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Articles of Interest- Friday, June 21, 2019

Articles of Interest- Friday, June 21, 2019

Shifting Wheat Trade Presents Opportunity

The Western Producer – 06/20/2019

Southeast Asia will become the world’s leading wheat importing region in 2018-19 for the first time. The Middle East and North Africa alternated as the top buyers over the last 10 years before being supplanted by Southeast Asia, according to a recent report by the United States Department of Agriculture. Southeast Asia is expected to remain the top buyer in 2019-20, increasing the gap over North Africa, where sales have been flat. Sub-Saharan Africa is the other region that has been on a tear, with consumption growing steadily over the last decade. Population growth is the main driver of demand in that region. Sub-Saharan Africa has surpassed the Middle East and is rapidly catching up to North Africa to become the second biggest importing region. Neil Townsend, senior market analyst with FarmLink Marketing Solutions, said the shifting wheat importing pattern is a good development because Canada is already a big player in the two big growth regions. “The more they buy that’s excellent for us,” he said. Indonesia has been the top market for Canadian wheat in 2018-19, buying two million tonnes of the crop in the first nine months of the year, according to the Canadian Grain Commission.

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US Weekly Wheat Exports Down 42.4% Behind Trade Expectations

S&P Global – 06/21/2019

The US weekly wheat exports totaled 187,567 mt for the 2019-20 marketing season (June-May), down 42.4% from the past week, and 59% lower from a year-ago period, data from the US Department of Agriculture showed. The latest weekly sales fell behind the market expectations, with analysts estimated it to be in the range of 195,000-495,000 mt. Physical wheat exports — that have already been shipped from the US — totaled 431,000 mt in the latest week that ended June 13, with the year-to-date exports hitting a steady pace, reaching 811,100 mt, compared with 736,900 mt in the same period of 2018-19, according to the USDA report released Thursday. Total commitments — cumulative exports plus outstanding sales – were up slightly from the past week at 6.3 million mt. Year-to-date wheat sales is marginally ahead of the seasonal pace needed to reach the USDA’s annual export target of 24.5 million mt for the 2019-20 marketing season, according to financial services firm INTL FCStone. Algeria emerged as the largest destination for the US export sales in the latest week, buying 59,900 mt, followed by Yemen at 58,400 mt and Japan at 38,700 mt.

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US Wants EU Ag Talks, But Are They Worth the Trouble? 

Agri-Pulse– 06/19/2019

The Trump administration is adamant that agriculture and all of the divisive policies and regulations that go along with it should be included in trade talks with the Europeans, but success could mean a long and arduous battle at a time when a trade war with China is being fought and other potentially lucrative trade pacts are being negotiated. The political call to get the EU to come to the table on agriculture has only increased since negotiations on the Transatlantic Trade and Investment Partnership (T-TIP) fell apart, but some in the industry are beginning to question if it’s worth the trouble. Getting the EU to negotiate its tariff and non-tariff barriers would be a win, but the Trump administration should focus its resources on efforts that are more likely to succeed and result in major windfalls for U.S. farmers and ranchers, said Maria Zieba, director of international affairs at the National Pork Producers Council.

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Mexico Ratifies Trade Pact with U.S., Canada

The Wall Street Journal – 06/19/2019

Mexico’s Senate overwhelmingly voted for a broad rewrite of trade rules between the United States, Canada and Mexico—making the nation the first of the three partners to ratify the pact designed to replace the North American Free Trade Agreement. Senators voted 114-4 with three abstentions on Wednesday to ratify the accord—rebranded as the U.S.-Mexico-Canada Agreement, or USMCA—which was signed last November by the heads of state of the three countries. Easy passage of the trade pact by the Mexican lawmakers was widely expected. “Mexico takes the lead, with clear signs that ours is an open, market economy,” Mexico’s deputy foreign minister and chief trade negotiator for North America, Jesús Seade, tweeted following the vote. “We trust our partners will soon do the same for the sake of a strong North America, with clear rules, attractive for investment, stable and competitive.” President Trump praised Mexico for ratifying the pact, adding in a tweet: “Time for Congress to do the same here!” U.S. Trade Representative Robert Lighthizer called Mexico’s ratification of the agreement a “crucial step forward.”

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Grain Shipping Supply Chain Remains Washed Out

Successful Farming – 06/18/2019

The impacts of this year’s flooding on the U.S. Inland Waterway system on grain shipments both on and off land along multiple rivers have a long tail. Because many locks and dams have been closed or are operating on a limited basis, river market grain elevators are threatened by storage backups, creating pressure on farmers trying to deliver grain to buyers during the recent market rallies…Since March, the flooding has affected in one way or another barge traffic on the Missouri, Mississippi, Illinois, Ohio, and Arkansas Rivers. The persistent high water has closed a lot of the locks and dams. Even the little barge traffic that has been occurring allows for only smaller barge units, restricted tow sizes, and bridge clearance issues. In its Weekly Grain Transportation Report, the U.S. Army Corps of Engineers reported such a significant drop in barge movement vs. a year ago, it marked the 2019 figures as ‘not available’ as of June 8. In 2018, at this time of the year, 9.6 million tons of corn had been shipped by barge, 4.7 million tons of soybeans, and 680,000 tons of wheat. Meanwhile, railcar transportation of grain along the Mississippi River to the U.S. Gulf of Mexico has surged higher, due to the drop in barge traffic.

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Source: U.S. Wheat Associates