Zafer ERGEZEN In November, we watched the efforts of December futures wheat prices to find support after high yield concerns. While the continuation of the high wheat price estimations increases the selling pressure, the unexpected increase in wheat stocks caused strengthening of this trend. However; it was seen that wheat prices were balanced over 640 cent/bushel level despite all these negative estimates and concerns. The strong demand especially from North Africa and China was an important factor for the wheat prices to find support. Due to the increased demand, there was an increase in Black Sea Region and European wheat prices. November experienced a search for balance point between high production and high demand in general. Estimations about production continue to be the most important factor on wheat market. U.S. Department of Agriculture announced that wheat production in 2013/14 season will be 50,89 million tons more than the production in the previous year. Thus, it is estimated that the total wheat production will reach to 706,38 million tons. As a result of this increase in the production, total wheat stocks will be 178,48 million tons. Despite this increase on annual basis, there is 2,51 million-ton decrease compared to the estimations made in previous month. The production losses in Russia, Kazakhstan and Argentina were an important factor in this decrease. While the production in Russia was 2,5 million tons, it was 1,5 million tons in Kazakhstan. It is estimated that total wheat loss in Argentina will decrease to 11 million tons. Canada came to the forefront as the only country with production increase. Wheat yield in Canada is estimated to reach 33,2 million tons with 1,7 million-ton increase. When we review the production in general, it is seen that the estimations decreased compared to the previous month. In spite of that, there is 2,2 million-ton increase in wheat stocks. The decrease in wheat consumption causes increase in stocks. Wheat consumption in 2013/14 season is estimated to decrease to 857,21 million tons. Consumption expectations in Europe and China are expected to decrease. While the total wheat production amount in China has not been changed with 121 million tons, total wheat consumption will decrease to 125,5 million tons. Providing 17% of world wheat production, China makes 17% of wheat consumption by itself. Another important note about China is that China has 32% of world wheat stocks. International Grain Council (IGC) expects that world wheat production will reach to 696 million tons with 4 million-ton increase compared to the previous month. On the contrary to the estimations of U.S. Department of Agriculture, an increase in wheat production is expected. Especially there is an increase expectation in the wheat production of Argentina and Black Sea Region. Likewise, wheat consumption is expected to increase. Wheat consumption in 2013/14 season will be 690 million tons. According to IGC data; the increase in the wheat demand from China and Egypt is expected to increase the wheat trade to 142 million tons. Despite the increase in the demand, end period stocks are expected to reach 182 million tons. Wheat stocks still remain below the 2011/12 record stock level despite the increase. In this period, wheat price index of IGC reached to nearly 239 by increasing 3% on monthly basis. The wheat index of the last year was at 287 levels. The United Nations Food and Agriculture Organization (FAO) increased its world wheat production estimation to 708,5 million tons by increasing it 3,9 million compared to the previous month in its monthly report. It is foreseen that especially Black Sea Region will have additional contribution to world wheat production. End period stocks in 2013/14 season are estimated to reach 166,7 million tons. At this point, FAO is the institution that makes the lowest end period stock estimation compared to other institutions. While world wheat trade is expected to be 142 million tons, it is seen that FAO reached to the same amount with IGC. Pointing 1,9% increase compared to the previous year, world wheat trade is balanced with the concerns on that import will decrease in European Region while it gets support with the import from Asia. In this season, export side seems much stronger due to the abundant production. The demand especially for Russian and Ukrainian wheat continues as high. World stock usage rate will reach 23,6% by increasing compared to the previous year. Increasing consumption amount despite the high wheat production causes the end period stocks to remain at reasonable scales. Total consumption amount that was 655,3 million tons in 2009/10 season has had 40,8 million-ton increase in the last four years. Whereas; total consumption amount has only increased 22,7 million tons. The difference between them emerges as the decrease in end period stocks. As a result; when the estimation averages of the three institutions making global estimation in grain markets are taken into consideration, world wheat production is expected to be 703,63 million tons averagely. The increase reached 1,33 million tons compared to the previous month. Last year’s average was 656,7 million tons. In other words, the increase on annual basis is 7,14%. When the data of this month is taken as basis, it is seen that the estimations of U.S. Department of Agriculture is different from other two institutions. However; the reason for that difference is that the October data wasn’t published due to the budget issues and thus some estimation took place in November estimations with some delay. Thus, it is foreseen that the difference between the estimations would not cause a change on the general trend. When we consider the developments on the demand side within this frame; we see that Egypt as the world’s largest wheat importer continues to wheat purchase tenders after the coup. The new administration in Egypt had already announced that wheat stocks would increase to 6,5 million tons level. It is seen that purchases made by Egypt has increased again. Lastly, Egypt realized 120 thousand-ton wheat import from Russia. The imported wheat amount throughout the year has reached to 2,6 million tons. However, it is seen that price has increased in the purchases. European wheat price has closed to the prices in Black Sea Region. Thus, it is estimated that the competition in wheat purchases of Egypt will increase. The wheat demand from North Africa can be an important opportunity for European wheat. Especially the increase of the Black Sea Region wheat, revives the demand for European wheat. Especially there is an increase in the demand from Morocco. Morocco announced that it plans to suspend the taxes on wheat import between January and April. After this news, there was an increase in wheat purchases from France. Even, this increase in the demand reached to such a point that there were some delays in the loadings from Dunkirk port of France due to the intensity. Morocco’s wheat import is expected to decrease 22% this year. Together with the increase of tax amount on wheat import to 45% in August, wheat import received a heavy blow. However; after the recent developments, the import amount is expected to exceed 5 million tons again. December futures wheat price on Chicago Mercantile Exchange closed to the 640 cent/bushel level by decreasing with high production estimations. Thus, it lost 9,7% value from its highest level in October. While the high change in this month points that the selling pressure is high, it can be said that the demand is still dynamic. The existence of long-term trend channel below 640 cent/bushel level causes reaction purchases and closure of short positions at this level. At this point; 640 and 630-35 cent/bushel levels respectively can be said as a critical reference point for futures wheat prices. Being a support and resistance point for many times, this level also stands out as the level that is exceeded by the 4-year increasing trend line. We can watch the strengthening efforts over 640 cent/bushel level in December. Due to the holidays at the end of the month, price movements will slow down. However, the probability of balanced and horizontal movement during the process until this period is quite high. Estimations on production will have an important role on prices again. But in the last period, especially the developments on the demand side are seen as the main factor. Thus, any news from the demand side would be followed closely by the market. While the cold and rainy weather in Far East due to the seasonal effects increases the wheat demand, it is seen as possible to experience some delays on wheat loadings in Black Sea Region due to the cold weather.