Recent developments in international wheat trade

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  Iran has imposed import duties on wheat, as Egypt received huge offers at a recent wheat tender.

  From WATTAgNet:
  Iran has imposed import duties on wheat and barley, hurting chances for more trade in the aftermath of the country’s historic nuclear deal.
  The wheat duty is IRR1,500 per kilo (US$50 per ton). Traders say that amount would render wheat imports commercially unfeasible. The new wheat duty has been imposed for the next year, and the barley duty until September 22, 2015.
  The import duty applies to all private sector importers, traders and mills. It does not apply to the state import agencies Government Trading Corp. of Iran (GTC) or the State Livestock Affairs Logistic Co. (SLAL).
  Traders said the move was seen as an effort to protect Iranian farmers from cheap imports an prevent imported grain from being resold to the government at higher prices.
  Huge wheat tender in Egypt
  The world’s biggest wheat importer, Egypt, received offers for 22 cargos at a recent tender, including some offered at prices not seen in years.
  At its fourth wheat tender of 2015-16, Egypt’s Gasc grain authority purchased 175,000 tons of wheat, all from Russia, for an average price of $205.37 per ton including freight.
  Gasc was offered 1.3 million tons of wheat, an unusually large amount. Gasc’s previous tender attracted less than 900,000 tons in offers. Its best tenders in July 2014 received 950,000 tons.

Bangladesh seeks answers on ‘bad wheat’ from Brazil

Bangladesh’s high court has given the government three days to report whether wheat imported from Brazil is fit for human consumption.
The wheat imported from Brazil was found to be substandard by the Bangladesh Council of Scientific and Industrial Research and the Directorate General of Food. Test results came after the country’s food ministry said the wheat was “within the quality parameters or within specification of contract.”
The 200,000 tons of wheat reportedly was accepted although the suppliers failed to provide the crops’ year certificate and the Certificate of Standard and Quality of Wheat, issued either by Brazil’s agriculture ministry or chamber of commerce.
Media reports said the wheat, supplied by Singapore-based contractor Olam International, was of substandard quality. Later, studies showed that wheat imported from Brazil in February and March is of substandard quality and a significant amount was found to be rotten.
“There are living insects in the samples and this [the wheat] could be distributed after controlling the insects in the proper way,” one study found.
Another report said: “All the supplied samples contained higher amount of shrunken and broken kernels than the supplied specification.”
Critics demanded that Food Minister Qamrul Islam resign over the “bad wheat,” but he presented two reports to prove the wheat was of good quality.
“The wheat is perfectly fine. The tests done by the Directorate General of Food and science laboratory (Bangladesh Council of Scientific and Industrial Research) have made it clear," he said. “I’m satisfied with the standards.”
Reports say the wheat is being distributed among police, Border Guard Bangladesh, Ansar, prisons, dealers, flour mills, and for Test Relief and Food for Work programs.
The court is due to revisit the issue on July 5.

Traders, experts suspect wheat smuggling in Egypt

The reported record 5 million tons of wheat that Egypt has purchased this season suggests chronic smuggling has been made worse by an inflated government purchasing price, traders and experts say in a Reuters report.
Annually, Egypt fixes a local procurement price for Egyptian wheat that is higher than global prices in an attempt to encourage farmers to grow it instead. This year’s purchasing price is up to $200 per ton above market.
Over the years, the high price has led to smuggling, where foreign wheat – mostly Russian – is sold to the government and labeled as Egyptian.
Traders believe as much as 1 million of the 5 million tons purchased this season could be foreign wheat, and 400,000 tons could be Egyptian wheat stored from the 2014 season. Egypt is the world’s largest wheat importer.
"It's simple economics. When there is a big price difference between Egyptian wheat and foreign wheat, it will be too tempting for some traders not to sell their imported wheat as local to the government," an Egyptian wheat expert who has worked closely with the government told Reuters.
Before the harvest season begins, small-scale local traders usually approach farmers and make a deal to buy their wheat at a lower price than that announced by the government and then sell it when the procurement starts, adding in some wheat they already imported to make a profit.
"They convince the farmers that they are taking on some of their transport costs and that the quality of their wheat is lower than what is demanded and take it for a cheaper price, and then they can easily mix it in their bags with foreign wheat," the expert said.
"There's definitely some Russian, Ukrainian and maybe some French (wheat)," another trader said.
The supply ministry denies claims of smuggling and says the wheat is being rigorously inspected.

