Top Factors Affecting the Global Wheat Market in 2011/12

1. 2011/12 Production up, third largest wheat crop on record at 664 MMT

World Wheat Supply and

Demand Situation
June 2011

Global supplies reach record 851 MMT; 1.0 MMT greater than previous record in 2009/10

Black Sea production rebounds, reaching 101 MMT compared to 81.0 MMT in 2010/11

2. Consumption sets record for fourth consecutive year, up 1% from 2010/11

3. World wheat trade projected at 128 MMT, third largest amount on record
4 2011 US plantings
4.
l ti
up 8% ffrom 2010

US production falls due to lower yields, falls to 56.0 MMT from 60.1 MMT in 2010/11

Dry conditions reduce HRW production, falls 24% to 21.1 MMT

5. Cool temperatures delay spring wheat plantings in North America

Canadian planting 86% complete compared to average 96% for second week of June

US spring wheat planting 88% complete compared to average 100% through June 12

6. EU production falls due to drought conditions in Western Europe

Major data source: USDA World Agricultural Supply and Demand Estimates
released June 9, 2011. Projections will change over the course of the year
p
g on weather and other developments.
p
depending

EU production at 131.5 MMT, down 3% from 2010/11

7. World ending stocks fall 2% to 184 MMT

Chinas ending stocks (64.6 MMT) account for 35% of total

ROW ending stocks fall from 127 MMT to 120 MMT

8. Competition for acres intensifies; U.S. corn stocks at 15-year low

Production, Consumption and Trade 2010/11

Environmental Protection Agency increases ethanol blend

Global corn demand reaches record 872 MMT

Stocks and Price 2010/11

USDA estimates global production at 664 MMT, 3rd largest on record

Up 3% (16.1 MMT) from 2010/11 and 3% (19.6 MMT) greater than 5-year average

Black Sea production rebounds to 101 MMT, up from 81.0 in 2010/11

Indian production reaches record 84.0 MMT, up 4% from 2010/11

Consumption to set record: up 1%

Consumption rises 8.0 MMT to record 667 MMT

Trade expected to increase by 1%

Import projections

Export forecasts

World trade projected at 128 MMT, third largest amount on record

Middle East up 4% to 13.7 MMT
Black Sea exports rebound, reaching 26.3 MMT, up from 13.3 MMT in 2010/11

Russian exports reach 10.0 MMT, up from 4.0 MMT in 2010/11 but below 5-year average of 12.8 MMT

EU exports fall 32%, from 22.0 MMT in 2010/11 to 15.0 MMT

World beginning stocks fall, but second highest in

past 5 years
Beginning stocks down 6% (11.1 MMT) from 2010/11
US beginning stocks at 22.0 MMT, 36% above 5-year average of 16.1 MMT

Global ending stocks fall 2% to 184 MMT

China ending stocks reach 64.6 MMT, accounting for 35% of global ending
stocks
Rest of World stocks fall from 127 MMT to 120 MMT

U.S. farm gate prices forecasted at record

$7.00 to $8.40 /bushel ($257-$309/MT)*
*Average
Average U
U.S.
S farm gate price
price, marketing year weighted average

World Production and Use

Supplies in Top Exporting Countries*

450

700
680

659

660

667

423

400

378

369

640

404

403

358

328

340

64

76

64

10/11

11/12

353

350
300
664

MMT

620
600

250
318

200
648

580
560

299
308

150

540

100

520
50

500

60

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

70

45

0
01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10

Production

Use

Beginning Stocks

Production

*Includes U.S., Canada, Australia, Argentina, EU-27, Russia, Ukraine, and Kazakhstan

World Beginning Stocks

World Wheat Supply and Demand

SUPPLY:

Beginning Stocks
Production
Supply Total

166
684
850

10/11
MMT
198
648
847

250

11/12
187
664
851

TRADE:

Exports/Imports

136

126

128

DEMAND

Food & Seed

Feed & Residual
Use Total

535
117
652

539
120
659

546
122
667

200

150

117

132

MMT

09/10

119

97

100
82
17

21

50
55

13
31

25

21

48 56 48

ENDING STOCKS:

198

187

184

91/92 93/94 95/96 97/98 99/00 01/02 03/04 05/06 07/08 09/10
Historical Five Major Exporters

Black Sea

11/12

Others

Historical Five Major Exporters include U.S., Canada, Australia, Argentina and EU-27.
Black Sea includes Russia, Ukraine, and Kazakhstan.

