High U.S. Wheat Prices Drive Exports to 44-Year Low

U.S. 2015/16 marketing year exports (June-May) are forecast to drop to the lowest level since 1971/72 because of high relative prices, abundant competitor supplies, and a strong U.S. dollar. International prices are being pressured downward by projected record global production and ample exportable supplies in Australia, Canada, EU, Kazakhstan, Russia, and Ukraine. Although U.S. wheat export prices have fallen, the United States remains largely uncompetitive, even in some traditional markets. Currently, U.S. FOB prices are about $35/MT above both French and Black Sea.

Russian and Ukrainian exports are forecast at record levels. EU exports are projected to be the second highest on record. 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. 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, U.S. export commitments to Mexico are down 27%. Additionally, U.S. 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. U.S. export commitments to Nigeria are down 38% from last year, further dimming prospects for market share recovery.


Global production in 2015/16 is raised to a new record driven by larger crops in Australia, Canada, the EU, and Ukraine, and despite smaller production in the United States and Argentina. Global trade is raised, primarily with imports for China, Iran, and Syria, more than offsetting a cut in Brazil. Exports are up for Australia, Canada, the EU, Kazakhstan, Russia, and Ukraine, but cut for Argentina and the United States. Marketing year U.S. exports are projected at a 44-year low. The season-average farm price forecast is unchanged from last month with a large share of 2015/16 production already marketed during the summer months.


Prices for all U.S. wheat classes rose in the last month, making exports less competitive. Concerns over dry planting conditions in the U.S. and Black Sea, along with a lower U.S. production estimate, are putting upward pressure on prices. Hard Red Spring (HRS) rose $13/ton to $249, while Hard Red Winter (HRW) edged just $7/ton higher to $222. Soft Red Winter (SRW) climbed $16/ton higher to $218 while Soft White Wheat (SWW) saw the weakest price performance, rising just $5/ton to $220.


Selected Exporters

  • Argentina is down 500,000 tons to 5.5 million based on a smaller forecast crop.
  • Australia is boosted 500,000 tons to 18.5 million on a larger forecast crop.
  • Canada is raised 1.0 million tons to 19.5 million on higher production.
  • 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.
  • Kazakhstan is raised 500,000 tons to 6.5 million on larger exportable supplies.
  • Russia is up 500,000 tons to 23.5 million on a faster pace of trade to date.
  • Ukraine is hiked 1.5 million tons to a record 15.0 million on higher production and a faster pace of trade to date.
  • United States is down 2.0 million tons to 23.0 million based on weak shipments and slow sales. The marketing year estimate of 23.1 million tons is projected at a 44-year low.

Selected Importers

  • Brazil is down 300,000 tons to 6.7 million based on currency weakness and lower consumption.
  • China is up 300,000 tons to 2.5 million on a higher-than-expected pace of imports to date.
  • Iran is hiked 2.0 million tons to 4.5 million because the government unexpectedly eliminated import duties that it implemented just two months ago.
  • Syria doubled to 1.0 million on reports of difficulty accessing domestic stocks.