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High US wheat prices drive exports to 44-year low

16-10-2015 | |
High US wheat prices drive exports to 44-year low
High US wheat prices drive exports to 44-year low

The 2015/16 marketing year exports (June-May) are forecast to drop to the lowest level since 1971/72 because of high relative grain prices, abundant competitor supplies, and a strong US dollar. This is concluded in the recently released Grains: World Markets and Trade report from the USDA.

International prices are being pressured downward by projected record global production and ample exportable supplies in Australia, Canada, EU, Kazakhstan, Russia, and Ukraine. Although US wheat export prices have fallen, the United States remains largely uncompetitive, even in some traditional markets. Currently, US FOB prices are about $35/MT above both French and Black Sea.

Some countries with export record

Russia is up 500,000 tons to 23.5 million and Ukraine is hiked 1.5 million tons to a record 15.0 million on higher production. Both countries show a faster pace of trade to date. The European Union is up 500,000 tons to 33.0 million on expectations that large supplies and competitive prices will boost exports in the second half of the season. EU and Black Sea exports have displaced the United States as the primary supplier in many major importing countries in North Africa and the Middle East based on low prices as well as freight and logistical advantages.

Market shifts

Furthermore, the United States has recently lost market share in some traditional markets and the trend is expected to continue. For example, Mexico has recently begun importing from France, Russia, and Ukraine. Compared to last year, US export commitments to Mexico are down 27%. Additionally, US market share in Nigeria declined from a five-year average of 76% to 43% last year as lower-priced Russian and EU supplies entered the market. US export commitments to Nigeria are down 38% from last year, further dimming prospects for market share recovery.

Source: USDA

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Koeleman
Emmy Koeleman Freelance editor





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