China’s Grain Quotas May Not Be a US Victory After All
Agri-Pulse – 07/24/2019
By the end of the year, China is finally expected to implement the quotas for corn, wheat and rice as it agreed to do about 20 years ago, but it may not be a cause for celebration for American farmers. It’s been more than two years since the U.S. Trade Representative filed a suit in the World Trade Organization against China, claiming the country never properly implemented the tariff rate quotas it agreed to for corn, wheat and rice.The U.S. recently won that case and China declined to appeal, handing U.S. farmers and exporters an apparent victory — but maybe not if the U.S.-China trade war continues to rage. China is levying a 25% tariff on U.S. corn, wheat and rice in retaliation for U.S. tariffs…USTR and USDA officials have promised the corn, wheat and rice sectors that they will be closely monitoring China in the months to come to make sure it’s living up to its WTO pledges. But unless the tariffs come down, it will be difficult to get in the quotas, says U.S. Wheat Associates Regional Vice President Jeff Coey, who leads the group’s efforts in China from an office in Hong Kong. “With quota, (Chinese) buyers can import whatever origin is wanted, but usually buyers will opt to avoid the punitive duty, hence the lack of business for U.S. origins,” Coey told Agri-Pulse in written correspondence. “Our wheat is good, but not good enough to justify a 25% premium. Besides which, the imposition of the tariff sends messages from the government that importing U.S. products is not encouraged.”
Russian Wheat Optimism is Fading as Heat Shrinks Bumper Crops
Bloomberg – 07/24/2019
Wheat farmers in Russia, the world’s top shipper, have started the new season a lot less optimistic than they were just a few months ago. Heat and dryness have curbed the crop’s potential, prompting analysts to keep downgrading their outlook for the harvest and exports. As well as hurting yields, the weather has improved crop quality to the point where it’s harder to sell, and the nation’s exports are off to a slower start. While Russia is still set to collect its second-biggest crop and nobody expects it to lose its title as the No. 1 exporter, it’s facing more competition from rival shippers, particularly in the Black Sea. For example, more favorable weather in Ukraine has put the nation on course for a record wheat crop, and a good harvest in Romania is helping take market share from Russia.
Brazil Wheat Imports Seen Growing as Frost Damages Parana Crop
Reuters – 07/24/2019
Brazilian wheat imports are poised to increase this year as a frost damaged part of the crop in key producing regions of Paraná, which accounts for roughly half of the country’s output, according to state government agency Deral. In a new crop forecast released on Wednesday, Deral estimated production would fall by nearly 16% in relation to the projection released in June, to 2.72 million tonnes in 2019. With 500,000 tonnes less than the output forecast last month, wheat imports into Brazil will likely increase, Deral’s wheat expert Carlos Hugo Godinho said. “Imports are expected to grow at the same rate as crop failure, perhaps a little less, depending on the quality factor,” he noted. Brazil is one of the world’s largest wheat importers and before the frosts, the federal government estimated 7.2 million tonnes of wheat imports this year, most of it supplied by neighboring Argentina.
Wheat Yield Potential Variable in North-Central North Dakota: Tour
Reuters – 07/24/2019
Harvest potential for the spring wheat crop in north central North Dakota is variable, with fields that were planted in a timely fashion on track for bumper yields, scouts on an annual tour found on Wednesday. But fields that were seeded late were expected to come in with below average yields as the crop struggled through early development in muddy fields. Yields on one route of the Wheat Quality Council’s tour of the state were calculated at 47 bushels per acre, based on samples taken from six fields. The scouts on that route made stops in McHenry, Ward and Bottineau counties. The tour’s five-year average for that route is 44.9 bushels per acre. A year ago, scouts on that route calculated average yields of 43 bushels per acre. On another route further south, scouts calculated yields of 35 bushels per acre after making stops in McLean and Ward counties. On that route, scouts calculated yields at 39.7 bushels per acre in 2018. The five-year average is 46.9 bushels per acre.
Wheat Prices Settle into Comfortable Trading Range
AgUpdate – 07/25/2019
After weeks of volatility, spring wheat prices have settled down somewhat. “With spring wheat we have kind of settled into a comfortable trading range of about $5.20 to $5.40 for Minneapolis September futures,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “We still have large world wheat supplies, we’re in the middle of winter wheat harvest, and we have good crop condition ratings, so there’s not a lot to move the market right now.” Local cash prices as of July 22 were ranging from $4.25 to $4.60,Part of the recent volatility came a few weeks ago when the wheat market got some support from the corn market due to planting delays and unplanted acreage. The timing of the earlier USDA reports didn’t really account for the acreage and production impacts in the corn region, Olson pointed out, adding that USDA will release some updated numbers in August. “That could cause a market reaction when those actual official numbers come out, but it’s tough to say,” she said. “The market may have already taken that into consideration as well.”
Source: U.S. Wheat Associates