Look at a line graph that tracks freight markets over the last two years and you may mistake it for the very waves the vessels traverse on the open ocean. Up and down the vessel goes, and so have the rates.

The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal and iron ore, hit a 13-year high on October 7 at 5,650, yet three weeks later, it climbed down 28% to 4,056 on October 27.

Disruptions and More

The effects of COVID-19 have turned the traditional flow of sea commerce upside down. And as economies reemerge from the pandemic-induced lull, logistic obstacles have abounded. “Global Supply-Chain Problems Escalate” and “Cargo Piles Up at Ports” are just two of the headlines outlining the shipping industry’s challenges. Disruptions to the supply chain, port congestion, and logistical challenges all add to the run-up in freight markets.

Grains, including wheat, are traditionally shipped using bulk carriers like Panamax, Handymax and Capesize vessels that contain large cargo holds to segregate grains. Cargo ships, the more familiar vessel for the trans-ocean shipping of retail items, only carry small volumes of grain. However, as extraordinary times created the need for more extraordinary efforts, the massive U.S. retailer Walmart recently chartered a dry bulk cargo ship to carry merchandise to circumvent global supply chain disruptions. Other retailers may do the same as the holiday season approaches.

Idled Vessels

That would not be a bargain because 16% of the world’s dry bulk fleet is waiting to unload at various ports around the world, with 6% of those vessels waiting at Chinese ports. The inefficiencies caused by loaded vessels idling outside ports translate directly to tighter supply despite higher demand and, thus, higher prices. Dry bulk shipping rates were below $20,000 per day last January but rates, led by Capesize vessels, hit $85,000 per day in September. Grain buyers still must ship wheat and pay the higher prices, pushing up all rates across dry bulk carriers.

Global import for grain has also increased year-over-year. For example, China’s demand for grains has equated to around 25% of worldwide demand. Looking back, in the mid-2000s, the number of dry bulk carriers outweighed the demand for such vessels. However, an economic boom in China starting around 2006 saturated the dry bulk market leading to greater demand and a soaring BDI. Eventually, shipping companies added to their fleets, and the added capacity helped freight markets to stabilize. Then the global financial crisis reduced the demand for such vessels and slowed shipbuilding. Now a new spike, starting in 2020, has driven demand up again and daily rates for dry bulk shipping. The nearby market remains high while the forward market is much lower, creating a significant inverse. Exporters who need to ship now must pay the higher prices.

Freight Markets Export Elevator


Importers in South Korea, the fifth-largest U.S. wheat customer, based on a 5-year average, has seen freight rates double from US$40 per metric ton (MT) in 2020 to around US$80 per MT dollars today, said C.Y. Kang, Country Director for U.S. Wheat Associates (USW) based in Seoul. Kang also noted that the BDI Index in 2020 averaged 1,064 while this year it has averaged 2,941, a 176% increase. Egypt, the world’s largest wheat importer, has suspended the 15% price advantage it offered the state shipping line as GASC, the Egyptian state commodities buyer, tries to find ways to lower the overall cost of wheat imports.

High oil prices are also keeping freight rates elevated. On Tuesday, oil futures hit their highest levels since 2014 but started to slump Thursday, hitting their lowest level in two weeks at $80.58 as U.S. crude inventories rose more than expected. One market analyst said that energy prices are unlikely to weaken for the remainder of the year as supply remains restrained, but demand returns to the 5-year average. Oil sold for around $15 per barrel in April 2020 versus today, a 431% increase.

Seeing the Top?

Jay O’Neil, a commodities consultant, has outlined all today’s obstacles in the export freight supply chain in a video presentation that will be available to U.S. wheat customers in early November. On top of long lines at ports, there is a shortage of vessels, containers, skilled labor at ports, warehouse workers, a 30% shortage of truck drivers, railroad cars and even chassis to attach containers to train cars. In his presentation, O’Neil says that despite the logistical mess, which could extend into mid-2022, the dry bulk market is likely to have hit its top.

