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WMR-U.S. Wheat Exports Ahead of Projections

Posted: Nov 01 2019

The 2019 export season for U.S. wheat sales has started strong with sales at 514 million bushels, at mid-October, about 12 percent ahead of last year.  USDA is projecting total exports for the year to reach 950 million, just a 1.5% increase over a year ago, making current sales ahead of projections.  Winter wheat classes have had the best early demand, with HRW sales at 195 million bushels, 47% ahead of year ago.  HRS sales stand at 140 million bushels, about 5% behind a year ago, and durum export sales are showing the strongest year-to-year gains, up 50% to nearly 20 million bushels.  

The accompanying chart shows the current top markets for U.S. wheat export sales, compared to one-year ago.  Mexico and Nigeria are posting the strongest gains, with more than 80% of their purchases being HRW and soft red winter.  Very competitive price levels for HRW post-harvest along with high grade quality in the crop have been supportive for U.S. sales.  Taiwan, a top market for HRS and white wheat, is up slightly on purchases to date while the Philippines and Japan, also large buyers of HRS and SWW from the U.S. are lagging the year ago pace.  For HRS, the slower start in some markets is likely due to the sharp increase in export values or “offers” on higher quality due to the weather impact on harvest completion and quality.  Buyers are trying to assess quality availability in both the U.S. and Canada, and to-date some buyers have been reluctant to pursue the level of prices being offered. The EU is holding steady with a year ago.  They only purchase HRS and durum from the U.S., and the strong exports of durum to Italy are offsetting declines in HRS sales to the United Kingdom.

The  second chart shows the current export projections by USDA for the major exporters.  The U.S. is projected to show a small increase, with the EU, Ukraine and Argentina anticipated to see the largest year-to-year gains, driven by production rebounds and a competitive advantage against U.S. currency.  Russia, Kazakhstan and Australia are projected to see declines from last year or two years ago, due to drought impacts on the crop, and stronger domestic values.  

There is still plenty of competition, and supplies on in the world market, with world production projected at a record high of 28.1 billion bushels, up from 26.8 billion in 2018.  This will keep rallies in U.S. wheat prices in check, but this year’s trade environment looks more favorable than the past two years.  World use is projected at a record high of 27.7 billion with gains in both feed and food use . Quality shortages for higher protein wheat will be an added supportive factor. 

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