US wheat groups seek equal trade in Canada

U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) have called for improvements in Canada’s treatment of U.S. wheat classes in a letter to Canadian Minister of Agriculture and Agri-Food, Gerry Ritz, and Canadian Minister of International Trade, Ed Fast. 
While there has been positive collaboration between the two countries on wheat policy, the recent WTO Country of Origin Labeling (COOL) decision concerning the labeling of meat highlights Canada’s inconsistency on the issue of treatment of foreign agricultural products, the groups said.
The United States is routinely Canada’s top wheat export market and allows wheat grown in Canada to be graded and traded the same as U.S. wheat in the market. Yet, the Canada Grains Act and Varietal Registration System (VRS) denies U.S. producers that same courtesy. Instead, all foreign-grown grain is automatically downgraded under Canada’s official grading system to the lowest designation, regardless of whether the wheat is an approved Canadian variety or of high quality.
“Our concerns about the unfair regulatory environment that U.S. wheat faces in Canada closely parallel the arguments Canada successfully made in its WTO complaint against U.S. country-of-origin labeling (COOL) requirements,” states the letter signed by USW Chairman Roy Motter and NAWG President Brett Blankenship. “Specifically, the WTO Appellate Body found that the COOL measure was ‘inconsistent with Article 2.1 of the TBT Agreement because it accords less favorable treatment to imported livestock than to like domestic livestock.’ It is readily apparent to us that Canada’s treatment of imported wheat is less favorable than that of domestic wheat through its grading system.”
The two organizations propose that giving the market the freedom to determine origin segregation’s value — rather than mandating foreign grain labeling — not only increases benefits for both sides of the border, but also continues to strengthen the relationship between the two countries, further laying the foundation for a long-term, mutually profitable trade environment.

Russia lifts duty on wheat exports early

Russia has decided to lift its wheat export duty almost a month and a half ahead of schedule.
The tax of EUR35 (US$40) per ton originally was imposed from February 1 until June 30 to cool domestic prices and food inflation after the ruble fell last year. But Russia’s wheat prices have been falling as inflation has slowed and supplies have remained high.
The decision to lift the tax will allow Russia to export up to one million tons more of wheat by June 30, which will help avoid a grain glut domestically and keep prices above the cost of production, according to reports.
Analysts believe the move will put more pressure on global wheat prices, which have been trading at less than $200 per ton this year.


Tax impact on foreign sales
The tax affected foreign sales, as Russia’s wheat exports in January were 30 percent ahead of where they were one year prior. However, the figure had fallen in May to 17 percent. Overall production for this year’s harvest is expected to reach 100 million tons, down slightly from last year’s 105 million tons.
Analysts say the withdrawal of the wheat tax is meant to shore up domestic prices during harvest, but farmers have complained that they are losing money because of the tax. The government said it is working on a more flexible export duty program, where wheat sales are taxed only if domestic prices rise above RUB12,000 (US$243) per ton. When prices are below that level, the export tax would fall to EUR1 per ton; when they are above that level, the tax would range from 30 to 40 percent of the export price.

Deal gives Canadian Wheat Board marketing freedom

The government of Canada has approved a deal between the Canadian Wheat Board (CWB) and G3 Global Grain Group which ensures CWB becomes a fully private and global competitor in the Canadian grain sector. With this deal, the government has fully delivered on its commitment to marketing freedom by increasing marketing choice for Western Canadian grain farmers, Canada Agriculture Minister Gerry Ritz announced.
"Our commitment to marketing freedom and increasing marketing choice has always been about giving farmers the right to sell their own grain to a buyer of their choice,” Ritz said. “The removal of the CWB monopoly attracted numerous investors wanting to expand Canada’s grain capacity and supply chain. This investment deal offers Canadian farmers access to a new global player to compete for their grain and more delivery points for farmers to sell their grain."
The deal will see the investor, a new Canadian company headquartered in Winnipeg, invest $250 million in CWB, with plans to develop a coast-to-coast grain processing and shipping network across Canada. Once fully realized, the growth associated with this deal is expected to increase Canada’s grain export capacity and add hundreds of jobs and hundreds of millions of dollars of economic growth.
"This deal will enable the CWB to continue to expand its network. CWB's investments to date translate into hundreds of millions of dollars in new investment and hundreds of jobs across Canada. It also establishes a major new player in the Canadian grain industry well into the future, and we look forward to furthering our relationships with farmers across Canada," said Ian White, president and CEO, CWB.
The stronger CWB will offer farmers the opportunity to build significant equity in a growing grain company by delivering their grain. Canadian farmers have the opportunity to financially participate in CWB through the continuation of the Farmer Equity Plan.
This deal will benefit Canada through increased competition in the Canadian grain market and significant Canadian ownership through the farmers trust.
Marketing freedom and the commercialization of CWB is part of the government’s broader modernization of Canada’s grain sector supporting the creation of jobs and economic growth for farmers and Canadians. It includes an aggressive trade and market access agenda, grain transportation and supply chain improvements and investments in science and research.

