Black Sea Wheat Exports Projected at a Record

Once again, Black Sea countries' (Kazakhstan, Russia, and Ukraine) wheat exports are projected at a record in 2015/16. Russia accounts for the lion's share of trade and is forecast at a record, while Ukraine's exports are the second highest ever. Kazakhstan is up slightly from last year.

Russia's largest markets are in the Middle East and North Africa, particularly Egypt and Turkey. Ukraine's wheat is typically lower quality with a large percentage sold into feed markets in the EU, East Asia, and Southeast Asia. Food-quality wheat is also exported to Bangladesh and countries in North Africa. Kazakhstan's wheat is generally uncompetitive other than to neighboring countries in Iran and Central Asia because it is primarily land locked and transportation costs to ports can be prohibitive.

For 2015/16, production in the Middle East and several countries in North Africa is expected to rebound significantly from last year and import demand is projected to fall as a result. This will likely shift lower-priced Black Sea wheat into other markets. Both Russia and Ukraine have already expanded market share in several traditional U.S. markets such as Mexico and Nigeria. Russian and Ukrainian wheat market share in Nigeria has already grown from 1 to 17 percent in 2 years. Similarly for Mexico, Russia and Ukraine captured 12 percent of the market in 2014/15, compared to zero just 2 years ago. However, The United States is expected to offset these losses with an opportunity to expand exports in Asian and South American markets as a result of tightening supplies in both Argentina and Canada.

OVERVIEW

Global production in 2015/16 is raised to a record as larger crops in Kazakhstan, Russia, Turkey, and Ukraine more than offset lower production in Argentina, Canada, and the United States. Global trade is down slightly, highlighted by smaller imports for Iran and Libya, which more than offset increases for Morocco and Turkey. Exports are raised for Russia and Ukraine but cut for the United States and Canada. The season-average farm price is lowered from last month.

U.S. PRICES:

Prices for all U.S. wheat classes plummeted during the last month based on abundant competitor supplies, harvest pressure, and a strengthening dollar. Soft White Wheat (SWW) plunged $57/ton to $220. Hard Red Spring (HRS) fell $50/ton to $235, further pressured by prospects for a bumper crop. Hard Red Winter (HRW) dropped $36/ton to $218, while Soft Red Winter (SRW) was $35/ton lower at $208.

TRADE CHANGES IN 2015/16

Selected Exporters

  • Canada is lowered 1.5 million tons to 18.5 million on tightening exportable supplies.
  • Russia is boosted 1.0 million tons to a record 23.0 million with a larger crop.
  • Ukraine is up 500,000 tons to 13.0 million based on higher production.
  • United States is down 750,000 tons to 25.5 million based on intensified competition from Russia and Ukraine.

Selected Importers

  • Iran is cut 2.0 million tons to 2.5 million based on a recently established import duty.
  • Libya is down 300,000 tons to 1.4 million as domestic conflict is expected to continue to make trade difficult.
  • Morocco is raised 1.0 million tons to 2.8 million with the expectation that imports will pick up in the second half of the year after import duties are removed.
  • Turkey is up 300,000 tons to 3.8 million as import demand is expected to remain strong despite a record crop.
  • United States is lowered 150,000 tons to 3.4 million based on a large domestic spring wheat crop and tighter Canadian supplies.

TRADE CHANGES IN 2014/15

Selected Exporters- based on trade data

  • Australia is lowered 902,000 tons to 16.6 million.
  • Canada is boosted 648,000 tons to a record 24.8 million.
  • European Union is raised 500,000 tons to a record 35.2 million.
  • Kazakhstan is cut 498,000 tons to 5.5 million.
  • Russia is up 500,000 tons to a record 22.7 million.

Selected Importers- based on trade data

  • Iran is lowered 300,000 tons to 5.2 million.
  • Philippines is raised 300,000 tons to a record 5.0 million.