As these circumstances change globally, logistical headaches may ease as more workers return and more consistent patterns resume. For now, though, the tight supply of vessels and the consistent appetite for grains is helping keep the global dry bulk business at historic levels.

Stay up to date on U.S. wheat market information at

By Michael Anderson, USW Market Analyst


A surprising drop in USDA’s estimate of U.S. wheat production in the September 30 Small Grains Summary Report helped support the trend of higher U.S. and world wheat prices. The recent sustained run-up in prices calls to mind another (and even more challenging) bull wheat market beginning in marketing year 2006/07 and continuing through 2007/08.

In March 2008, then U.S. Wheat Associates (USW) Senior Market Analyst Joe Sowers wrote in Wheat Letter that 2007/08 had been a remarkable year. He noted that “unforeseen weather calamities around the globe and major wheat exporters protecting supplies for domestic use” helped push stocks to their lowest level in 60 years and drove prices to record highs at the time. That supply shock followed a period in which wheat use outpaced production in 7 of the prior 10 years. Read Sowers’ article here.

Lower world wheat supplies and some key exporters still trying to hold down domestic food prices are also fueling the current market rally.

Today’s Supply Issues

The challenges reducing worldwide wheat production and global stocks are well known at this point. The most recent Small Grains Report listed all wheat total production 10% below 2020 at 44.9 MMT (1.65 billion bushels). The report also fell short of average industry estimates and the NASS August projections. Despite a 5% increase in planted area in 2021 compared to 2020 and harvested area being up 1%, dry conditions ultimately trimmed total production. Winter wheat production was up 9% compared to 2020 while spring wheat bushels were down 44% compared to 2020, their lowest level since 1988. Durum wheat was down 46%.

The latest USDA World Agricultural Supply and Demand Estimates (WASDE) report released October 12 also signaled lower production. USDA cut world wheat production by 4.4 MMT and trimmed ending stocks by 6 MMT. The report briefly sent U.S. wheat futures higher (followed on October 13 by managed money profit-taking). The report showed that for the second year in a row, ending stocks have declined following a long period of sustained annual growth. Compared to the highest ending stocks on record in 2019/20, ending stocks this year are down more than 17 MMT. USDA now projects 2021/22 world use to outpace production by 11.0 MMT — while global wheat demand continues to set new records.

Drought conditions in Canada, the United States and Russia, along with quality issues in the European Union, have cut exportable wheat supplies.

Intervention Raises Import Cost

As it did in 2007/08, government intervention continues to hurt the world’s wheat importers. Russia’s export tax, which keeps going up, has helped increase global wheat prices. Russia’s agriculture ministry also laid out plans for an export quota beginning February 15 and lasting through the remainder of the 2021/22 season ending June 30, 2022. In Ukraine, which had better-growing conditions than neighboring Russia and is on an export pace well ahead of last year, the government and grain association are still at odds over what to do with surplus wheat. Kazakhstan was the first to announce plans to limit wheat exports but in early September the Kazak president called that idea “premature.”

Wheat futures prices 2006 to 2021

The bull wheat market from 2006 to 2008, seen here in U.S. wheat futures prices, was fueled by sharp drops in global wheat supplies from bad weather and intervention by some exporting countries’ governments. Supply and intervention also helped push prices up in late 2010. That pattern emerged again in 2020 as the market reacted to shorter supply and continued, trade-distorting government policies.

Differences and New Challenges

Will the current pressure on global wheat supplies continue? That remains to be seen. Higher prices do tend to stimulate an increase in planted area. Wheat varieties around the world are much improved from 13 years ago in their ability to perform better under production stresses. Farmers in every major exporting country are managing their crops better and in more sustainable ways.

New circumstances have added concerns for wheat importers. The ongoing challenges of the COVID-19 pandemic, including its contribution to dramatically rising freight costs with record recent gains in the Baltic Index, are unprecedented.

