Wheat Letter Blog Archive - Page 39 of 104

Wheat Industry News

Recent news and highlights from around the U.S. wheat industry.

Speaking of Wheat. “The market is panicking but rightly so. Balance sheets globally were relying on a big Aussie milling wheat crop to cover until new crop Northern Hemisphere [arrived]. I guess the rally in Aussie prices is overdone but prices won’t go back down to where they were a month ago until maybe the end of Q1 and assuming Northern Hemisphere crops are all looking good.” – An Australian wheat trader quoted in a Nov. 23 “AgriCensus” article titled “Australia’s WA Wheat Market Explodes as Protein Levels Disappoint.”

Condolences to our colleague Chang Yoon (CY) Kang, Country Director, USW/Seoul, and his family on the recent passing of his mother.

Congratulations to our colleague Dalton Henry, USW Vice President of Policy, and his wife Sarah on their new baby boy, Samuel Walter Henry, born Nov. 18, 2021.

A “Dizzying” Market. Reuters reported this week that “benchmark wheat traded in Chicago climbed to a nine-year peak late last month, while prices at ports in Russia, the world’s No. 1 supplier, and Australia, typically the fourth largest exporter, are at all-time highs. World food prices rose for a third straight month in October to reach a new 10-year peak, led by increases in cereals and vegetable oils, the UN food agency said. The dizzying price levels are alarming buyers who are still suffering from the economic impact of the coronavirus pandemic, with decade-high freight costs compounding their problem.”

“Hell in a Handbasket.” That is the title Rabobank chose for its November Agri Commodity Markets Research Outlook for 2022. “It is highly unlikely that food prices will go back to the five- or two-year averages in 2021 as commodity prices are now supported by inflation … high shipping costs, energy and fertilizer prices, as well as a shortage of labor in many countries,” the report stated. Rabobank predicts wheat prices will stabilize in the second half of 2022 assuming reduced demand for feed wheat.

Goyings Farms Top Ohio’s SRW Wheat Yield Contest. Congratulations to USW Past Chairman Doug Goyings and his son Jeremy, Paulding, Ohio, who produced the top yield in the state’s 2021 Wheat Yield Contest with an entry of 138.4 bushels. An “Ohio Country Journal” article described their intensive management of their soft red winter (SRW) wheat crop, to the use of fungicides and insecticides to protect the crop in the late spring and early summer. Read more.

Indian Government Spreads More Subsidy Joy to Farmers. Reuters reported Dec.1 that Indian fertilizer stocks jumped after a report the government plans to increase fertilizer subsidies to a record … in 2021-2022 to avoid shortages amid a sharp rise in global prices. India, the top urea importer, has already raised fertilizer subsidies twice in this fiscal year ending March 31, and the new figure is almost double the amount initially budgeted. Studies have shown that India’s massive production subsidies distort trade, causing annual losses of more than $500 million for U.S. wheat farmers.

2022/23 Winter Wheat Conditions. USDA/National Agricultural Statistics Service reported Nov. 30 that nationwide, 92 percent of the winter wheat acreage had emerged by Nov. 28, equal to last year but 1 percentage point ahead of the 5-year average. As of Nov. 28, forty-four percent of the 2022 winter wheat acreage was reported in good to excellent condition, unchanged from the previous week but 2 percentage points below the same time last year.

Cereal & Grain Sciences Events Calendar. Dr. M. Hikmet Boyacioglu, an Applications Development Specialist with KPM Analytics, updates a calendar of cereal and grain sciences industry events every month. Contact Dr. Boyacioglu to receive the calendar link each month via email.

Subscribe to USW Reports. USW publishes various reports and content that are available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts and wheat industry news, the weekly Price Report and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online. Visit our Facebook page for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter, video stories on Vimeo and more on LinkedIn.

December 2, 2021/by Steve Mercer

Stocks-to-Disappearance Ratio Suggests Continuing Wheat Market Volatility

By Michael Anderson, USW Market Analyst

The Food and Agriculture Organization (FAO), a branch of the United Nations (UN), in a biannual report published this month, said “the ratio of major wheat exporters’ closing stocks to their total disappearance is expected to fall to 12.5 percent.” The report also noted that, if realized, this will be the lowest level in more than two decades. From January to October 2021, wheat prices have been 29.1 percent higher compared to the same period in 2020 FAO reported.

