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March 14, 2019 | FBN Insights | Kevin McNew

Shift in Global Export Demand and Supply Economics

U.S. wheat remains the residual supplier to the world

France’s AgriMer Raises French Wheat Exports to 9.5 MMT   

French farming agency FranceAgriMer raised sharply its forecast for French soft wheat exports outside the European Union for the 2018/19 marketing year.  The agency said that upside room exists as French wheat is competitively priced and has drawn late-season demand from importers.

French soft wheat shipments to non-EU countries are expected to reach 9.5 MMT, +7% from 8.85 MMT projected last month and +17% YoY.  The 9.5 MMT estimates could be moved higher to 10 MMT for the marketing year as the export pace in March has been torrid.

French wheat has become competitive as supplies from Russia, Romania and Ukraine have been drawn down causing a rise in FOB prices.    

French wheat exports have been strong into north African countries like Morocco, Egypt and Algeria, which has imported close to 5 MMT of French wheat this year.    

French ending wheat stocks are expected to be dragged down to 2.4 MMT or -18% YoY.  

What it means for U.S. Farmers: The shift in the global export demand and supply economics is occurring as anticipated and that is not bullish for the U.S. wheat producer.  Aside of the Iraqi business, which given the political economy was a high probability sale, the shift from the black sea origins to the French indicates that U.S. wheat remains the residual supplier to the world. With the French next in line, the U.S. exporters and futures are stuck waiting to see what the world does next. With the marketing year coming to a conclusion in May, any volume to the U.S. just gets pushed further back.  


U.S./Chinese Push Back Trump/Xi Trade Summit to At Least April

A meeting between U.S. President Donald Trump and Chinese President Xi Jinping to resolve the ongoing trade war won't take place this month and is more likely to occur in April at the earliest.

Political pundits were projecting that Chinese President Xi could possibly meet President Trump around the close of March at Mar-a-Lago after the Chinese President concluded a working trip to the EU.     

Negotiators from both countries have been working towards a deal to resolve the trade dispute.

What it means for U.S. Farmers: The delay toward finalizing a trade deal is a certainly a negative for U.S. agricultural commodities.  Combine this delay with a lack of details that includes such essential items like: procurement commitment times, volumes and products and all that is left to do is wait.  We have written here many times that financial markets do not like “vague”. This recent development adds more uncertainty into the markets.


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