The critical consideration for wheat buyers and flour users today, as it was in 2007/08 when Joe Sowers wrote about that remarkable year, is whether they can rely on good weather to increase supplies and reduce world wheat prices for the rest of 2021/22 and into 2022/23.

By Michael Anderson, USW Market Analyst


The U.S. farm families who produce wheat and the entire U.S. supply chain remain committed to operating a transparent and open market. How export prices are discovered is one of the reasons why our overseas customers know they can depend on the integrity of our supply chain, the quality of U.S. wheat and our unmatched reliability as a supplier. U.S. wheat export prices are discovered openly through futures exchanges and the cost to move wheat to the loading equipment at export elevators, and prices are always available to customers. In addition, private exporters use risk management tools to honor sales contract prices often made months in advance of vessel loading. However, we recognize that navigating U.S. export markets and making purchasing decisions is a complicated, risk-involved process, especially when wheat customers have so many options for sourcing their supplies. For many years, U.S. Wheat Associates (USW) has helped wheat buyers navigate this process and discover export prices by publishing its weekly wheat price report on its website.

What is the USW Price Report?

The weekly U.S. wheat export prices as reported by USW each Friday after wheat futures markets close are compiled through research from numerous market sources, including U.S. wheat exporters of all classes from various U.S. ports. The prices reported the Free on Board (FOB) estimated value of number two grade and the proteins indicated. They are not intended to represent offers nor should U.S. wheat importers rely on them as such. Additional factors may alter these prices significantly* and USW recommends that buyers maintain regular contact with suppliers to receive offers representing their requirements.

In addition to estimated prices of U.S. wheat by class (not including durum nor hard white wheat), protein level, export region and delivery period, Price Report also includes weekly futures prices select ocean rates and currency exchange rates, charts that provide context and market highlights that help buyers understand the market more thoroughly.

How is the USW Price Report assembled?

The USW Market Analyst begins by surveying export wheat company representatives trading the U.S. wheat classes from the Gulf, Pacific Northwest (PNW) and Great Lakes. The traders provide the week’s current basis, which is the difference between cash price offered for a commodity at a specific location and a futures contract price for that commodity. The basis is then added to the Friday closing futures price from the exchange on which the wheat class is traded: hard red spring (HRS) on the Minneapolis Grains Exchange (MGEX); hard red winter (HRW) on the Kansas City Board of Trade (KCBT); and soft red winter (SRW) on the Chicago Board of Trade (CBOT). PNW soft white (SW) and Western White correspond to the CBOT futures price. Expressed as an equation: Export Basis + Futures Price = Cash Price (FOB).

How to Read the Price Report

Posted below is the front page of a past Price Report, which has been color-coded to display the information featured in the report. The delivery month is in chronological order and details forward pricing. Each month also includes wheat futures month codes as follows: H=March; K=May; N=July; U=September; Z=December. The futures month codes are combined with the calendar year to show the futures price reference and delivery month.

For example, in the column Nov (Z21), “Nov” represents November delivery and Z21 represents the November delivery price based on the December 2021 wheat futures contract. To calculate the estimated export price of wheat in November, the November export basis, quoted in cents, in red, is added to the FOB price in green. The total is the FOB price, in purple.

Color coded Price Report

More on Export Basis

Export basis can move up or down, affecting the export price of wheat, due to a variety of these factors. Some factors affecting export basis include transportation costs (trucking, barge, and rail rates), storage and elevation costs at export terminals, supply and customer demand, quality specifications, handling costs and profit margins, among other factors. Wheat export prices are also directly tied to movements in the futures market. In addition, export basis varies by exporting company, so USW Price Report basis prices represent an average of the shared quotes from traders.

Additional Resources in Each USW Price Report

Ocean Freight rates are included on the second page of each USW Price Report. Rates come from industry representatives each week and show many common vessel sizes and routes. A variety of charts are included in the USW Price Report to help customers visualize price trends. In addition, a Daily Futures Settlement Prices chart shows a week-on-week snapshot of the futures exchange.