An abstract by the Agricultural Market Information System (AMIS) confirmed that when global wheat inventories fall and the stocks-to-disappearance ratio dips below 18 percent, higher volatility will follow. All the major factors that affect volatility AMIS noted have made recent headlines and been exacerbated by higher oil prices, stock market volatility, foreign exchange rates and weather variability, the last being especially relevant to the 2021/22 wheat crop in the exporting countries Canada, Russia and the United States.

Ratio Defined

The stocks-to-disappearance ratio defined by the Organization for Economic Cooperation and Development (OECD) is the ratio of stocks held by exporters to their disappearance (domestic utilization + exports). Among major wheat exporting countries, domestic use strongly influences the export policies of Russia, Ukraine and Kazakhstan. Russia for example uses an export tax to keep domestic prices lower. The Russian government also uses export quotas to tame domestic wheat prices and has already announced plans to curb exports starting in February 2022. Ukraine and Kazakhstan have routinely used export quotas in the past.

USW Vice President and West Coast Office Director Steve Wirsching recently noted that the 2021/22 stocks-to-disappearance ratio for major exporters is 13%, similar to levels last experienced in 2007/08 when wheat prices were exceptionally high. That year, Russia had a good crop, but imposed a substantial export tax. Following a poor crop in 2010, Russia banned wheat exports completely until the next harvest.

This year, world wheat production is expected to set a record high. However, worldwide use is expected to outpace production by more than 12 MMT. Among major wheat exporters, the EU, Ukraine, Argentina and Australia increased production this year while Canada has seen a 40% decline in wheat production with only a 13% drop in domestic use. Despite a 13% fall in production, Russia has seen domestic use go up 6% and export forecasts increase 42%.

Volatility is evident in the periods when stocks-to-disappearance ratios among exporting countries were low in this chart showing wheat futures prices over time

Volatility is evident in the periods when stocks-to-disappearance ratios among exporting countries were low in this chart of wheat futures prices from U.S. exchanges. For example, hard red spring prices (MGEX in red) in 2008 reached as high as $18.30/BU. That year was characterized by limited export supplies, strong international demand and low global wheat stocks.

Southern Harvest Quality Questions

Next week, USDA will release its latest supply and demand report, offering an updated forecast for major exporting regions. While the northern hemisphere crop is mostly in the bin, the southern hemisphere is beginning harvest now, and already concern is growing for the Australian wheat crop.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) recently did raise its forecast for Australian wheat production by 1.4 MMT, up 4% compared to last year. However, a rainy harvest there is generating speculation about the volume of milling quality wheat. One trader noted “the mess that wet harvest weather has left us in.” In addition, the EU experienced a wet harvest this season that downgraded milling wheat to only 62% of the total harvest according to Stratègie Grains.

More Volatility Ahead

The volatility inherent in the 2021/22 marketing year has major importers going to great lengths to shore up supply as futures moved lower. This week, Egypt, the world’s largest importer of wheat, suddenly purchased 600,000 metric tons (MT) of the grain at nearly $90 per MT more than the average price paid for wheat tenders last year. The purchase is thought to be Egypt’s largest single wheat purchase ever and surpasses a previous record of a 540,000 MT Egyptian purchase in 2008.

Wheat markets have moved lower recently, but with the exporter stocks-to-disappearance ratio remaining low until at least closer to the 2022 Northern Hemisphere harvest, volatility is likely to continue.

December 2, 2021/by Steve Mercer

Japan

Honoring the Late Mr. Hiroshi Sawada, Chairman, Nippn Corporation

U.S. Wheat Associates (USW) has been blessed to work with many impressive customers in the global flour milling industry. Among them was Mr. Hiroshi Sawada, Chairman of Nippn Corp., who passed away on Nov. 21, 2021, at the age of 90.

Mr. Hiroshi Sawada. Photo courtesy of Nippn Corp.

