Lack of milling wheat may turn millers to feed grade

: Agriculture
22/05/19

Tight global balance sheet and high prices of milling wheat may push its major consumers to expand their demand to the product that is currently classified as feed wheat, which, in turn, could tighten global corn balance sheet.

With Ukraine's wheat exports significantly lower because of the Russia-Ukraine war, and given India's recent export restrictions on wheat shipments, global milling wheat supply in the 2022-23 marketing year (July-June) could fall short of demand by 10mn t, US agricultural advisory AgResource's president Dan Basse told the GrainCom conference in Geneva yesterday.

A potential solution for large milling wheat-consuming countries may be the use of feed wheat as milling product. Feed wheat can be used as feedstock for flour production, according to market participants, with wheat classified at times as feed grade because of test weight, not contamination or quality measurements.

As a result, more countries could follow Spain in using feed wheat in flour production, which the country started doing because of steep price rises in milling wheat prices, intensified after Russia's invasion of Ukraine on 24 February.

And wheat prices are likely to continue seeing support from unfavourable weather in several major producing and exporting countries, and ongoing logistics issues in Russia — a key exporter enjoying weather conditions beneficial to wheat production.

Prospects of further wheat balance sheet tightening

The US Department of Agriculture (USDA) in its latest World Agricultural Supply and Demand Estimates report forecast the 2022-23 global wheat exports at 204.89mn t — compared with 199.89mn t this marketing season — with imports projected at 201.26mn t. But even this could be an optimistic export estimate, with India's wheat exports likely to see downward revisions in future reports on significantly lower output caused by adverse weather conditions.

The USDA's EU wheat export estimate of 36mn t for 2022-23 could also be revised down, as combined with beginning stocks and production estimated at 13.61mn t and 136.5mn t, respectively, this would leave the bloc with intolerably low ending stocks at 10.61mn t. If there are any downward revisions in production estimates, the EU-27's 2022-23 wheat exports could be closer to 30mn t, or even below this level.

US wheat output and export forecasts for 2022-23 — currently pegged at a respective 47.05mn t and 21.09mn t by the USDA — could also be revised down, with winter wheat crop conditions at record lows after severe drought hit major producing states at the start of 2022.

Stronger demand for feed wheat to tighten corn balance sheet

Upgrading feed wheat quality to milling wheat grade would alleviate the global supply crunch on the wheat market. But it would tighten corn balance sheet — as feed wheat prices rise further and near milling wheat prices, more animal feed producers will switch to corn. Especially this could be the case for southeast and east Asia, where producers have already shown feedstock flexibility by replacing cancelled volumes of Ukrainian corn with shipments of Indian wheat.

But global corn fundamentals are also already tight — especially with new legislation increasing the permitted ethanol percentage in petrol, for example, in the US.

And unlike wheat — of which Ukraine exported 18.2mn t since the beginning of this marketing year until the start of the invasion — the severe limitation of Ukraine's export capacity has already removed a potential 10mn t of corn from the global export supply this marketing season, with only 9mn t projected for export from the country in the next season.

By Anna Sneidermane

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25/04/14

Argentina FX change, return of tax to spur exports

Sao Paulo, 14 April (Argus) — Argentinian farmers will likely boost exports of soybeans, corn and other products in coming months after the government loosened foreign exchange controls and President Javier Milei said export taxes will rise again at the end of June. Those two factors, combined with better weather conditions for soybean and corn harvesting should spur sales, according to Javier Preciado Patiño, director of RIA Consultores. The Argentinian peso is expected to weaken with the new exchange rules, which will move it from trading with a narrow peg to the dollar to moving within a wider, slowly expanding, range against the US currency. A weaker currency will increase the number of pesos Argentinian farmers receive in exchange for products priced in dollars, such as corn, wheat, soybeans, soybean meal and soybean oil. The new rules also get rid of a special exchange rate for exporters that left farmers with less money for their sales abroad, which will also encourage producers to sell. Milei announced the exchange rule changes on 11 April and they went into effect today. As a result, the value of the peso weakened through out the day, losing 11pc relative to the US dollar. Argentina has gone through a series of complicated exchange rate regimes over the years intended to prevent a rapid devaluation of the peso, keep dollars from flowing out of the country and allow the country's central bank to maintain enough dollar reserves to meet debt servicing needs and import necessary goods. Looming tax increase Milei's announcement today that a temporary tax reduction on ag exports will end as expected in June should also push farmers to sell more of their crops in the next few months. Until this morning, many people in the farming sector had hoped that the tax cut initiated by the government in January would be extended, or that duties would be eliminated altogether . But Milei confirmed the end of the tax cut in June during a radio interview today. The temporary cuts, which reduced the tax on soybeans to 26pc from 33pc, cut soybean product taxes to 24.5pc from 31pc, and trimmed the levy on corn, wheat, barley and sorghum to 9.5pc from 12pc, will revert to their previous levels, the president said. "Let farmers know that if they want to sell, they should sell now, because the taxes will return" as scheduled, he said. Argentinian governments have for years taxed exports of agricultural products, taking advantage of the country's status as a farming giant to raise much-needed funds, but also reducing farmers' incomes. Waterlogged fields Improved weather is also expected to boost sales, especially for soybeans, in the next few weeks. Argentina's soybean harvest got off to a slow start about two weeks ago because steady rains in many areas had left fields and rural roads too soggy for farm equipment to enter. Sunny weather in recent days has helped dry fields out, and farmers in those areas will want to pick up the pace to take advantage of improved conditions to make up for lost time, according to Patiño. The improving pace of harvest is expected to provide farmers ample supplies to sell in the coming weeks, allowing them to exploit of the advantageous currency situation. By Jeffrey T. Lewis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US winter wheat declines as rain misses key regions

