, this is a weekly continuous KC chart:

The shaded rectangle is crop year 2005/06, and the horizontal line is $4.00. I’m fairly comfortable saying USA HRW wheat is competitive with Russian wheat when the futures are around $4.00/bu, when the Russians have a big crop.
I know that’s a sweeping generalization, but I think it’s a pretty good rule of thumb.

The Russians do indeed have a very big crop this year, last estimated at 82 million tonnes, (and it might be increased again…on Wednesday’s USDA’s November update), and that is the main reason wheat rallies are still facing a long uphill struggle.

No matter, it’s good to see the business.



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Source: Kansas Association of Wheat Growers