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WMR-Hard Red Spring Wheat Exports Higher

By: Jim Peterson
Posted: Apr 19 2021

The 2020 marketing year has been somewhat variable for U.S. HRS wheat exports, with the strongest sales pace during late fall and early winter.  As of late March, U.S. HRS sales stood at 275 million bushels, about 3 percent higher than a year ago.  USDA’s full year projection is for sales to reach 285 million bushels by the end of May, a level certainly within reach.

Export sales to most of our traditional top ten markets are steady or higher than a year ago, with the exception of Japan, the EU and Bangladesh.   The declines in those markets have been more than offset by exceptional gains in China and Mexico however. The Philippines continues to be the anchor, accounting for nearly one-fourth of total exports, and slightly higher than 2019.  U.S. producers enjoy nearly 100 percent market share for the higher protein wheat demand in the Philippines.

Sales to Japan have declined a bit from their mid-season pace, and currently sit at 10 percent lower than a year ago.  While Canadian competition is keen in this market, they are also down about 6 percent on year-to-year shipments to Japan.  Taiwan, South Korea and Thailand typically make up our remaining top five markets historically, and sales to each of those markets are running nearly equal to a year ago.

China and Mexico have moved into the top five markets this year with strong purchases at the middle part of the marketing year.  China has reached nearly 28 million bushels, up more than 8 times from a year ago.  In Mexico, sales are nearly 20 million bushels and 2.5 times higher.  In both markets, HRS is sought after for use as a blending wheat and also making premium quality bakery products.  Part of the demand in Mexico was driven by the value offered for mid protein HRS wheat relative to higher protein HRW.
The continued strong demand from Vietnam, Indonesia and Malaysia is a positive trend, that is anticipated to see continued growth.  Consumer demand in those markets for a greater variety of baked products, as well as frozen and refrigerated dough products are supportive for higher sales of U.S. HRS. 

In the EU, sales are lower solely due to the tariff which was imposed on U.S. HRS exports in November.  Fortunately, the tariff was suspended for four months, starting in March, but it may take some time for exporters and customers to resume normal purchase patterns.

With two months remaining in the marketing year, additional export sales will be needed to reach USDA’s goal, but the successful season to date, has already exceeded fall of 2020 USDA projections. This, along with record domestic mill grind of HRS during the past year, is leading to a lower carryover projection for HRS, compared to earlier estimates. 

The accompanying chart illustrates the steady gains in Minneapolis (MGE) futures since harvest, and moving back to a price premium in the market, relative to other wheat classes.  Improving demand through the marketing year has been a driving factor in this price trend, along with the synergist impact of sharply higher corn and soybean prices on all commodities.  

Recently, growing concerns over 2021 HRS planted area and the expansion of severe drought conditions in U.S. HRS areas are adding another supportive variable to MGE prices.  HRS supplies are still relatively large from a historical perspective, due to three consecutive crops of near record yields, and large Canadian crops adding to demand competition.  These old-crop supplies will likely continue to be a headwind, but those supplies will certainly carry less weight if 2021 production concerns become more prominent. 

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