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jrsiajdranch
Veteran Advisor

Wheat imp[orts from EU for feed use.

Well it was one of those weeekends when I thought I would have lots of puter time but animals and farmin took over so no pot stirrin! LOL

ANy way I did find this on agrimoney's site and thought I would pass it on. Very interesting.  I wonder if this will make some be,ieve that demand has actually started to run not just walk away from corn?

 

 

US buys UK wheat, highlighting export challenge

The US is, for the first time in two seasons, to import feed wheat from the UK, stoking fears over the competitiveness of American supplies flagged in a slip in export data.

An unnamed buyer, quoted as a "major feed compounder" has purchased a "significant" quantity of feed wheat, believed to be about 100,000 tonnes, from Openfield, the UK's biggest farm co-operative.

Market rumour in the UK names the buyer as Smithfield Foods, the Virginia-based pork group which has a history of buying from the UK.

The group in a statement to Agrimoney.com declined to confirm or deny the rumour, but said that it "actively pursues opportunities to acquire feed ingredients – both domestic and international in origin – to achieve a least cost formulation.

"This least cost formulation can accommodate both corn and wheat as market prices and conditions change."

However, in the US, feed consortium Wilmington was named as the likely buyer.

The deal, the first US purchase of UK wheat since 2009-10, comes amid rumours of hog and poultry producers in North and South Carolina buying 100,000 tonnes of feed wheat from Brazil.

And it follows export data on Thursday showing a slump below 300,000 tonnes in US export sales of wheat in the week to November 3, the worst result - old crop and new combined, since the first week of 2011 - when trade was disrupted by seasonal holidays.

'Significant discount'

The deal exploits a discount in UK feed wheat which, at headline levels, appears to work out at about $36 a tonne to US corn and  $16 a tonne to soft red winter wheat, the variety traded in Chicago, and which is the main type used for feed.

"Current indications peg standard UK feed wheat at around $244, with a further $18-20 a tonne freight to the US Gulf [of Mexico ports]," Jaime Nolan Miralles at FCStone's Dublin office said.

"This is a significant discount to corn."

However, in working out slightly above US soft red winter wheat, priced at $260 a tonne at the Gulf, the deal signals that the buyer has been able to negotiate a further discount.

The deal suggests "a deal on price and freight has been put in place", Mr Nolan said.

Openfield added that "the good quality of this year`s crop was crucial to securing the business".

'What hope' 

The shipment was seen as boding ill for US wheat export prospects, and Chicago futures prices.

"If the US can't even sell themselves their own wheat, what hope have they got of selling it to anyone else," one UK trader said.

Indeed, Chicago wheat for December stood 1.4% lower at $6.11 ¼ a bushel as of 17:15 GMT, despite a 1.2% tumble in the dollar. A weaker greenback improved the competitiveness of dollar-denominated commodities as exports, while making assets in other currencies less affordable to US buyers.

This closed some of the premium to London wheat, which for January eased 0.7% to £150.00 a tonne, with the best-traded May lot edging 0.3% lower to £153.50 a tonne.

Wheat prices in the US are gaining support from corn, whose prices have remained particularly strong, lifted by historically low stocks. Indeed, corn has gained an atypical premium to wheat, whose higher protein level usually sees it trade at higher levels.

Some commentators, including Rabobank, have forecast that this dynamic might lead to a disconnect between prices of US wheat and those in the rest of the world, which face pressure from stocks expected to reach a 10-year high this season.

The US Department of Agriculture has forecast US wheat imports jumping 24% to 3.27m tonnes in 2011-12, the third highest level on record.  

Weak start

The shipment follows a soft start by the UK itself to 2011-12 wheat shipments, hit by the return of Black Sea exporters to the world market.

Exports in the first two months, July and August, were 40% lower than a year before at 279,000 tonnes, latest customs data shows.

Sales to countries outside the European Union fell particularly hard, to 102 tonnes from 61,000 tonnes.

Openfield, the UK's biggest farm co-operative, exports about 500,000 tonnes of wheat a year, from the 4.6m tonnes of total grains it handles.


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31 Replies
teaspoon73
Senior Contributor

Re: Wheat imp[orts from EU for feed use.

   What a rodeo clown you are thats an old story from two weeks ago. Your noise is old.

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Mizzou_Tiger
Senior Advisor

are you bored or what.........

corn export sales look pretty good, better than last............USDA's cut in demand projections were too far............corn is corn, wheat might sneak in some rations for awhile, but corn is still corn and it will still be king.............I would be willing to bet that current ethanol margins are crazy good considering oil and corn prices along with DDG demand.........there is a certain core demand for grains that will not waver even in the face world issues............we are likely there, thus demand is pretty solid...........and its outpacing supply.........