“Mr. Sawada was a true pioneer in Japan’s flour milling industry, joining Nippon Flour Mills Co. in 1953,” said USW President Vince Peterson. “During most of the 64 years we have had an office in Japan, Mr. Sawada always graciously welcomed our representatives and farmer leaders and was very generous with his time. Serving four terms as Chairman of the Japan Flour Millers Association, Mr. Sawada helped build the close relationship between U.S. wheat farmers and his country’s flour millers. It has been an honor working with him and we send sincere condolences to Mr. Sawada’s family and his colleagues.”

Over his 68-year career at Nippon Flour Mills (which changed its name to Nippn Corp. in January 2021), Mr. Sawada served as Director, Managing Director and Senior Managing Director. He was named President in 1993 then Chairman & CEO in 2002. Nippn Corp. is the second largest flour milling company in Japan.

Legion of Honor

Among his career highlights, Mr. Sawada received Japan’s Legion of Honor award for his contributions to the country’s food industry. In 2017, the “Great Falls (MT) Tribune” featured Mr. Sawada in an article about Nippn’s ownership of Pasta Montana in which he talked about his first visit to that state in 1967.

Chairman Sawada with 2018/19 USW Chairman Chris Kolstad and his wife Vicki at Nippn Corp. in 2019. The photo at the top of this page was taken in 2018 when U.S. wheat industry representatives helped celebrate the 70th anniversary of the Japan Flour Millers Association.

December 1, 2021/by Steve Mercer

Trade Negotiations and Barriers

WTO Ministerial Postponed; U.S. Agriculture’s Engagement to Continue

Though disappointed in the postponement of the 12^th World Trade Organization (WTO) Ministerial Conference this week, U.S. Wheat Associates (USW) will continue working with U.S. agricultural interests toward positive reform of this important organization.

As a member of a U.S. agricultural coalition that is speaking up on the importance of the WTO, USW representatives were set to attend the WTO ministerial “MC12” in Geneva, Switzerland. Ms. Sharon Bomer Lauritsen, the founder of Ag Trade Strategies, LLC, and a former Assistant U.S. Trade Representative for Agricultural Affairs and Commodity Policy, supports the coalition and recently outlined key positions on the WTO in a co-authored Agri-Pulse editorial.

“The WTO is a crucial element in facilitating global trade, but it is in need of reform,” she and her co-author wrote on Nov. 24, 2021. “To revitalize and restore confidence in the WTO, attention must be paid to addressing government policies that distort production and trade, including tariffs and trade distorting domestic support.”

In remarks made to business interests just before the WTO ministerial was postponed, however, WTO Director-General Ngozi Okonjo-Iweala had little optimism for substantial progress on agricultural domestic support negotiations.

There is a stand-off over price supports used for public stocks between some developing countries like India and China and a group of developed and developing countries, especially the United States and several Latin American countries. India, for example, fiercely protects its trade distorting subsidies for wheat and rice as part of its public stockholding program for food security. Unfortunately for the rest of the world’s wheat and rice producers, these hefty subsidies can lead to larger stocks and the need for India to export these grains, often at lower prices than the costs the government incurred for the grain.

The U.S. coalition is also concerned that WTO members are not complying with their transparency requirements for reporting on domestic agricultural subsidies. Less than half of WTO members have submitted notifications on their subsidies since 2016, and many of those are incomplete, manipulated data, or incorrectly categorize their policies.

Data from the WTO shared as part of U.S. dispute cases and counternotifications reflect this issue. The graph below shows the wide disparity between the wheat subsidy levels China and India reported and the actual levels identified by a WTO dispute panel and other members.

Graph shows various wheat subsidies reported to WTO.

Source: World Trade Organization.

Improving transparency requirements for policies impacting agriculture trade and notifications of current commitments was a realistic outcome from the MC12 meeting that USW and the U.S. coalition will continue to encourage.

USW strongly supports the WTO’s mission to liberalize world trade. In a July 2021 letter, USW and the National Association of Wheat Growers joined dozens of other agricultural organizations in sharing key priorities for the WTO to U.S. Trade Representative Katherine Tai and U.S. Secretary of Agriculture Tom Vilsack.