USW Price Report Charts Page

Finally, on the last page of the Price Report, highlights that we have gleaned from several sources on potential market factors in the global wheat market help give meaning to price movements for the week. The futures highlight explains fundamental and technical factors affecting futures movement week-over-week. Export basis details the international and domestic conditions affecting basis movement by class and export region week-over-week. Highlights also include important information published by the USDA including crop progress and acreage, commercial U.S. export sales, U.S. Drought Monitor and foreign wheat marketing and production updates.

In the video below, a past USW Market Analyst shares a more detailed review of the USW Price Report, how it is assembled and how to understand and utilize the data.

An open, transparent pricing system is essential to a functioning global market and USW wants its customers to have as much information and tools available to them when making wheat purchasing decisions. Buyers should contact their suppliers to obtain prices based on their specific requirements and contract terms.

The weekly USW Price Report can be viewed here. Sign up to receive the report directly to your inbox every Friday by subscribing to the weekly USW Price Report email.

*These factors may include: (1) payment terms (differing from cash against documents which are the terms used in the U.S. Wheat Associates price report); (2) various quality factors, and method of quality certification; (3) loading terms (USW prices represent Free on Board and do not include loading rate guarantees, stevedoring costs or other elevator tariff charges); (4) different delivery periods than indicated in monthly prices reported by U. S. Wheat Associates.

By Michael Anderson, USW Market Analyst


On Tuesday, Sept. 14, 2021, U.S wheat futures gained as much as 2% after key wheat-producing nations lowered their production outlooks. With harvest nearly wrapped up in the Northern Hemisphere, the most recent USDA Supply & Demand (WASDE) report brought an updated look at key exporting countries and regions.

USDA currently expects 2021/22 world exportable wheat supplies will be about 221 MMT, down from an estimated 231 MMT in 2020/21.

United States

The 2021 harvest is virtually complete with only a few pockets of hard red spring (HRS) remaining to be harvested and about 10% of the durum crop still in the field. Except for soft red winter (SRW), all U.S. wheat classes saw lower production compared to 2020/21. Proteins were all higher than the 5-year average and growing regions that saw longer periods of hot, dry weather, including the Pacific Northwest (PNW) soft white (SW) region and the state of North Dakota, where the bulk of HRS and durum wheat is grown, saw protein averages reach as much as 1.8 points above the 5-year average.

USDA forecasts U.S. wheat production in 2020/21 will total 46.2 MMT, down 7% compared to 2020/21 following lower than average yields for SW, HRS and durum. Total U.S. wheat exports are expected to reach 23.8 MMT, which is down significantly from last year.

Click here to read more about the 2021 U.S. wheat harvest.

U.S. wheat supply and demand

Source: USDA, September 2021


After a record-setting 2020 wheat harvest, Canada’s total 2021 wheat crop is forecast to drop sharply. Stats Canada, in its latest report released this month, used satellite images and other data to estimate production. The Western Canadian spring wheat crop is expected to be 15.3 MMT, a 41% drop compared to last year, which would be the smallest spring wheat crop since 2007. Total wheat production is projected at 21.7 MMT, down 38% compared to 2020/21. The decline in production is blamed on hot, dry weather that persisted throughout the growing season.

Canadian wheat supply and demend

Source: USDA, September 2021

European Union (EU)

France’s farm ministry lowered its estimate for 2021 soft (non-durum) wheat by more than 600,000 MT this month following a wet summer. Despite the reduction, the ministry emphasized that the forecast was 24% higher than last year’s harvest and 8% higher than the 5-year average. Strategié Grains noted that wet weather towards the end of the growing cycle led to disappointing yields in France and Germany, while hot, dry weather early in the summer challenged the wheat crop in Poland and the Baltics. On the other hand, Romania and Bulgaria had record-setting yields this year. According to Romania’s agriculture minister, yields there were 5.34 MT/ha (79.4 bu/ac). Bulgarian wheat production was up 51% compared to last year reported AgriCensus. Despite the increased production, persistent rain caused concern about milling quality with decreased test weight and falling number reported.