25/04/14

US winter wheat declines as rain misses key regions

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Funding cuts could delay US river lock work: Correction

25/04/14

Funding cuts could delay US river lock work: Correction

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Frost spells may affect Turkey's wheat production

25/04/14

Frost spells may affect Turkey's wheat production

Kyiv, 14 April (Argus) — Turkey has recorded some of the lowest temperatures in 30 years in some regions over the past three days, sparking concerns of a loss of winter wheat areas and a production decline. Severe frost last week — particularly in Central Anatolia, the country's largest wheat production area, where the temperature fell to as low as minus 13°C — could affect wheat production this marketing year. The weather forecast for the next seven days continued to show temperatures of below zero in the east and southeastern parts of the country. This could further increase the risk of damage to the winter wheat crop. But according to market participants, it is still too early to fully assess the impact. Turkey received some rainfall in April, which improved soil moisture in some wheat-growing areas that had previously suffered drought. Turkey's wheat imports are already projected to double on the year to 8mn t in the coming 2025-26 marketing year (June-July), according to the US Department of Agriculture Foreign Agricultural Service (FAS) in its April report . The FAS earlier this month forecast Turkey's wheat crop at 18.5mn t in 2025-26, slightly below the 19mn t for the outgoing marketing year, to reflect the risk of drier weather affecting yields and offsetting a slight rise in areas. By Kristin Yavorska Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

New tariffs could upend US tallow imports: Correction

25/04/10

New tariffs could upend US tallow imports: Correction

Corrects description of options for avoiding feedstock tariffs in 12th paragraph. Story originally published 3 April. New York, 10 April (Argus) — New US tariffs on nearly all foreign products could deter further imports of beef tallow, a fast-rising biofuel feedstock and food ingredient that had until now largely evaded President Donald Trump's efforts to reshape global trade. Tallow was the most used feedstock for US biomass-based diesel production in January for the first month ever, with consumption by pound rising month to month despite sharp declines in actual biorefining and in use of competing feedstocks. The beef byproduct benefits from US policies, including a new federal tax credit known as "45Z", that offer greater subsidies to fuel derived from waste than fuel derived from first-generation crops. Much of that tallow is sourced domestically, but the US also imported more than 880,000t of tallow last year, up 29pc from just two years earlier. The majority of those imports last year came from Brazil, which until now has faced a small 0.43¢/kg (19.5¢/lb) tariff, and from Australia, which was exempt from any tallow-specific tariffs under a free trade agreement with US. But starting on 5 April, both countries will be subject to at least the new 10pc charge on foreign imports. There are some carveouts from tariffs for certain energy products, but animal fats are not included. Some other major suppliers — like Argentina, Uruguay, and New Zealand — will soon have new tariffs in place too, although tallow from Canada is for now unaffected because it is covered by the US-Mexico-Canada free trade agreement. Brazil tallow shipments to the US totaled around 300,000t in 2024, marking an all-time high, but tallow shipments during the fourth quarter of 2024 fell under the 2023 levels as uncertainty about future tax policy slowed buying interest. Feedstock demand in general in the US has remained muted to start this year because of poor biofuel production margins, and that has extended to global tallow flows. Tallow suppliers in Brazil for instance were already experiencing decreased interest from US producers before tariffs. Brazil tallow prices for export last closed at $1,080/t on 28 March, rising about 4pc year-to-date amid support from the 45Z guidance and aid from Brazil's growing biodiesel industry, which is paying a hefty premium for tallow compared to exports. While the large majority of Brazilian tallow exports end up in the US, Australian suppliers have more flexibility and could send more volume to Singapore instead if tariffs deter US buyers. Export prices out of Australia peaked this year at $1,185/t on 4 March but have since trended lower to last close at $1,050/t on 1 April. In general, market participants say international tallow suppliers would have to drop offers to keep trade flows intact. Other policy shifts affect flows Even as US farm groups clamored for more muscular foreign feedstock limits over much of the last year, tallow had until now largely dodged any significant restrictions. Recent US guidance around 45Z treats all tallow, whether produced in the US or shipped long distances to reach the US, the same. Other foreign feedstocks were treated more harshly, with the same guidance providing no pathway at all for road fuels from foreign used cooking oil and also pinning the carbon intensity of canola oil — largely from Canada — as generally too high to claim any subsidy. But tariffs on major suppliers of tallow to the US, and the threat of additional charges if countries retaliate, could give refiners pause. Demand could rise for domestic animal fats or alternatively for domestic vegetable oils that can also be refined into fuel, especially if retaliatory tariffs cut off global markets for US farm products like soybean oil. There is also risk if Republicans in the Trump administration or Congress reshape rules around 45Z to penalize foreign feedstocks. At the same time, a minimum 10pc charge for tallow outside North America is a more manageable price to pay compared to other feedstocks — including a far-greater collection of charges on Chinese used cooking oil. And if the US sets biofuel blend mandates as high as some oil and farm groups are pushing , strong demand could leave producers with little choice but to continue importing at least some feedstock from abroad to continue making fuel. Not all US renewable diesel producers will be equally impacted by tariffs either. Some tariffs are eligible for drawbacks, meaning that producers could potentially recover tariffs they paid on feedstocks for fuel that is ultimately exported. And multiple biofuel producers are located in foreign-trade zones, a US program that works similarly to the duty drawbacks, and have applied for permission to avoid some tariffs on imported feedstocks for fuel eventually shipped abroad. Jurisdictions like the EU and UK, where sustainable aviation fuel mandates took effect this year, are attractive destinations. And there is still strong demand from the US food sector, with edible tallow prices in Chicago up 18pc so far this year. Trump allies, including his top health official, have pushed tallow as an alternative to seed oils. By Cole Martin and Jamuna Gautam Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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