Australia looks to boost wheat exports to Southeast Asia

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  Australia is looking to boost its wheat exports to Southeast Asia, after losing some market share there to Canada and the U.S.

  From WATTAgNet:
  Australia is looking to boost its wheat exports to Southeast Asia, after losing some market share there to Canadian and U.S. grain.
  Australia is the world’s No. 4 wheat exporter. It has seen buyers in Indonesia, Vietnam and Malaysia move to other overseas suppliers.
  U.S. wheat values, which are down about 15 percent, could drop lower if Australia succeeds in winning back its buyers in Southeast Asia.
  Australia is expected to end the marketing year in September with 6.5 million tons of wheat, up from 6 million tons a year ago. Sales also will take a hit with lower 2014-15 high-protein wheat output, estimated at 7.3 million tons, down from a five-year average of 9 million tons. Drought in the next season also is likely to constrain wheat output.
  The Australian Export Grains Innovation Centre (AEGIC), a joint venture between the Grains Research and Development Corporation, owned by Australian farmers, and the Department of Agriculture, Western Australia, was formed to promote the country's grains and oilseeds. Its chief executive, David Feinberg, said it is working to strengthen the relationship between Australia and the Southeast Asian market.
  "Canadians are beginning to capture some of the market share in Indonesia. Our aim will be to work more closely with the industry as an Australian representative," Feinberg said.

Russia has 1M tons of wheat to export

Russian grain exporters still have 1 million tons of wheat to export under contracts signed before the government imposed curbs on exports, according to a report.
The head of the Grain Union, Arkady Alochevsky, said traders are trying to fulfill previously signed contracts, but are not agreeing to any new deals.
"The risks are so unpredictable now that exporters are afraid to sign contracts," he said. "When you sign a contract now you cannot guarantee that you will be allowed to ship this volume out of the country."
The Russian government has been trying to keep domestic wheat prices lower, but they have risen recently due to a falling ruble. Prices for third-class wheat increased by RUB50 (80 cents) per ton last week, according to SovEcon, a company that reports on Russian agriculture.
The government imposed an export tax from February 1 until at least June 30. The duty is set at 15 percent of the customs price plus EUR7.5 (US$8.5) but will be no less than EUR35 per ton.
Exporters had contracts to ship 3 million tons of wheat in December. They were able to ship 2 million tons in January, and 87,000 tons in the first 11 days of February, according to reports.
“Some companies will have to continue supplying wheat for exports and fulfill previously agreed contracts despite the launched tax and signs of the ruble stabilization,” SovEcon said.
The largest importers of Russian wheat are Turkey, Egypt and Iran.

China feed wheat use to grow 6 percent in 2013

China's use of wheat in animal feed is predicted to grow 6 percent in 2013, to 12.4 million metric tons, with imports increasing to meet the needs domestic production alone can't fulfill, according to agricultural researchers.
The country's wheat production is expected to rise slightly in 2013, to 118.3 million metric tons from 118.1 million metric tons in 2012, said Bi Jieying, assistant professor at the Chinese Academy of Agricultural Sciences. Consumption is expected to increase to 119.6 million metric tons from 119.1 million metric tons. "Our consumption will increase and there is a decrease in the sowed area, so there is not much potential for an increase in production," said Jieying. "There is already a gap of around 1 million metric tons in production and consumption. Imports will continue to increase in the coming years."
China's wheat imports are estimated to hit 3 million metric tons in 2013.

China makes largest winter wheat purchase since 2004

China has purchased 110,000 metric tons of soft red winter wheat from the U.S., the Asian country's largest purchase of that type of wheat since January 2004 and likely due to a smaller domestic crop, according to the U.S. government. The wheat will probably be used for food, and is not expected to cut into China's U.S. corn purchases.
China may see its first year-on-year decline in wheat production in a decade following drought in a key wheat growing area and the spread of yield-cutting disease, say analysts. The current U.S. Department of Agriculture estimate for a 120-million-metric-ton Chinese wheat crop may be overstated by 10 million metric tons or more. Crop losses could spur China to import up to 5 million metric tons of wheat this season from all sources, double the current USDA forecast for the 2012–2013 season and up from 3 million metric tons in 2011–2012, said traders.

