Drop in wheat exports in the United States

The decline in the United States wheat exports continues in a severe crisis. The US Wheat Associates (USW) website reports a decline in exportable supply through October 2022.

The U.S. expects to close the year with an export of 33.5 million metric tons. This is 7% less than what was exported between 2021 and early 2022.

The situation becomes more complicated if you look at it in perspective, because compared to the last five years, the US has produced 28% less.

The factors that precipitated this fall

The factors behind this drop are multiple. Starting with bad weather, rail strikes and global pressure on the grain industry due to shortages caused by the war between Ukraine and Russia. Two countries that are in the wheat business.

As of September 2022, wheat production was estimated at 44.9 million metric tons. A low projection, if we remember that the average of the last five years was 48.8 million metric tons.

Considering that Ukraine and Russia were an important part of the wheat industry. It is useful to know how the wheat market works in the world.

Ranking of wheat producers selling wheat to the world

According to the report made by the United States Department of Agriculture (USDA) in 2016, on the ranking of wheat producers in the world panorama, the European Union, is the main producer.

In this ranking, it is followed by Russia, Canada and, in fourth place, the United States. Ukraine, Australia and Argentina follow.

The EU exported between 33 million and 9 million tonnes of wheat to countries such as Algeria, Egypt, Iran, Jordan and Turkey.

But things have changed.  Since the war with Ukraine began, the wheat market has been hit hard because Ukraine is a major supplier to Europe and the United States. 

In the past, the U.S. had to buy wheat from Canada and other leading countries to meet its domestic demand. Today, the situation is more tense because of this agricultural crisis. 

In late October, the Russian government headed by Vladimir Putin suspended wheat exports to Ukraine, suspecting a boycott in the landing zones. At this point in the year, Putin is not budging on the war.

How will lower wheat exports affect agricultural competition?

According to the latest report from US Wheat Associates, in June 2022, the price of a bushel (25.4 kilos) of wheat reached $6.62. That's a record for the year. And things are not getting any better. These are the increases through November 4, 2022:

• Red wheat rose 18 cents to $8.74/bu.
• Hard red winter wheat (HRW) rose 28 cents to $9.53/bu.
• MGE (HRS) rose 9 cents to close at $9.54/bu.
• CBOT corn rose 1 cent to $6.81/bu.
• CBOT soybeans will rise 64 cents to $14.51/bu.

But why has the fall in wheat exports worsened? The latest blow to the crisis: in early November 2022, Russia announced its withdrawal from the "Black Sea Grain" agreement, but quickly retracted, causing prices to continue to rise.

And there is growing concern in the U.S. that it cannot meet demand. And we already know that the Americans are currently unable to meet even their domestic demand.

The crisis has affected the sector to such an extent that the FAO has had to make a statement about it and has requested the purchase of this product from South American countries. We can only wait for things to change for the better.