EU wheat supply and demand

Source: USDA, September 2021


The latest USDA WASDE report put Russian wheat production at 72.5 MMT, 12.5 MMT less than the USDA’s original forecast of 85.0 MMT. Russia’s agriculture ministry reported 69.3 MMT of wheat harvested as of Sept. 9 on 23.7 million hectares (58.5 million acres), 12% less than the same time last year.

Russian wheat supply and demand

Source: USDA, September 2021


An autumn drought last year reduced Ukraine’s winter grains planted area, but officials said farmers plan to plant 10% more winter wheat this year. The agriculture ministry reported the wheat harvest complete with 32.8 MMT in the bin with a yield of 4.66 MT/ha (69.20 bu/ac). The current wheat harvest is a record for the Black Sea exporter, and yields are 22% higher than last year’s reported AgriCensus. In 2021, Ukraine’s grain exports could reach 80.6 MMT according to their agriculture ministry. The latest WASDE report forecasts Ukrainian wheat exports to be 23.5 MMT, up significantly from last year.


Australia’s Bureau of Agricultural and Resource Economics (ABARES) reported “exceptionally favorable” growing conditions for the second year in a row and adjusted its wheat forecast up 17% to 32.63 MMT. The latest WASDE report forecast Australian wheat production at 31.5 MMT, up 1.5 MMT compared to the August report.


The Buenos Aires Grains Exchange (BAGE) reported 79% of all the wheat planted area had normal or excellent moisture levels. BAGE emphasized that Argentina’s wheat crop improved significantly following rainfall in the central and southern planted areas. The USDA left its production forecast unchanged from last month at 20.5 MMT.

By Michael Anderson, USW Market Analyst


An August 2021 survey of 737 farmers across the United States conducted in late July by Farm Progress Publications suggests that wheat, corn and soybean planted area will be up for 2022.

Jacqueline Holland, writing in, said the surveyed farmers estimated they will plant a total of 46.7 million acres of wheat. Farm Progress also noted recently that, if realized, 46.7 million acres of wheat would exceed “the smallest wheat acreage in history in 2020…by an astounding 5.4 million acres.”

USDA’s National Agricultural Statistics Service (NASS) will release it’s annual Small Grains Summary report including wheat acreage, area planted and harvested, yield and production on Sept. 30, 2021.

Even with a potentially large 2022 U.S. wheat crop, the Farm Progress survey showed why wheat stocks could actually decline slightly through the next marketing year. The publication said it estimates 2022/23 U.S. wheat usage at just under 58 million metric tons (2.13 billion bushels) in part because of “higher export targets.” That would be the highest usage rate since 2016/17 and “consume all new production that comes online” in 2022 and, if realized, create the lowest stock-to-use percentage since 2013/14.

The image shows a table giving estimated acres farmers expect to plant as of August 2021.

The planted area estimate of 94.3 million acres of corn and 87.6 million acres of soybeans from the survey would mean the combined total planted area with wheat would be the third largest combined acreage on record.

Where Will Those Acres Come From?

Ms. Holland suggested that farmers in the Plains have some flexibility to change their crop rotations compared to farmers in the Eastern U.S. Corn Belt. She added that cattle herd numbers are down which could allow a shift from forage crops. And double-cropping wheat after soybeans remains a profitable choice.

The writer goes on to describe reasons why these rather bullish estimates may be tempered. For wheat, as for corn and soybeans, the estimates from the survey assume optimal weather conditions. Too many U.S. wheat farmers know optimal conditions are rare. In fact, the threat of continued drought through the winter wheat planting season will have an impact on seeded area for 2022.

China’s Influence

The author also noted that China will continue its outsized influence on global wheat, corn and soy supply and demand. Export demand levels could grow if China’s livestock feed demand grows and that will affect U.S. grain production profitability.

“Global livestock rations will likely waver between wheat and corn depending on market prices,” Ms. Holland wrote. “Any potential usage shifts could have significant impacts on pricing and acreage allocations in the 2022/23 marketing year.”