Japan to buy 77 percent more feed wheat in 2012-2013

Japan's farm ministry said it plans to buy 77.7 percent more foreign feed wheat in the 2012–2013 year as an alternative to corn, which is usually the main ingredient in Japan's compound animal feed, according to reports.
The ministry plans to buy 764,000 metric tons of wheat and 1.288 million metric tons of barley, compared with 430,000 metric tons of wheat and 1.41 million metric tons of barley bought in the 2011–2012 year. Japan carefully controls imports of wheat and barley to protect local farmers and sets an import target for both grains for use in animal feed annually to buy them in a tender under a system to reflect the needs of end-users.

USDA reports wheat sales to Mexico, South Korea, soybeans to China

U.S. exporters net sales of wheat for the 2011/2012 marketing year were 604,700 metric tons over the January 13-19 period, up 3 percent from the previous week and 59 percent from the previous four-week average, according to the United States Department of Agriculture.
Increases in wheat sales for 2011/2012 marketing year were primarily for South Korea, with exports of 196,000 metric tons, Mexico with exports of 126,800 metric tons, and Japan with exports of 85,700 metric tons, as well as Indonesia (61,000 metric tons) and Yemen (50,000 metric tons). Decreases in wheat exports were reported for unknown destinations (97,300 metric tons) and Peru (11,200 metric tons). A combined net sales of 14,000 metric tons of wheat for delivery in 2012/2013 marketing year were reported for Italy (9,000 metric tons) and Mexico (5,000 metric tons). For this period, exports of 424,600 metric tons were higher by 19 percent from the previous week, and 22 percent higher from the prior four-week average. The primary destinations were to South Korea (82,500 metric tons), Mexico (77,600 metric tons), Japan (58,600 metric tons), Nigeria (43,300 metric tons) and Peru (27,100 metric tons). 
Net corn sales of 958,100 metric tons were reported for the 2011/2012 marketing year, thanks to increases for Japan (311,900 metric tons), Mexico (264,100 metric tons), South Korea (186,600 metric tons), Egypt (120,000 metric tons), Costa Rica (78,100 metric tons) and China (72,800 metric tons). The net sales increases were partially offset by decreases for unknown destinations (151,200 metric tons), the Dominican Republic (10,500 metric tons) and Guatemala (5,900 metric tons). A combined net sales of 82,500 metric tons of corn for delivery in 2012/2013 marketing year were reported for Mexico (45,000 metric tons), Japan (32,500 metric tons) and Nicaragua (5,000 metric tons). For this period, exports of 940,700 metric tons of corn were up 25 percent from the previous week and 24 percent from the previous four-week average. The primary destinations were to Japan (214,000 metric tons), Mexico (193,300 metric tons), South Korea (126,700 metric tons), China (120,200 metric tons), Saudi Arabia (70,200 metric tons) and Taiwan (48,700 metric tons). 
Net sales of soybeans for the 2011/2012 marketing year were 466,300 metric tons, a 53 percent decrease from the previous week and 21 percent lower than the prior four-week average. Increases were primarily for China (360,900 metric tons), Mexico (143,500 metric tons), Egypt (60,000 metric tons), Turkey (41,300 metric tons), Costa Rica (30,100 metric tons), and Spain (30,000 metric tons). Decreases in soybean exports were reported for unknown destinations (258,000 metric tons) and Japan (8,500 metric tons). A combined net sales of 126,000 metric tons for delivery in 2012/2013 marketing year were reported for China (120,000 metric tons) and Japan (6,000 metric tons). Exports of 1,184,500 metric tons were reported primarily to China (890,600 metric tons), Mexico (121,100 metric tons), Turkey (41,300 metric tons), Japan (40,500 metric tons), Tunisia (32,200 metric tons) and Taiwan (29,600 metric tons). 

GrainCorp buys AWB in all-share deal

GrainCorp of Australia has a $770 million, all-share deal to buy its smaller rival AWB. According to a Reuters report, the purchase would create a group in Australia with A$2 billion plus market capitalization and revenues of A$7 billion making it the top exporter for the globe’s fourth-biggest wheat exporting country.
The GrainCorp deal offered shareholders more value, AWB management said. The deal usurped the hopes of U.S. commodities firm Gavilon Group, who had long tried to get a 50-50 grain trading joint venture with AWB.

Philippine farmers warn against zero-tariff wheat

The government of the Philippines is considering lifting the tariff on wheat imports to stabilize bread prices, but corn growers are asking that feed wheat not be included in the move, according to the Philippine Daily Inquirer.
A six-month tariff exemption that began in November 2008 resulted in an influx of feed wheat and lowered demand for domestic feed corn, the newspaper reported.
The Philippine Maize Federation (Philmaize) said that a repeat of the scenario could lead farmers to plant less corn and cause supply problems in the long run.