Individually, or as a group, some keys to $5.00 plus wheat is world, foreign, Russian, the Ukraine, U.S. total, and U.S. hard red winter (HRW) wheat production and wheat quality. During the last two years, especially 2017/18, Russia has been the bear in the china shop.
In the early 2000s, Russia announced a goal to become a major wheat exporter. Wheat harvested acres increased from a 5-year average of 5.7 million acres, in 2005/06, to 6.7 million acres in 2017/18.
Russian wheat yields have increased from a 5-year average of 29 bushels per acre in 2005/06, to a 5-year average of 38 bushels per acre in 2017/18. Russia’s wheat yield for the 2017/18 marketing year was 47 bushels per acre.
Total Russian wheat production has increased from a 5-year average of 1.7 billion bushels in 2005/06, to a 5-year average of 2.4 billion bushels in 2017/18. Russia’s 2017/18 wheat production was 3.1 billion bushels.
In 2000/01, Russia’s 5-year average exports were 34 million bushels. Since the 2000/01 marketing year, annual Russian wheat exports have been essentially the same or increased in every year but two. During the 2017/18 wheat marketing year, Russian wheat exports are projected to be 1.3 billion bushels. Russia’s percentage of world wheat exports has increased from 0.8 percent in 2000/01 to a projected 20 percent in 2017/18.
Reports are that Russia may bring another 25 million acres into crop production. If, and how much will be planted to wheat is another question.
RUSSIA AND OKLAHOMA
It is interesting to note that during the last 15 years, when annual Russian wheat production was below the 5-year average (2010/11 and 2012/13), Oklahoma wheat prices increased almost $6 in 2010/11 and $3 in 2012/13.
Ukrainian wheat production and exports have increased about the same percentage as Russian production and exports. Between the 2000/01 and 2017/18 wheat marketing years, wheat production increased from a 5-year average of 519 million bushels to 938 million bushels.
The 5-year average annual Ukrainian wheat exports were 69 million bushels in 2000/01 compared to a 5-year average of 532 billion bushels in 2017/18.
Between the 2000/01 marketing year and 2017/18, world wheat exports increased from 3.8 billion bushels to 6.7 billion bushels. Russia and the Ukraine provided 1.7 billion of the world’s 2.9 billion bushel increase in exports.
Note that the world’s 2.9 billion bushel increase in exports included all classes of wheat. Russia and Ukraine export hard wheat. The fact is that Russia and the Ukraine’s increase in exports took exports from Argentina, Australia, Canada, and the U.S.
Between 2000/01 and 2017/18, U.S. wheat exports declined from 1.1 billion bushels to 1.0 billion bushels. U.S. HRW wheat exports declined from a 5-year average of 392 million bushels to 354 million bushels.
Hard wheat production and exports in and from Argentina, Australia, and Canada also have direct impact on U.S. HRW wheat prices. These three countries together produced 2.5 billion bushels of wheat compared to Russia and the Ukraine’s 4.1 billion bushels.
Reports are that Russia has a contract to ship about 22 million bushels of wheat this marketing year to Venezuela. Russian and Ukrainian domination of wheat exports to North Africa, western Asian countries, and South America increase the competition between Argentina, Australia, Canada, and the U.S.
The past five years’ success of Russian wheat production and exports supports the premise that relative low wheat prices were mostly caused by Russia being in the China shop.