The rising cost of production inputs may also come into play as U.S. farmers make their cropping plans and weigh heavier on decisions should crop prices start to fall back.

Wheat Will Compete

Ms. Holland’s final point about the survey estimates is important for the world’s wheat buyers.

“…With winter wheat sowings just around the corner and wheat futures trading at lucrative prices,” she wrote, “expect wheat to be a strong competitor against corn and soybean in the 2022 acreage battle.

By Michael Anderson, USW Market Analyst


USDA’s August 2021 World Supply & Demand Estimates (WASDE) report trimmed expected global wheat production, reduced the global wheat stocks-to-use ratio and created a supply shock market rally. USDA dropped total production to 777 million metric tons (MMT), 15.4 MMT less than its July forecast, citing major weather problems in Russia, Canada and the United States. Global wheat use forecast for 2021/22 is 787 MMT.

Wheat supply is of course a major variable in global price discovery and is related to the “stocks-to-use” ratio, representing the level of carryover stocks as a percentage of the total demand or use. These new USDA estimates reduced the global stocks-to-use forecast to 35%, which, if realized will be its lowest since 2016/17. If China’s massive wheat stocks are removed from the calculation (China exports very little wheat), the stocks-to-use estimate is 21.6%.

A chart showing global wheat stocks-to-use ratios for last 10 years.

Global wheat stocks-to-use percentage has declined after an eight-year run-up. Source: USDA August 2021 WASDE and USW Supply and Demand Report.

Guy Allen, Senior Economist at IGP Institute at Kansas State University, points out that an important consideration when looking at the wheat stocks-to-use ratio is to compare the ratio to corn as well. While wheat is primarily a food grain, it can compete with feed grains given relative prices or regional shortages. The current global stocks-to-use ratio forecast for corn is 24%, also lower than its ratio the past few years.

Supply Shock Source

How did the world get to this point? Global use continues to set records each year and ending stocks declined in 2020/21 and again this marketing year. It is major exporting countries taking the supply hit this year. In fact, Stratégie Grains, a French grains analyst, said that the stocks-to-use ratio for major exporting countries could fall to its second-lowest level on record after 2012/13.

USDA slashed Russia’s production forecast 12.5 MMT to 72.5 MMT. The Russian statistical agency, Rosstat, reduced the number of winter wheat acres harvested while the Ministry of Agriculture reported lower yields. In Canada, the Prairie Provinces saw production decline after persistent drought slashed yields by 24% compared to the 5-year average. USDA reduced its Canadian production forecast by 32% compared to 2020/21 to 24.0 MMT. If realized, it will be the smallest Canadian wheat crop since 2010/11.

U.S. Wheat Balance Sheet

USDA also lowered U.S. production 7% compared to last year as drought has affected several wheat-growing areas including the Northern Plains states and the Pacific Northwest (PNW). The total stocks-to-use ratio in the U.S. is forecast at 30% for 2021/22, down 10% from 2020/21’s total stocks-to-use ratio of 40%. This is not surprising considering that all wheat classes started with lower beginning stocks in 2021/22 and of the five wheat classes tracked by the USDA in its monthly report all wheat classes except for hard red winter (HRW) and soft red winter (SRW) are expected to have lower ending stocks. Even with the higher production in HRW and SRW, the stocks-to-use ratio is forecast lower for all wheat classes in 2021/22. U.S. white wheat, primarily soft white grown in the Pacific Northwest (PNW) is the most affected with 16% stocks-to-use compared to 21% last year.

U.S. wheat stocks-to-use data for August 2021

USDA now expects the 2021/22 stocks-to-use ratio for each major U.S. wheat class to decline. Source: USDA August 2021 WASDE and USW Supply and Demand Report.

With harvest well underway for many classes (HRS, S.W.) and complete for HRW and SRW the market is getting a better indication of how accurate the USDA’s production number is. The September WASDE report will account for more known production in the United States and other major exporting countries. USDA will also publish its quarterly Grain Stocks report at the end of September that will also add to our understanding of how much wheat is available.