World Ending Stocks

Global Stocks*-to-Use Ratio

40

250

35

35

200

30
30

28

187

184

28
60.1

150

64.6

MMT

25
20
20

100

62.3

50.3

50

20.8

21.9

15
10
43.9

47.5

0
01/02

03/04

05/06

Historical 5 Majors

97/98

99/00

01/02

03/04

05/06

07/08

09/10

07/08
Black Sea

Other

09/10

11/12

China

11/12

*Ending stocks

Historical Five Major Exporters include U.S., Canada, Australia, Argentina and EU-27.
Black Sea includes Russia, Ukraine, and Kazakhstan.

Global Ending Stocks and Price

250

400
359

World and U.S. Wheat

Supply and Demand

350

200
300

Major
M j Exporters
E
t

250

MMT

150
99

118 200

108
71

100

150

82
31
24

50

22

19
13

52

42

42

31

44

07/08

11/12

100
50

Import Demand
U.S. Situation by Class
Outlook

0
83/84

87/88

91/92

Historical 5 Majors

95/96
Black Sea

99/00

03/04

Rest of World

HRW price

Canada Situation

Canada Ending Stocks

12.0

40.0
35.0

10.0
97
9.7

30 0
30.0
8.0

23.2

25.0

16.0
15.0

18.5

7.8
MMT

MMT

25.0
20.0

6.0

50
5.0

7.8

6.7

10/11

11/12

6.2

4.4

4.0

10.0

6.7

6.5

2.0

0.0
02/03

03/04

04/05

Beginning stocks

05/06

06/07

Production

07/08

Imports

08/09

09/10

Exports

0.0
02/03

Domestic use

Australia Situation

05/06

08/09

11/12

Australia Ending Stocks

35.0
10.0
30.0
9.4
80
8.0

25 0
25.0
26.0
20.0

25.0

MMT

21.9
6.0
MMT

17.0
15.0

16.5

5.4
4.7

4.0
10.0

4.1

4.0

4.3

3.6
5.0

20
2.0
3.6

4.1

4.7

10/11

11/12

0.0
02/03

03/04

Beginning stocks

04/05

05/06

Production

06/07

07/08

Imports

08/09
Exports

09/10

Domestic use

0.0
02/03

05/06

08/09

11/12

Argentina Situation

Argentina Ending Stocks

20.0

3.0

18.0
16.0

2.5

2.6

14.0
15.0

12.0

2.0

15.0
10.0

9.0
11.0

8.0

MMT

MMT

25
2.5

2.4

1.5

8.0

1.4

1.3

6.0

1.0

4.0
20
2.0
1.3

0.0

1.4

2.5

0.5

0.6
0.4

02/03

03/04

04/05

Beginning stocks

05/06

06/07

Production

07/08

Imports

08/09

09/10

Exports

10/11

11/12

0.0
02/03

Domestic use

EU-27 Situation

05/06

08/09

11/12

EU-27 Ending Stocks

30

180

27.5

160
25
140
0

23.4
120

20
135.7

100

131.5

80

MMT

MMT

138.7

15

16.0
14.2

60
10

11.7

12.2

40
22.0
20
18.9

11.7

10/11

11/12

0
02/03

03/04

Beginning stocks

04/05

05/06
Production

06/07

07/08

Imports

08/09
Exports

09/10

15 0
15.0

16.0

Domestic use

0
02/03

05/06

08/09

11/12

Black Sea Region Situation

Black Sea Exports

160
40
140
35
120

7.9
30

113.9
100

9.3
81.0

100.6

MMT

MMT

25
80
60

15

40

21.0

13.3
25.4

8.5

10

26.3
20

18.6

5.0
3.7

20.8

10.0

4.0

0
02/03

03/04

Beginning stocks

04/05

05/06

06/07

Production

07/08

Imports

08/09

09/10

Exports

10/11

11/12

03/04

04/05

Domestic use

05/06

06/07

Russia

07/08

Ukraine

08/09

09/10

10/11

11/12

Kazakhstan

The Black Sea Region includes the Former Soviet Union, excluding the Baltic States
Russia, Ukraine and Kazakhstan are the most important wheat producers in the Black Sea
Region

Black Sea Ending Stocks

U.S. Situation
100

30
90
25

80

25.4

60.1

70
21.9

20

60

20.8
MMT

MMT

7.5

20

15

63.8
40

13.0
10

56.0

60.4

50

15.6

11.4

30

24.0

35.2
28.6

20
5

26 6
26.6

10

17.9

13.4

22.0

0
02/03

05/06

08/09

11/12

93/94

96/97

Beginning stocks

99/00
Production

02/03

05/06

Imports

Exports

08/09

11/12

Domestic Use

U.S. Ending Stocks

World and U.S. Wheat

Supply and Demand

30

25

26 6
26.6

MMT

Major Exporters

22.0

20
17.9

Import Demand

18.7

15
14.7

13.4

U.S. Situation by Class

12.4

10

Outlook

0
02/03

05/06

08/09

11/12

Major World Wheat Importers

Top 10 Customers for U.S. Wheat

(from all origins)

