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WHEAT SCOOPS: World wheat market in flux

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The U.S. is projected to export 12% of the world’s wheat exports in the 2021/22 wheat marketing year.

There are indications that the U.S. percentage share of world wheat exports (and of most grains and oilseeds) will continue to decline. At the beginning of the 21st century (2000), the five-year average for U.S. wheat exports totaled 27% of the world’s exports. Black Sea exporters (Kazakhstan, Russia, and Ukraine) supplied 6% of the world’s wheat exports. 

Today’s market tells a different story. The U.S. is projected to export 12% of the world’s wheat exports in the 2021/22 wheat marketing year. Black Sea exporters are projected to export 34% of the world’s 2021/22 wheat exports.  

The U.S. percentage share of the world’s wheat exports may continue to decline. The good news, however, is that increasing world wheat exports may cause little change in the number of bushels that the U.S. exports.  

In 2000, the five-year average (1995-1999) Ukrainian wheat production was 560 million bushels. In 2021, Ukraine had increased its five-year average (2016 – 2020) wheat production to 980 million bushels.  

On July 1, 2021, the Ukraine opened the market for the purchase of farmland. Farmers can now purchase up to 100 hectares (247 acres) of farmland. The limit for farmland ownership is scheduled to increase to 1,000 hectares (2,471acres) on January 1, 2024.  

About 104 million acres of Ukraine’s farmland is regarded as the world’s most fertile soil. Land ownership is expected to bring investments into the farming community for production and infrastructure. A comparison to U.S. farmers is investments in owned land versus rented land. 

Since 2000, Ukraine farmers have increased grain and oilseed production from 10 million tonnes (tonne = 2,205 pounds) to nearly 100 million tonnes. With the change in land ownership, production is projected to reach 113 million tonnes by 2026.  

This wheat and other grain and oilseed production increase is expected to be placed on the export market. Of the Black Sea exporters over the last five-years, Ukraine has had the largest increase in wheat exports. 

While the EU-27 has always been a major player in the wheat export market, it ranked as the number two wheat exporter in the world for the 2013/14 marketing year. It was number one during the 2014/15, 2015/16 and 2019/20 marketing years. The EU is expected to continue to challenge Russia as the number one world wheat exporter. 

The Black Sea exporters have the biggest impact on hard red winter wheat prices. The EU-27 has the biggest impact on soft red winter wheat prices. This phenomenon is expected to continue.  

India (the third largest world wheat producer with 4 billion bushels, and the world’s second largest population of 1.4 billion) announced that changes will be made in their wheat marketing system. These changes are expected to increase wheat production, improve the quality, and reduce the massive losses of wheat in storage. India’s objective is to become a major wheat exporter.  

Brazil, Pakistan, and Romania have increased their wheat exports. While the exports have been relatively small, every bushel exported replaces a bushel that could be available for U.S. exports. This situation indicates that these countries are developing export systems and markets for the future. 

Some good news is that Russian wheat production may have reached a plateau. Three out of the last five years, Russian wheat production has been nearly 3.12 billion bushels. Russia’s five-year average production is 2.945 billion bushels.  

Russia’s wheat exports have averaged 1.4 billion bushels per year for the last five-years. The exports ranged from 1.267 billion bushels to 1.47 billion bushels.  

Changes have occurred and will continue to occur in the world wheat market. Oklahoma and Texas wheat producers should expect little impact on Oklahoma or Texas markets. 

TAGS: Outlook
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