The United States was once the world’s leading wheat exporter, but now is losing its position to Russia and Canada due a stronger dollar, stagnant yields, rising competition and climate change.
According to analysts, exports of wheat may drop 9.3% to 21.1 million metric tons in the season ending May 31, the lowest since 1972.
“We’re no longer going to lead in volume every year,” Alan Tracy, president of US Wheat Associates told Bloomberg, adding that an increase in global wheat trade was the only hope for the country.
Nearly 40% of the US crop goes for export, according to the Department of Agriculture. The acreage for winter wheat fell to its second-lowest since 1913.
As US wheat is no longer the leader in global markets, American farmers are changing to corn and soybeans.
Russia is now the world’s leading wheat exporter and is monopolizing Middle East markets, which were once the preserve of America.
Russia will harvest 62.5 million metric tons of wheat in 2016, the most in eight years, according the Moscow-based Institute for Agriculture Market Studies. Exports from the Black Sea area rose to $185 a ton last week, the highest since December. Prices increased 3.9% from a five-year low set in February and March, reports IKAR.
Compensating Ukraine Deficit
“Crop conditions currently are good, especially in the southern district,” said Olivier Bouillet from Paris-based consulting company Agritel.
The richer harvest from Russia might compensate for the drop in Ukraine, where output may fall to about 9% to 7.2 million tons.
Ukraine and Russia’s Black Sea region boast some of the best land for wheat. Russia was the world’s top shipper. By 1972, however, wheat production had fallen so far because of communist mismanagement that the Soviet Union had to buy from America.
Today, Russia is again the No.?1 exporter, while Ukraine is in fifth place. They’re swallowing the Middle Eastern markets, once American wheat’s top destination. The weather in Canada, the second-biggest exporter, has gotten warmer, resulting in longer growing seasons and bumper crops. Argentina, Australia, France, Germany, Kazakhstan, and players in Eastern Europe are stepping up shipments.
The result is an end to clear US leadership in global markets, says Alan Tracy, president of US Wheat Associates, the industry’s export promotion arm. “We’re no longer going to lead in volume every year,” he says. “The saving grace for us is that total global wheat trade has increased, and we can still sell plenty of what our farmers produce.”