“The WTO has served American farmers, ranchers, and workers across the food and agriculture sector well, but in recent years the flaws in the system have become apparent,” the letter stated. “Reform is … needed, including changes that lead to a market opening agenda for agriculture and a better functioning institution. These changes can help improve global agricultural sustainability and support rural communities, workers, and better-paying jobs.”

USW believes a “better functioning” WTO will also benefit our wheat importing customers around the world.

November 30, 2021/by Steve Mercer

Market and Crop Analysis

A Deep Dive into Ocean Freight Market Factors

The recent run-up in ocean market freight rates is causing heartburn for the world’s grain importers. Vessel rates bounced up on Nov. 22, but a shipbroker quoted in a Reuters report expects dry bulk spot rates to stabilize in November and December “before a seasonally soft first quarter of 2022.”

That would be some good news for wheat importers, but rates remain very high. That is one reason why U.S. Wheat Associates (USW) asked Jay O’Neil, HJ O’Neil Commodity Consulting, to record an in-depth analysis of the ocean freight market as part of its 2021 Crop Quality Report. His presentation is posted online at https://cropquality.uswheat.org with all by-class written and video reports and other special topic presentations translated into several languages.

Demand and Inefficiency

In his report, recorded in mid-October, O’Neil discussed the physical make-up of the global ocean freight fleet. He noted that grain carrying vessels make up about 13% of global seaborne cargo, so its rates “follow the lead” of larger coal and iron ore vessel rates in the Capesize category. Those rates have spiked in recent months due to higher demand, primarily from China, pulling grain rates up with then. O’Neil also described how China’s high demand for grain and oilseed imports has lifted freight rates.

The pandemic is adding cost because it is taking longer to load and unload vessels.

“We have about 16% of the world global dry bulk fleet tied up waiting to unload at various ports,” O’Neil said in October. “That creates inefficiency that requires more ships to carry the same amount of cargo.”

The 13-year high in dry bulk freight rates is partially tied to vessel turn-around slowed by the COVID-19 pandemic, said ocean freight consultant Jay O’Neil.

Vessel Capacity Lagging

For many years following a much more significant price spike around 2008, rates remained somewhat stable at relatively low levels. As a result, “we have not been building many vessels for the last 13 years,” O’Neil said. “Now we don’t have enough ships to carry all the new cargo demand, so we have this spike.” The ship-building process takes years, he noted.

Yet there is what O’Neil described as a “huge inverse between the nearby market and the forward market. Those who need to purchase vessels are paying whatever they have to pay in the nearby market but are not much interested in paying those high rates for freight several months in the future.”

O’Neil sees bulk ocean freight demand growing faster than fleet growth into at least 2023. He noted a two-year backlog in container and tanker vessel production that limits capacity to build bulk vessels. Risk management through a hedge on rates in the Freight Forward Agreement markets is an opportunity for buyers, he said.

Volatility Ahead

There are other unseen factors affecting future bulk ocean rates, O’Neil noted, including global economic conditions and management of vessel emission standards. He also offered a look at container market factors.

“One constant is volatility in the freight markets will continue to plague us,” he said. “If you are a cargo buyer, timing (of purchases and risk management) is going to be very important.”

USW reports ocean freight market rates and weekly changes in the Baltic Index each Friday in its Price Report.

November 22, 2021/by Steve Mercer

USW Announcements

U.S. Wheat Associates Renovated Website Increases Focus on Crop Quality

U.S. Wheat Associates (USW) recently launched its renovated website, www.uswheat.org, with an updated look, improved organization and an expanded Crop Quality section including unique, individual pages for each of its six wheat classes.

“The pandemic has highlighted challenges and changes in how people communicate and consume information across the globe,” said USW Director of Communications Amanda Spoo, who supervised the update. “So, as we adapt, it is important that our outreach continues to reflect the reliable service our customers have come to expect from U.S. Wheat Associates and the long-standing trust they have in U.S. farmers. The new website maintains its strong focus on the importance of the U.S. wheat farmers we represent and provides customers expanded access to the vital information and resources they need when making their purchasing decisions.”

