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WMR-World Wheat Dynamics Remain Tough for U.S. Exports

By: Jim Peterson
Posted: Nov 15 2022

USDA’s latest projection for US wheat exports is just 775 million bushels, reflecting the challenging start to overall export sales, and the fact that many buyers are still opting to pursue Russian wheat, even with the added risk factors.  U.S. exports have been challenged by relatively high internal prices, do in part to inland freight costs and the high U.S. dollar value.  U.S. exports are currently 7% below a year ago, with HRW export sales off 35%.

As the accompanying chart illustrates, Russia is projected to reach 1.5 billion bushels, up from just 1.2 billion last year.  A historically large crop is propelling the higher level of exports, and prompted the Russian government to adjust it’s wheat export tax rate mid-summer to help incentivize exports.  Putin has made it a priority that Russia remains the world’s largest exporter of wheat, in spite of Black Sea shipping challenges.  

The EU and Canada are also projected to see sharp increases in exports, due to larger supplies, and a competitive advantage against the stronger U.S. currency.  Both countries had good quality harvests, and the EU will be a prime competitor for markets in Africa and the Middle East, with Canada competing in Asia and Central/South America.

The current projection for the Ukraine is in sharp contrast to Russia, down to just 400 million bushels, or nearly 50% below the past two years.  This would be the lowest level since 2013.  A lot of uncertainty in the current projection, as it will depend on all parties holding to the shipping channel agreement with Russia.  

Australia is projected to have another strong year of exports, although down slightly from a year ago.  The current projection is in question however, due to ill-timed rains as harvest commences.  Nonetheless, they will no doubt be a strong competitor in much of Asia for milling wheat, but a greater than typical portion may need to move as feed wheat.

Argentina export projections are currently much lower than last year, and may drop further, due to severe drought conditions, as they approach their harvest season.  Recently the government has taken steps to shore up domestic supplies. Further declines would be beneficial for potential U.S. exports into South America.

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