By USW Market Analyst Michael Anderson


The effects of weather on the 2021/22 global wheat crop have sparked a run-up in prices even as harvest progresses in the Northern Hemisphere. Given the market’s supply concerns, U.S. Wheat Associates (USW) gathered information from major wheat exporting countries to see what may affect USDA’s next estimates of world supply and demand due on Aug. 12.

Both USDA and the International Grain Council (IGC) still expect 2021/22 global wheat crop production to reach a record level. USDA’s July estimate of 792.4 million metric tons (MMT) was down 2.0 MMT from June. IGC trimmed its latest forecasts by about 1.0 MMT to 788 MMT.

Hot, dry weather in the northern and Pacific Northwest (PNW) regions of the United States and, recently, in Canada, has attracted much of the market’s attention.

United States

The Wheat Quality Council Hard Spring and Durum Tour estimated this year’s hard red spring (HRS/DNS) yield average at 29.1 bushels per acre, compared to 43.1 bushels per acre in 2019. Even so, the tour’s consensus is HRW/DNS protein and kernel size will be very good. U.S. northern durum and soft white (SW) wheat yields are also expected to be down significantly. On the other hand, hard red winter (HRW) and soft red winter (SRW) average yields and production are expected to be higher for 2021/22. In addition, Kansas-based HRW grower Brian Linin, noted, “We put a lot into this crop. Protein [levels] have been awesome.” Follow USW’s weekly Harvest Report for more information.

HRS wheat rows showing effect of drought in North Dakota

Drought in the Northern U.S. Plains could cut the 2021/22 HRS/DNS yield average by one-third, but industry experts expect protein and kernel quality will be good.


Canada, the largest spring wheat producer, has experienced record temperature and drought in portions of its Prairie Provinces. Agriculture and Agri-Food Canada (AAFC) cut its most recent forecast of spring wheat production by 11% to 25.6 MMT, down sharply from previous estimates. That agency also reduced spring wheat export forecasts to 17.7 MMT, down 16% from last year.

South America

In Argentina, dry weather is also a concern, depleting soil moisture for the winter wheat crop and creating a logistics headache. The Buenos Aires Grains Exchange (BAGE) reported potential leaf damage and developmental delays caused by a severe cold front in July. Neighboring Brazil and Paraguay have also experienced potentially damaging cold weather. Brazil experienced some of the lowest temperatures in years throughout July. One local newspaper in Paraguay, “La Nación,” reported there may be a need to import wheat this year instead of marketing excess domestic production.


The European Union’s top wheat-producing states, France and Germany, received persistent rain leading to flooding in some areas, which slowed harvest and created quality concerns. On Aug. 3, France’s farm ministry lowered the estimate for wheat production there by 410 thousand metric tons (TMT), but total production is still expected to be at least 25% more than in 2020/21. In a report following the flooding, a German farmers group suggested there may be crop failures in many areas. Despite this, total German production is expected to be 23.1 MMT, up almost 5% compared to last year. Further east, Romania and Bulgaria each expect to harvest record crops, although official reports said rains could downgrade a portion of Bulgaria’s harvest to feed.

Black Sea

USDA’s May Russian wheat production forecast of 85.0 MMT was seen as bullish by many at the time. Two private Russia-based analysts cited lower-than-expected yields in the Central and Volga regions when they cut their production estimates recently. IKAR cut its forecast for the 2021 wheat crop by 3.0 MT to 78.5 MMT and SovEcon cut its forecast 6.6% to 76.8 MMT. Rosstat, the Russian state statistics agency, reduced winter wheat planted area by 7.5% compared to last year, blaming dry weather. Export prices, as a result, increased at least $7 per MT following the news. The current Russian government export tax scheme is also adding part of that increased export cost.

