Russia is Projected to Become World's Largest Wheat Exporter

For the third consecutive year, Russia's wheat exports are projected at a record. Furthermore, Russia is forecast to be the world's largest exporter for the first time ever. The upward trajectory in exports is a function of expanding exportable supplies driven by four straight years of production growth and relatively flat domestic consumption. However, the 30-million-ton export estimate for 2016/17 assumes ideal conditions such as optimal weather for loading, effective management of the movement of the grain through ports, and steady supplies throughout the year.

Russia's primary competitors, the EU and Ukraine, both have tighter supplies in 2016/17 compared to last year. EU exports are slashed this month as a result of a poor crop in France, the largest EU exporter. Russia has freight and logistical advantages to growth markets in North Africa, Sub-Saharan Africa and the Middle East and can easily grow its market share in these regions to replace a portion of the curtailed EU exports.

The United States lost market share in Western Hemisphere countries to both the EU and Russia in recent years. As Russia replaces some EU wheat in markets in North Africa, Sub-Saharan Africa and the Middle East, the United States will likely expand exports to its traditional markets.

OVERVIEW

Global production in 2016/17 is raised to a new record despite a sharp reduction in the EU. A record crop in Russia as well as larger crops in Australia, Canada, Kazakhstan, Ukraine, and the United States more than offset the significant decline in the EU crop and a slight reduction in Argentina. Global trade is up month-to-month, but remains fractionally below the previous year's record. The upward revision is based upon larger projected imports for the EU and growing demand across much of Asia and Africa. U.S. imports are cut slightly due to a larger crop. Expansion of exports for Australia, Canada, Kazakhstan, Russia, Ukraine, and the United States are more than offset by cuts to the EU and Argentina. The U.S. season-average farm price is lowered 10 cents to $3.70 per bushel.

For 2015/16, global trade is revised up to a new record.

U.S. PRICES:

Prices for most wheat classes were volatile in July, with the exception of soft white wheat (SWW). Poor crop conditions in France, the primary exporter in the EU, supported prices over the last several weeks after the June price plunge. Overall, HRW prices gained $10 to $192/ton. Soft Red Winter (SRW) prices settled $5 higher at $182/ton. Hard Red Spring (HRS) prices rose $7 to $233/ton. SWW fell $7 to $202/ton.

TRADE CHANGES IN 2016/17

Selected Exporters

  • Argentina is down 1.0 million tons to 8.0 million due to tighter old crop supplies and lower-than-expected new crop planting.
  • Australia is raised 1.0 million tons to 18.5 million based on a larger crop. It is expected that Australia will regain market share in Southeast Asia as supplies tighten in Argentina.
  • Canada is up 1.0 million tons to 21.0 million due to higher production.
  • EU is slashed 7.0 million tons to 27.0 million on a significant cut in the French crop, thus limiting exportable supplies. France is the largest producer and exporter in the EU.
  • Kazakhstan is raised 1.0 million tons to 8.0 million due to a larger crop.
  • Russia is boosted 4.5 million tons to a record 30.0 million based on a record crop and reduced competition from the EU.
  • Ukraine is up 2.0 million tons to 14.5 million as the result of a bigger crop and demand for feed-quality wheat in East and Southeast Asia.
  • United States is up 500,000 tons to 25.5 million on growing price competitiveness.

Selected Importers

  • Afghanistan is raised 300,000 tons to 2.7 million as the result of increased shipments anticipated from Central Asia.
  • EU is up 500,000 tons to 6.0 million to reflect the steep drop in domestic production.
  • United States is trimmed 150,000 tons to 3.1 million as a result of a larger crop.

TRADE CHANGES IN 2015/16

Selected Exporters - based on trade data

  • Australia is reduced 418,000 tons to a final 15.8 million.
  • EU is raised 800,000 tons to 33.8 million.
  • Russia is boosted 500,000 tons to 25.5 million.
  • United States is up 106,000 tons to a final 21.856 million

Selected Importers - based on trade data

  • Afghanistan is raised 300,000 tons to 2.7 million.
  • Egypt is up 400,000 tons to 11.9 million.
  • Ethiopia is cut 500,000 tons to 2.6 million.
  • Indonesia is boosted 300,000 tons to a record 9.9 million.
  • The Philippines is elevated 300,000 tons to 4.8 million.
  • United States is down 44,000 tons to a final 3.056 million.