Crop Quality Focus

The expansion of the site’s original Crop Quality section includes unique, individual pages for all six wheat classes and the existing Harvest Report. Users can access these new pages via the “Crop Quality” tab in the main menu across the top of the website. This section provides users with general wheat class information and additional detailed information about the 2021 U.S. wheat crop. In addition to access to the full 2021 USW Crop Quality Report, available in seven languages, users can access individual regional class reports, an overview of U.S. wheat inspection practices, and more.

Other Highlights

The Newsroom features our new home base for USW’s blog “Wheat Letter,” news releases, original video content and more.
Market Information is home to a familiar set of reports, including the popular Price Report, the Price Charting Tool, Supply and Demand and Commercial Sales.
Working with Buyers describes the type of activities USW conducts with its customers, the six U.S. wheat classes and their uses, wheat industry terms, as well as U.S. wheat grade and non-grade factors. The Ask the Expert page allows site visitors to confidentially seek answers to questions about contract specifications, wheat quality, milling and end-product uses, and flour quality. Included in this section is access to our interactive U.S. wheat export supply system map.
The Office Locations section, focused on USW’s 15 office locations and the countries they serve, was expanded to provide more information and resources for customers based on the needs of that region and direct access to local USW representatives.

Other important sections of the site include Policy, Who We Represent and Our Story.

Learn more about USW and its mission here.

November 17, 2021/by Steve Mercer

Wheat Industry News

Recent news and highlights from around the U.S. wheat industry.

Speaking of Wheat. “Durum presents the greatest challenge in terms of balancing global import requirements with global export availability.” – Rhyl Doyle, director of export trading at Paterson Grain, Winnipeg, Manitoba, quoted in a Reuters article covering Italian pasta makers’ fears about a global durum supply shock.

Brazil Approves GMO Wheat Flour Imports. Reuters reported Nov. 11 that Brazil’s biosecurity agency CTNBio has cleared imports of flour from Argentina made with genetically modified wheat. Reuters wrote that the agency’s decision, the first of its kind in the world, “applied only to wheat flour, after Brazilian millers threatened to boycott Argentine grains.”

2021 Fusarium Head Blight Disease Impact Update. The U.S. Wheat and Barley Scab Initiative recently announced publication of its 2021 Fusarium Head Blight Disease Impact Update. In general, drought held back the severity of the plant disease with only isolated problem areas. Read the full announcement here.

USW Publishes Latest Supply and Demand Report. USW updated its monthly World Wheat Supply and Demand Situation Nov. 9 following the release of USDA’s World Agricultural Supply and Demand Estimates (WASDE) report. This month world wheat trade estimate for 2021/22 was raised to a record 203.1 MMT even in the face of reduced exportable supplies. Read the USW report online here.

Subscribe to USW Reports. USW publishes various reports and content that are available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts and wheat industry news, the weekly Price Report and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online. Visit our Facebook page for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter, video stories on Vimeo and more on LinkedIn.

November 11, 2021/by Steve Mercer

Board of Directors

U.S. Wheat Industry Leaders Meet in Kansas City

The boards of directors of U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) met jointly November 8 to 10, 2021 in Kansas City, Mo. Each organizations’ board includes wheat growers assigned to represent state wheat organizations. These U.S. wheat industry leaders meet together two times each year.

The work at a joint board meeting includes committee meetings specific to USW and NAWG as well as Joint International Trade and Wheat Breeding Innovation Committee meetings. There is a combined board meeting as well as individual board meetings.

At their joint session Nov. 10, U.S. wheat industry leaders heard a very interesting speech from Ms. Esther L. George, President and CEO of the Federal Reserve Bank of Kansas City, which is one of 12 regional Reserve Banks that, along with the Federal Reserve Board of Governors in Washington, D.C., make up the nation’s central bank. The “Fed” as it is known works “in the public’s interest by supporting economic and financial stability.” Pres. George outlined several factors that are contributing to rising inflation in the United States specifically but also affecting the global economy. One of those factors is the dramatic disruption in global supply chains that have pushed up shipping costs and interrupted normal production and distribution of goods.

“Supplier delivery times have slowed dramatically, not only for manufacturers but also for service providers,” President George said, “in part as shipping times from Asia to the West Coast have doubled, and transit costs have skyrocketed.” While a text of Pres. George’s speech is not available, her recent speech at an energy conference includes many of the key points from her presentation to U.S. wheat leaders.

