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THE YEAR RUSSIA DID NOT LIMIT WHEAT EXPORTS BUT REDUCED


FEED AND RESIDUAL Russia’s wheat production was forecast at 72 million tonnes in May by the United States’ Department of Agriculture (“USDA”) with exports forecast at 36.5 million tonnes.


In August 2018, Russia’s production was at 68 million tonnes with exports forecast at 35 million. Feed and residual was at 19 million tonnes in May and trimmed to 16 million in August.


The EU’s wheat production was forecast at 150.4 million tonnes in May by USDA with exports forecast at 29 million. By August, USDA had cut 7.5 million tonnes from production and exports were trimmed to 23 million tonnes while feed and residual was at 57 million tonnes in May and cut to 52 million by August.


USDA was forecasting US exports at 27.9 million tonnes in August.


During the same time (May-August ‘18), US and Matif futures rallied on the smaller global production out- look and the potential for the US export program to be stronger than in recent years. Global export prices were rising to multi-year highs on the shortening harvests expected for Russia and the EU.


Chart 1: Nearby Kansas City Futures 6.00


5.50 5.00 4.50 4.00 3.50 Source: The futures data are from Chicago Board of Trade


While USDA’s US export forecast did not represent an export limit being in place for Russia, many in the market expected Russia’s government to place a cap on total wheat grain exports. For the US to have an export program at one billion bushels plus, combined exports out of the EU and Russia had to  were top heavy with beginning stocks.


Nearby Kansas City futures peaked last August, coinciding with USDA’s boost to the US export program. Rumors of an export limit for Russia were spreading, which helped keep futures supported. Russia exported monthly records for July, August, September, and October ’18 while exports from the   on anticipation of a limit and shrinking global supplies.


24 | ADMISI - The Ghost In The Machine | March/April 2019


US Dollars per Bushel


Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19


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