U.S. Wheat Associates World and U.S. Wheat Supply and Demand

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U.S. Wheat AssociatesWorld and U.S. Wheat
Supply and Demand

• February 2007

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Production 2006/07

• World - 592 MMT, down 5 (28 MMT) from 2005/06
• Problems in nearly all major exporters
• Northern hemisphere
• Exporters
• U.S. drought down 16 (8 MMT)
• Black Sea winterkill down 4 (5 MMT)
• Late season problems in EU down 4 (5 MMT)
• China up 6 (6 MMT)
• North Africa up 21 (3 MMT)
• Southern hemisphere
• Australia down 57 (14 MMT) from 25 MMT
• Argentina 14.2 MMT, 10-year average 14.8

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Consumption and Trade2006/07

• World use down 1 (6 MMT)
• Feed use down 4 (4 MMT), decreases in Europe and
  FSU
• Food use down 2 MMT, high prices limit growth
• Export outlook
• Up Canada (4 MMT), Argentina (1)
• Down Australian (6 MMT), Black Sea (2), US (4)
• China to EXPORT 2.5 MMT (mostly feed quality)
• Import outlook
• Indian explodes to 6 MMT from 0.3 MMT last year
• Brazil to import 7.5 MMT, top importer this year
• North African imports down 2 MMT

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Stocks and Price Outlook 2006/07

• World ending stocks 121 MMT, down 26 MMT from
  last year
• 32 (58 MMT) below 10-year average
• Stocks to use ratio at record low 20
• China is a large part of stock drawdown
• U.S. farm gate prices rise
• 4.20 to 4.30/bushel (154-158/MT)
• 3.42 (126/MT) in 2005/06
• World export prices much stronger
• Average U.S. farm gate price, marketing year
  weighted average

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Production Outlook 2007/08

• Sharp increase in world plantings
• U.S. winter wheat up 9
• HRW 9, SRW 13, SW 2
• U.S. conditions were average at dormancy
• Recent storms positive, risks remain
• Ice on fields in Kansas
• Cold temperatures in Northern SRW belt
• Recent price rise of competing crops (corn,
  barley) may limit expansion of later planted
  classes
• North American spring wheat acres

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World Production and Use
Source All data is from USDA, World Agricultural
Supply and Demand Estimates, February 9, 2007
release (unless otherwise noted)
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World Production and Use(with 07/08 forecast)
07/08 production forecast International Grains
Council
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Supplies in Top Five Exporting Countries
Includes U.S., Canada, Australia, Argentina, and
EU-25
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World Wheat Supply and Demand
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World Beginning Stocks
Five Major Exporters include U.S., Canada,
Australia, Argentina, and the EU-25
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Global Stocks-to-Use Ratio
Ending stocks
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World Ending Stocks and Price
Prices are marketing year averages2006/07
current year-to-date average
Top 5 Exporters include U.S., Canada, Australia,
Argentina and EU-25
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Chinese vs. Rest of the World Ending Stocks
China accounted for 49 of world stocks in
1999/2000, down to 30 this year
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World and U.S. Wheat Supply and Demand

• Major Exporters
• Import Demand
• U.S. Situation by Class

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Canada Situation
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Canada Ending Stocks
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Australia Situation
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Australia Ending Stocks
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Argentina Situation
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Argentina Ending Stocks
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EU-25 Situation
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EU-25 Ending Stocks
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Black Sea Region Situation

• 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

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Black Sea Exports
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Black Sea Ending Stocks
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U.S. Situation
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U.S. Ending Stocks
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U.S. Share of Wheat Export Market
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U.S. Wheat Area and Production
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U.S. Crop Planted Area Comparison
Source USDA National Agricultural Statistics
Service
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World CornProduction, Use and Trade
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World SoybeanProduction, Use and Trade
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World WheatProduction, Use and Trade
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World and U.S. Wheat Supply and Demand

• Major Exporters
• Import Demand
• U.S. Situation by Class

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Major World Wheat Importers(from all origins)
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Top 10 Customers for U.S. WheatPrior Marketing
Years 2004/05 vs. 2005/06
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Top 10 Customers for U.S. Wheat2005/06 vs.
2006/07(year-to-date)
Source USDA FAS export sales report February 8,
2007
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Change in U.S. Wheat Sales2005/06 vs.
2006/07(year-to-date)
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World Wheat Imports
Trend in other importers denoted ( )
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China Wheat Situation
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India Beginning Stocks and Production
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India Net Trade
Net Exports
Net Imports
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World and U.S. Wheat Supply and Demand

• Major Exporters
• Import Demand
• U.S. Situation by Class

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U.S. Hard Red Winter
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(No Transcript)
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U.S. Hard Red Spring
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U.S. Soft Red Winter
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U.S. White
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U.S. Durum
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U.S. Winter Wheat Planted Acreage

• 2007/08 estimates USDA, January 12, 2007
• 9 increase HRW 9, SRW 13, SW 2

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U.S. HRS planted area down 7, durum up

• 2007/08 forecast average of trade estimates
• HRS acreage back to average

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U.S. Wheat Sales by Class(year-to-date)
Source USDA FAS export sales report February 8,
2007
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U.S. Wheat Ending Stocks by Class
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U.S. Wheat Supply and Demand
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U.S. Wheat Supply and Demand
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U.S. FOB Gulf Prices
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U.S. FOB PNW Prices
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SRW and Soft White Prices

• SW currently at 0.53/bu (19/MT) premium to SRW
• The highest premium since October 2002
• In October 2006, SRW was 0.61/bu (22/MT) more
  expensive than SW

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U.S. Gulf Basis Prices
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U.S. PNW Basis Prices
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Ocean Freight Rates for Grains
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Summary

• Prices strengthen for all classes
• 2006/07 Global production down
• Hard wheat carry-in supplies tight
• Ample soft wheat supplies
• 2007/08 winter wheat production to climb
• Corn, barley compete with spring wheat
• Stocks to fall in all exporting countries
• World stocks-to-use ratio to historic low 20
• World trade patterns shift
• India imports 6 MMT
• Australia, Black Sea, U.S. exports fall
• U.S. wheat export share to fall from 24 to 22