Other Interesting Speakers

On Nov. 10, Mr. Daniel Whitley, Administrator of USDA’s Foreign Agricultural Service (FAS), spoke to the USW board of directors about the long and successful public-private partnership between “cooperator” organizations like USW and FAS. He also noted the significant expected increase in U.S. agricultural exports for 2021/22 to more than $175 billion in value, which includes an estimated $7 billion in U.S. wheat exports.

USW Chair and President with Daniel Whitley

FAS Administrator Daniel Whitley (center) with USW Chairman Darren Padget (left) and USW President Vince Peterson (right) at the 2021 Fall USW Board of Directors meeting Nov. 10 in Kansas City, Missouri.

Joining the USW directors virtually, Greg Borossay, head of Maritime Business Development at the Port of San Diego, Cal., previewed expansion plans that will introduce bulk freight loading capacity, including for grains. In addition, he described progress on a U.S. Pacific Coast Marine Highway project to create barge service between San Diego and marine ports in central and northern California, Oregon and Washington state.

Global Wheat Supply and Demand Focus

Even more specific to U.S. wheat exports, USW Vice President of Overseas Operations Mike Spier provided a very thorough review of the supply and demand factors affecting global wheat trade. Focusing on the run-up in wheat prices, Spier noted that U.S. wheat ending stocks declined by 50% in just five years. He also noted that the ratio of wheat ending stocks to “disappearance” (domestic consumption plus exports) among global wheat exporting countries is now at 13%, a level not seen since the global wheat supply shock of 2007/08.

USW Vice President of Overseas Operations Mike Spier provided an overview of global and U.S. wheat supply and demand factors at the USW Board of Directors meeting Nov. 10.

USW and NAWG directors will meet jointly again in January 2022 in Washington, D.C.

November 11, 2021/by Steve Mercer

Wheat Quality

2021 USW Crop Quality Report Now Available for The World’s Wheat Buyers

This year has once again provided its share of uncertainty for wheat producers, handlers and buyers. We have seen challenges from drought, variable trade policies and the ongoing global pandemic. Through it all, the entire U.S. wheat industry remained fixed on providing the highest quality wheat for almost every customer need, backed by transparent pricing, trusted third-party certification and unmatched service before and after the sale.

As a key part of its commitment to transparency and trade service, U.S. Wheat Associates (USW) has produced its annual Crop Quality Report that includes grade, flour and baking data for all six U.S. wheat classes. The report compiles comprehensive data from analysis of hundreds of samples conducted during and after harvest by our partner organizations and laboratories. The report provides essential, objective information to help buyers get the wheat they need at the best value possible.

The 2021 USW Crop Quality Report is now available for download in English, Spanish, French, Italian, Arabic and Portuguese. Chinese translations will be available soon. USW also shares more detailed, regional reports for all six U.S. wheat classes on its website, as well as additional information on its sample and collection methods, solvent retention capacity (SRC) recommendations, standard deviation tables and more. View and download these reports and resources here.

New Resources

USW continues to provide unique ways for our customers to experience and gain more knowledge about the 2021 U.S. wheat crop. New this year, USW has expanded its Crop Quality page on its primary website to include unique, individual pages for each of its six wheat classes. When viewing the website, users can access these new pages via the “Crop Quality” tab in the main menu across the top of the website.

For a second year, the pandemic has changed other traditional parts of the USW Crop Quality outreach effort. At https://cropquality.uswheat.org/, customers will find a variety of pre-recorded presentations covering 2021 U.S. wheat crop quality data and analysis, as well as several special topics in English or captioned versions in several different languages.

As always, USW local representatives are ready to help customers review their purchase specifications to receive the best value possible. For more information, please contact your local USW office here.

Continue to look for 2021 USW Crop Quality updates on Facebook, Twitter and LinkedIn.

November 8, 2021/by Amanda Spoo

Market and Crop Analysis, Michael Anderson, Wheat Production and Harvest

Wheat Exporting Countries Control Just 18% of Global Stocks

By Michael Anderson, USW Market Analyst

As the U.S. wheat 2021/22 marketing year reaches its halfway point, U.S. Wheat Associates (USW) summarizes market factors affecting global wheat supply and demand with its farmer board of directors. The data comes from USDA’s October reports, which will be updated on November 9. We want to share some information here, focusing on key wheat exporting countries.