5-year average
11.0

3.5

10.0
3.0
8.0

2.5

7.0

2.0

MMT

MMT

9.0

6.0

1.5

5.0
1.0

4.0
3.0

0.5

2.0

0.0

1.0
0.0
Egypt

Brazil

EU-27 Indonesia Japan

10/11

Algeria

S. Korea

Nigeria

Iraq

Mexico

11/12

Top 10 Customers for U.S. Wheat

Top 10 Customers for U.S. Wheat

2010/11 vs. 2011/12

(year-to-date)

2009/10 vs. 2010/11

4.5

1.0

4.0
3.5

08
0.8

3.0
MMT

MMT

0.6

0.4

2.5
2.0
1.5
1.0

0.2

0.5
0.0

0.0

2010/11

2011/12

2009/10

2010/11

Source: USDA FAS export sales report June 9, 2011

Source: USDA FAS export sales report June 9, 2011

World Wheat Imports

World and U.S. Wheat

Supply and Demand

160
140
120

Major Exporters

MMT

100

Import Demand

80
60

U.S. Situation by Class

40

Outlook

20
0
83/84

87/88

91/92
"Other"

Trend in other importers denoted (

95/96
China

99/00
FSU

03/04

07/08

11/12

EU-27

U.S. Hard Red Winter

U.S. Wheat Plantings by Class

40
70

53.6
2.6
4.2

50

2.4
4.4

30

8.2

25

28

25

13.6

13.0

MMT

5.3
40

20

30

15

20

10
29.4

28.6

17
10
10

10

0
0

05/06
2001/02

2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

06/07

HRW

HRS

SRW

White

07/08

08/09

09/10

10/11

2011/12*
Beginning stocks

Production

Imports

Exports

Durum

*Source: USDA Prospective Plantings Report, March 31, 2011

U.S. Hard Red Spring

U.S. Soft Red Winter

20

25

20

15
16
11
MMT

15
15

MMT

Million Acres

35

58.0

60

10

10

9
5

3
6

5
0

05/06
05/06

06/07

07/08

08/09

09/10

06/07

Production

Imports

07/08

08/09

09/10

10/11

10/11
Beginning stocks

Beginning stocks

Production

Imports

Exports

Exports

U.S. White

U.S. Durum

12

5
1.0

10

1.0

7
6

2.9

3
MMT

MMT

3.0
2

5
1.1

1.1
1
2
2

09/10

10/11

05/06
05/06

06/07

07/08

08/09

06/07

07/08

Beginning stocks
Beginning stocks

Production

Imports

1.0

0.7
0

08/09

Production

09/10

Imports

10/11

Exports

Exports

U.S. Wheat Sales by Class

U.S. Wheat Ending Stocks by Class

(year-to-date)

