For 2017/18, global production is raised to a new record based on larger crops in Argentina, Moldova, and Ukraine. Global trade, already a record, is forecast up from last month. Imports are forecast higher for Indonesia but lower for India and the European Union. Higher exports for Argentina, Canada, Pakistan and Russia more than offset lower forecasts for the United States and the European Union. The U.S. season-average farm price is unchanged at $4.60 per bushel.


Overall, U.S. wheat prices were up during January on concerns over drought conditions in Hard Red Winter (HRW) wheat areas. These strengthening prices make U.S. wheat less competitive globally in light of abundant competitor supplies. HRW surged $16/ton to $240, while Soft Red Winter (SRW) jumped $11/ton to $183. However, Soft White Winter (SWW) rose just $3/ton to $203, while Hard Red Spring (HRS) moved up only $1/ton to $278.

Indonesia Forecast as Largest Wheat Importer, Increasingly Supplied by the Black Sea

Indonesia is forecast to be the largest wheat importer for 2017/18 at 12.5 million metric tons, passing Egypt, which has traditionally been the top wheat importer. Indonesia wheat imports have been growing based on food and feed demand. Population and incomes are rising and diets are moving towards Western trends of pastries, instant noodles, and poultry. Even though there are feed wheat import restrictions, lower-priced milling wheat is still an affordable ingredient to process into feed rations.

Traditionally, Indonesia’s top four wheat suppliers have been – ranked from highest to lowest – Australia, Canada, Ukraine, and the United States. However, competitively priced black Sea wheat continues to put pressure on high-quality suppliers by offering wheat at a much lower price. So far in 2017/18, those top suppliers have changed to Ukraine, Australia, Russia, and Canada. The United States is now the fifth-largest exporter so far in 2017/18. To date (July-November 2017), imports from Ukraine have surpassed those of Australia, a long-time top supplier of wheat to Indonesia with market share of around 50 percent or more. Not only is Ukraine robbing Australia of its major market, Russia has now made an entrance into Indonesia.

Pace Analysis of U.S. Exports

This month, the U.S. export estimate (June-May Marketing Year) is lowered by 25 million bushels (680,000 MT) to 950 million bushels (about 25.9 million tons). Total commitments are down 11 percent. This is comprised of accumulated exports, which are only slightly lower than last year, and outstanding sales, which have sunk 25 percent. U.S. Trade Year (July-June) imports are lowered 1.0 million tons to 25.0 million.

The competitive position of U.S. wheat has changed in the last year. With both area and yield down from the previous year, the 2017/18 U.S. crop was the smallest in 15 years. U.S. supplies were abundant to start the marketing year (based on large carry-in supplies) and shipments took off quickly in the early months. However, the pace of exports has abated in recent months in light of growing international competition. Russia, with a record crop, is now forecast to be the world’s number one exporter. This has challenged U.S. market share in many markets globally. Even though EU exports are forecast down from last year, larger French shipments have trimmed U.S. market share in Morocco. Argentina has just harvested another massive crop and is shipping to Brazil. U.S. shipments to that market have slowed to a trickle following unusually large exports last year. Furthermore, the low-price Argentine supplies are challenging U.S. exports to other markets around the world, particularly Sub-Saharan Africa and Southeast Asia.

There have been a few bright spots for U.S. wheat this year. Iraq has purchased at least 600,000 tons of Hard Red Winter wheat (according to USDA export sales data), representing the largest purchase from the United States in at least 6 years. Last year, the United States did not export any wheat to Iraq. Key trading partners in East Asia such as Japan and South Korea continue to demand high-quality wheat, providing an outlet for U.S. supplies amid ample competition. Competition from Canada continues to be strong in East and Southeast Asia, but exports from Australia have been scarce after that crop was struck with drought. Overall, global supplies of wheat are abundant and the U.S. share of global trade is falling. However, consumption growth in developing countries around the world is pushing trade to record levels, providing a rising tide for wheat suppliers.