USDA pegs 2021/22 world wheat production at a record 776 million metric tons (MMT), up 1.0 MMT from last year and 2% above the 5-year average of 757 MMT. Total global supplies are forecast to reach 1,064 MMT, 1% less than last year.

Significantly lower production is expected in the United States, Canada, Russia, Kazakhstan and a slight drop in Australian production, all exporting countries.

Among wheat exporting countries, the United States, Canada, Russia, Australia, Kazakhstan and Australia saw wheat production decline for 2021. All wheat exporting countries now hold 18% of world wheat stocks.

USDA estimates 2021/22 world wheat ending stocks will reach 277 MMT, down 4% from last year and 2% less than the 5-year average. A closer look at stocks held by exporting countries reveals that USDA now expects exporters to control just 18% of world wheat stocks, including Black Sea exporters. When exporters hold so few stocks, a bullish market and volatility result.

Following are USDA estimates for selected exporting countries, except where noted.

United States

U. S. wheat production will total 44.8 MMT, down 10% from last year and 15% below the 5-year average;
Persistent, severe dryness significantly cut hard red spring (HRS), soft white (SW) and Northern durum production;
Total U.S. wheat exports will reach 23.8 MMT in 2021/22, 12% less than last year and 10% less than the 5-year average.

Canada

Canadian 2021/22 wheat production will reach 21.0 MMT, 40% lower than last year and 35% less than the 5-year average of 35.4 MMT;
Spring wheat production is projected to decrease 40% on the year to 15.3 MMT due to extended dry weather Agriculture and Agri-Food Canada (AAFC) reported;
According to Statistics Canada, Canadian durum production is forecast to be 3.5 MMT in 2021/22, 46% less than last year on significantly drier growing conditions;
Total Canadian wheat exports will decrease 43% from last year to 15.0 MMT, 36% less than the 5-year average.

Russia

Total 2021/22 Russian wheat production decreased 15% on the year to 72.5 MMT;
According to SG, Russian planted area was down 1%, and average Russian wheat yield decreased 10% from last year to 39.55 bu/acre;
The imposition of a government export tax has slowed international demand for Russian wheat;
Total Russian wheat exports will fall 9% from last year to 35.0 MMT, 2% less than the 5-year average of 35.6 MMT.

Ukraine

USDA estimates total Ukrainian wheat production rose 30% from 2020/21 to 33.0 MMT;
SG predicts the total Ukrainian average wheat yield was up 18% from last year to 66.7 bu/acre;
Total Ukrainian wheat exports will rise 39% from last year’s record to 23.5 MMT in 2021/22.

Australia

Australian wheat production will fall 5% on the year to 31.5 MMT, although this is still a large crop with significant exportable supplies;
Increased average yield was lower despite a 7% increase in harvested area of 34.1 million acres;
Total Australian exports will be 23.5 MMT, 0.5 MMT down from 2020/21.

European Union

Total European Union (EU) wheat production is up 11% on the year to 139.4 MMT;
SG estimates that total EU non-durum wheat will be 129.5 MMT, up 9% from last year;
Heavy rain during harvest in both France and Germany challenged milling wheat quality and, as a result, 65% of EU non-durum wheat, or 80.8 MMT, meets millable grade;
Total EU wheat exports will increase 20% on the year to 35.5 MMT, 20% above the 5-year average.

Argentina

Total Argentinian wheat production will rise 14% from last year to 20.0 MMT following good growing conditions this season;
Total Argentinian wheat exports are expected to increase to 13.5 MMT in 2021/22, 23% more than last year and 8% greater than the 5-year average.

USDA expects 2021/22 world wheat trade to fall slightly from last year’s record to 200 MMT. If realized, that would be 6% greater than the 5-year average of 189 MMT. Total global wheat use is forecast at 787 MMT in 2021/22.

According to USDA’s trade forecast, the United States will have a 12% market share in the world wheat trade at 23.8 MMT, in line with last year’s market share.

November 5, 2021/by Steve Mercer