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2018-19 HRS Exports Higher, Early 2019-20 Demand Shows Strong Potential

Posted: Sep 24 2019

Record hard red spring wheat (HRS) exports to the Philippines, strength in other Asian markets, and growing demand in Central American helped lead to stronger HRS exports for the 2018-19 marketing year, which ran from June 1, 2018  to May 31, 2019.  Gains in these markets helped make up for losses in exports to China and Japan.

HRS exports to the Philippines reached 64 million bushels, a new record, and up about 18 million from the previous year.  A growing, relatively young population, increasing demand for quality products, and a strong preference for U.S. wheat helped spur the higher exports.  The Philippines has been the top customer of U.S. HRS for the last six years, surpassing Japan.  Exports to Japan were down about seven million bushels to reach 32 million bushels.  Demand in Japan has been falling in recent years due to a declining and agingpopulation, strength of the U.S. dollar, and the fact that Canada and Australia enjoy a price advantage over the U.S. due to their inclusion in the CPTPP trade agreement.

Taiwan and Korea are consistently top five buyers of U.S. HRS and sales to both countries were up marginally in 2018-19.  Bangladesh, a non-traditional HRS buyer, purchased nearly 17 million bushels, making them a top five market.  Rounding out the top ten HRS markets were Thailand, Italy, Indonesia, Guatemala and Mexico.  Record HRS exports were also recorded for Thailand and Guatemala for 2018-19.

A noticeable change in the top markets was the drastic decline in HRS exports to China.  In 2018-19, just over one million bushels were sold to the country, a nearly 20 million bushel loss compared to the previous year.  HRS exports to China had been as high at 40 million bushels.  The lack of demand from China is due to the ongoing trade disputes between the U.S. and China.

The Southeast Asian region in general has been a bright spot in recent years for U.S. HRS as growing incomes continue to lead to demand for higher quality food products, a perfect fit for HRS and other U.S. wheat classes.  Also, Australia has suffered from significant drought issues the last few years, leading to a decline in their exportable supplies in the world market.  U.S. wheat exports have filled some of that void.  HRS exports for the 2018-19 marketing year to Southeast Asia reached a new record of nearly 100 million bushels, up from about 66 million the previous year.  Demand from this region is expected to continue to grow. 

2019-20 export potential looks promising.  HRS sales for the first three months of the marketing year (that began on June 1, 2019) are up 11 percent compared to a year ago.  Asia, the largest export destination for HRS, so far is showing an increase in sales of 14 percent.  In Central and South America, the second largest region for HRS exports, demand is up by 50 percent compared to last year – due in large part to a substantial increase in sales to Mexico.  In fact, seven of the top ten customers from last year are showing increased sales for the first three months of the new marketing year.  Continued demand will be highly dependent on price, quality, and size and quality of production in other major wheat producing regions.

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