12
4.0
10
3.0

MMT

MMT

2.0

4
1.0
2
0.0
HRW

HRS

White
2011/12

2010/11

SRW

Durum

0
HRW

HRS
05/06

06/07

SRW
07/08

SWW
08/09

09/10

Durum
10/11

Source: USDA FAS export sales report June 9, 2011

10

U.S. Wheat Supply and Demand

HRW
09/10 10/11
Beginning Stocks
Production
Imports
Supply Total

6.9
25.0
0.1
32.0

10.5
27.7
0.0
38.2

HRS
09/10 10/11
MMT
3.9
6.4
14.9
15.5
1.1
0.8
19.9
22.7

Domestic Use
p
Exports
Use Total
Ending Stocks
Stocks-to-Use

11.5
10.1
21.5
10.5
49%

12.5
16.7
29.2
9.0
31%

7.7
5.8
13.5
6.4
47%

7.8
9.4
17.1
5.6
32%

U.S. Wheat Supply and Demand

SRW
09/10 10/11
4.7
11.0
0.9
16.5

6.6
6.5
0.8
13.8

Beginning Stocks
Production
Imports
Supply Total

1.7
6.5
0.3
8.5

2.2
7.5
0.2
9.9

0.7
3.0
1.0
4.6

1.0
2.9
0.9
4.8

17.9
60.4
3.2
81.5

26.6
60.1
2.7
89.4

7.0
3.0
9.9
6.6
66%

6.6
3.0
9.5
4.3
45%

Domestic Use
Exports
Use Total
Ending Stocks
Stocks-to-Use

2.4
3.9
6.3
2.2
35%

2.7
5.0
7.7
2.1
27%

2.4
1.2
3.6
1.0
26%

2.5
1.2
3.7
1.1
28%

30.9
24.0
54.9
26.6
48%

32.1
35.2
67.4
22.0
33%

White
09/10 10/11

U.S. FOB Gulf Prices

Durum
09/10 10/11

Total
09/10 10/11

U.S. FOB PNW Prices

700
600
550
600
500
450
$/Metric Ton

$/Metric Ton

500

400

400
350
300
250

300
200
150
200
100
Jun-08

Oct-08

Feb-09

Jun-09

Oct-09

Feb-10

Jun-10

Oct-10

Feb-11

Jun-11

100
Jun-08

Oct-08

Feb-09

Jun-09
HRW ords

Oct-09

Feb-10

HRS 14%

Jun-10
SRW

Oct-10

Feb-11

Jun-11
HRW 11.5%

HRS 14%

SW

11

SRW and Soft White Prices

U.S. Gulf Basis Prices

250

450

400

200

350
$/Metric Ton

$/Metric Ton

150
300

250

100

50
200
0
150

-50

100
Jun-08

Oct-08

Feb-09

Jun-09

Oct-09

Feb-10

SW

SRW

Jun-10

Oct-10

Feb-11

Jun-11

Jun-07

Jun-08

Jun-09
HRS 13.5

U.S. PNW Basis Prices

HRW 12

Jun-10

Jun-11

SRW

World and U.S. Wheat

Supply and Demand

250

200

$/Metric Ton

Major Exporters
150

Import Demand
100

U.S. Situation by Class

50

Outlook

0
Jun-07

Jun-08

Jun-09
HRS 14

Jun-10

Jun-11

HRW 12

12

U.S. Wheat Area and Production

U.S. Crop Planted Area Comparison

3.4
40.0
3.2

65

55

2.6
35
2.4

35.2

34.0
Million Hectares

45

37.3
35.7

36.0

30
3.0

2.8

37.9

38.0

MT/hectares

Production (MMT) and Harvested

P
d Area (mh)

75

32.0

31.0

31.4

30.0

30.0

28.0
26.2

26.0
24.0

25

31.9

31.2

24.5
23.9

23.4

2.2

23.5

22.0
21.7
15

2.0
91/92

94/95

97/98

00/01

Harvested Area

03/04
Production

06/07

20.0

09/10

90/91

93/94

Yield

96/97

99/00

Wheat

02/03

Corn

05/06

08/09

11/12*

Soybeans

*Source: USDA Prospective Plantings Report, March 31, 2011

World Wheat

World Corn

Production, Use and Trade

Production, Use and Trade

145

900

140

800

659

Production and Use (MMT)

660

664667

648

640

135

620

130

600

125

580

120

560

115

700

105

100

100

Production

Use

Trade

11/12

40

300

110

08/09

60

400

520

05/06

80

500

540

02/03

100

600

200

500

120
866 872
821 847

Trade (MMT)

1000

680

Production and Use (MMT)

150

Trade (MMT)

700

20

0
02/03

05/06
Production

08/09
Use

11/12

Trade

13

World Soybeans

Ocean Freight Rates for Grains

Production, Use and Trade

100
300

120

250

100

90

263

263

263

150

60

100

40

50

20

$/metric ton

80

77

70
Trade (MMT)

200

256

Production and Use (MMT)

80
99

95

93

60
50
40
30
20
10

Production

Trade

PNW to Japan

Gulf to Middle East

Great Lakes to East Med

6/8/11

5/8/11

4/8/11

3/8/11

2/8/11

1/8/11

11/8/10
0

12/8/10
0

9/8/10
0

10/8/10
0

8/8/10
0

7/8/10
0

6/8/10
0

5/8/10
0

4/8/10
0

3/8/10
0

2/8/10
0

1/8/10
0

11/8/09
9

12/8/09
9

9/8/09
9

11/12

10/8/09
9

08/09
Use

8/8/09
9

05/06

7/8/09
9

02/03

6/8/09
9

Gulf to West Africa

Summary
Global production climbs 3%
Production reaches 664 MMT; third largest on record

Global ending stocks decrease 2%

Stock-to-use ratio equal to 2009/10 at 28%
China ending stocks account for 35% of world total

World exporters

Black Sea production rebounds from 2010/11

World trade increases with growing demand

14