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WMR-U.S. Wheat Export Shipments Remain Strong

By: Jim Peterson
Posted: Feb 06 2020

U.S. export shipments of wheat in the 2019 marketing year are outpacing 2018 and 5 year average levels with shipments through the first eight months of the marketing year approaching 600 million bushels.  A more favorable world export environment, with strengthening prices in the EU and Russia, along with a devastating drought in Australia have benefitted U.S. exports to date.  When sales on the books are included, shipments yet to load, total sales to date are 768 million bushels, up 17% from a year ago.  USDA is currently projecting U.S. wheat exports will reach 975 million bushels by the end of May, about 4% better than a year ago.

As the accompanying chart shows, the last four months have seen an acceleration in U.S. export loadings.  This acceleration has supported gains in both U.S. futures and cash basis levels for most classes of U.S. wheat, at least through mid-January, before the coronavirus outbreak in China and its spread into other countries.  All commodities have taken a hit, and only time will tell how much more impact the outbreak will have on price trends.

By class, hard red winter sales and durum sales are leading the pack with HRW up 37% over 2018, and durum up 93%.   HRW sales stand at 283 million bushels, and are three quarters of the way to USDA’s projection for the year of 385 million.  Durum sales stand at 30 million bushels, also three quarters of the way to the 40 million bushel export projection.  Hard red spring wheat sales are at 220 million bushels, up 9 percent from a year ago, and about 85% of the projection for the year.

The top markets for the U.S. include Mexico, the Philippines, Japan, Nigeria, Taiwan and Korea.  Mexico, Nigeria and Taiwan are all 30% stronger on purchases compared to a year ago, with the Philippines about 6% higher, Korea steady, while Japan was down about 2 percent.  The attractive prices last fall and early winter for HRW have helped to drive the strong sales pace into Mexico, Nigeria and Taiwan, and recently HRS sales have seen an acceleration supported by purchases from Japan, the Philippines, and Mexico.  For Durum, Italy accounts for about two thirds of the sales to date, with most of those shipments taking place last fall.

As the remaining four months of the marketing year play out, HRW and durum will need to see an acceleration in sales to reach their USDA projections.  Black sea, EU and Argentine price trends will be important variables in how successful the U.S. is in capturing additional mid to low protein export demand.  The opening of exports through the Great Lakes this spring will be a key time to watch for durum, to see if Italy returns to the market at the same level they did in November and early December.
For HRS, if the current sales pace continues, USDA may have to raise export projections for the year.  Trends in Canadian spring wheat prices, and producer selling pace in Canada will be important variables in demand trends for higher protein wheat exports.  

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