 

on the supply side, things keep creeping lower and history tells us a continued downward revision in NOV means a high likelihood it revises lower in JAN............that tucked away 2009 corn is now gone...........basis locally is very strong (we just finished harvest) and will likely get stronger if last spring and summer were any indication..............

 

were does the talk of PP acres insurance changes for certain states fit in??????????I ask this because I don't know what the insurance deal looks like..........and its an important deal for several reasons.........the biggest being that additional corn acres will have to come from fringe areas that have large weather risk...........soya and wheat might not be able to compete with corn, but corn can not compete with risky weather, high inputs, and no insurance............

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Tarheel farmer
Contributor

Re: Wheat imp[orts from EU for feed use.

It wouldn't suprise me Smithfield would be importing feed wheat as there isn't much corn in North Carolina this year. Production is way down because of a hot and very dry summer and Hurricane Irene this fall. My production was off 35 bu./acre from last year and about 25 bu./acre from my avg., and I had a good crop compared to most in the area. I have a basis contract with the local grain dealer at .50 over March futures picked up at my bin. Thats higher than most years.

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sandiego77
Frequent Contributor

Re: Wheat imp[orts from EU for feed use.

producer selling noted in corn since last weeks usda report, as well.. Feed wheat from the UK and Brazil is cutting domestic corn use... a number of technicals are saying in corn loses 630 it's going to tumble...have a great week you'all!!
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vrbuck
Advisor

Re: Wheat imp[orts from EU for feed use.

You are funny dot boy exports suck and wont reach the depressed goals in the last report. Corn is replaced in rations by huge amounts. The clock is ticking on the blenders credits experations, how will that effect ethano
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Mizzou_Tiger
Senior Advisor

VR..........

export sales are ahead of last year..............so if this year sucks, then that means last year really sucked and we had $8 cash corn..........so are you saying we will see $9 or $10.............

 

please explain your "corn is replaced in rations by huge amounts" statement.............JMO, corn is still king and we are seeing that trend as demand is still chewing thru stocks even with wheat at a discount.........

 

blenders credit will not matter with todays parameters..........look at the price of energy right now.........and with corn in the 5's and 6's they are making money..........also, have you seen the spread between gas and diesel lately.......its getting wider by the day.........HMMMMMMMMMMMM whats in gas thats not in diesel...............HMMMMMMMMMM o thats right ethanol..........people are under estimating the ethanol industry............they are full bore and will be for awhile.........

 

simple fact is............take ethanol away and gasoline goes up 40 cents OVERNIGHT............corn goes to sub cost of production levels............and your GROCERY BILL GOES UPPPPPPPPPPPPPPPPPP because food is tied to SGA and ENERGY prices...........NOT GRAIN PRICES............a 2.5 pound box of cereal probably has 25 cents of grain in it, but it cost $4........HMMMMMMMMMMMMMMMM........that means a bushel of wheat/corn is worth close to $100/bushel............

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vrbuck
Advisor

Re: Wheat imp[orts from EU for feed use.

Has goes up 14cents according to studies I read finally ethanol is a drop in the bucket. As far as exports look at inspections and nothing else,they are behind.
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GoredHusker
Senior Contributor

Re: Wheat imp[orts from EU for feed use.

This reminds me of I believe the 03/04 marketing year with regards to soybeans.  We had a short crop and soybean prices elevated significantly.  Bunge made an announcement of thinking they were going to import SA beans.  I don't think they ever did, but the announcement was enough to break the back of the soybean market.  I highly doubt we import much feed wheat into this country.  The most interesting thing from the USDA reports is the amount of demand they have killed in the feed use category.  It's interesting because they didn't include more wheat into the feed catagory.  I'm leery of falling into the belief that we'll actually curb nearly half a billion demand of corn use this marketing year when compared to the last marketing year at these prices or lower.  I do think it's possible to curb the 442 million bushels USDA has pegged, but it's going to take prices higher than these.  I'm in the camp that believes the end user has more forward coverage than usual either via futures or options.  The real rationing could very well be via basis this marketing year rather than futures. 

 

The thing that continues to itch in the back of my head is where the CZ1 futures was at planting time to get 92 million acres and where the CZ2 futures need to be to get 94 million acres.  There's always more than one way to skin a cat.  At first blush, it appears the CZ2 futures need to be around 7 or higher.  However, we could always get the extra acres by simply killing soybean prices.  I'm not sure this is in the cards.  The spread between old crop and new crop corn is looking like a good play in here. 

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rightone
Senior Contributor

Re: Wheat is record production in AU

now.  ( assuming they get it harvested ie no big rain problems like last year )

 

Anyway production there is similiar to adding 1 billion + bu of corn to the world equation at this juncture.

 

Heck with cash wheat 30 to 50 cents under cash corn, AND wheat has 10% more net feed convert value vs corn, the conversion math on this is not rocket science.

 

 

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