Ukraine’s wheat harvest lags last year’s pace but yields are up 12% compared to 2020. In reaction to reduced wheat production in Russia, prices for Ukrainian wheat gained $3 to $5 per MT settling between $240 to $243 per MT. The USDA estimates Ukraine’s wheat production to rise 15% this year to 30.0 MMT.

According to one Ukrainian-based broker, farmers in Kazakhstan are expecting a 30% drop in wheat production this year from hot, dry weather in the early summer. The Kazak government is considering banning feed wheat exports while also considering a tax on milling wheat exports following a meeting of the foreign affairs and trade commission last month.


Wheat growing areas of Australia, especially Western Australia, are “looking extremely good” said one analyst with the Australian Export Grain Innovation Centre. Production estimates are expected to fall 17% compared to 2020/21 when Australia produced a record crop. This year’s crop is expected to be 15% above the 10-year average to 28.5 MMT following a 1% increase to the planted area. Some areas are reporting water logging and would benefit from a couple of weeks of sunny dry weather to dry out the fields.

screenshot from Australian Export Grain Innovation Centre

The Australian Export Grain Innovation Centre reports a second year of good wheat production potential after breaking a severe drought in 2020.

In-Born Optimism

Back in the drought areas of the United States, many wheat farmers are looking ahead to the next crop with winter wheat seeding likely to start in some areas by early September. In an interview with the Pacific Northwest Ag Network, Casey Chumrau, Executive Director of the Idaho Wheat Commission, described the farming community’s outlook this way: “The overall sentiment is not great, but they are farmers, so they are thinking next year is going to be better.”

By Michael Anderson, USW Market Analyst


On the heels of a White House Executive Order on competition this month, a large group of agricultural shippers recently wrote to the U.S. Surface Transportation Board (STB) to advocate for several policy proposals in front of the board that can make a significant difference in increasing rail competition in transportation of wheat and other commodities.

The letter was written by a diverse grouping of agricultural organizations, including U.S. Wheat Associates (USW), that created an informal coalition, the Agricultural Transportation Working Group (ATWG), in 2003. The group meets regularly to discuss critical transportation policy issues that affect U.S. agriculture. The group also identifies policy priorities and suggests needed changes to help maintain U.S agriculture’s international competitiveness.

Elevator and train to illustrate rail competition story.

About 70% of U.S. wheat is transported by train from inland country elevators to domestic and export markets, so rail competition is important for the entire supply chain.

More Room for Negotiation Needed

With about 70% of U.S. wheat moving to domestic and export markets by rail, railroads provide an essential logistical function that neither farmers nor grain companies can perform on their own. Yet those shippers are often “captive” because they lack economic alternatives to a single railroad.

The letter specifically encouraged STB to enable “competitive switching” (see below for more information) and urged “the Board to finalize other regulations … to provide rail customers greater ability to negotiate prices and challenge unreasonable rates and fees.” The letter points out that “fees are increasingly becoming a larger source of revenue for railroads and expense for their customers.” Click here to read more about how rail rates affect U.S. wheat export basis.

The President’s Executive Order was particularly broad and focused on proposals to increase competition in many industries, with the transportation portion including rail competition and maritime initiatives,  stating that “robust competition is critical to preserving America’s role as the world’s leading economy … inaction has contributed to these problems, with workers, farmers, small businesses, and consumers paying the price.”

“Competition is critical to the health of the rail industry and the significant role rail serves in the larger economy, and this Executive Order will help focus attention on these important issues.” – Surface Transportation Board Chairman Martin J. Oberman

The Order explicitly states that agencies like the STB and Federal Maritime Commission (FMC) can influence the conditions of competition through their exercise of regulatory authority. In addition to the competitive switching rule, the STB has the latitude to propose or finalize other options such as bottleneck rate rules and Final Offer Rate Review – for which USW has advocated – both of which would start to tip the scales in favor of a level playing field for rail shippers.

Opposition Anticipated

While the rail industry will almost certainly oppose any changes to the current regulatory model that affects rail competition, executive pressure and political initiative may encourage the STB majority to act on these proposals (click here to read STB Chairman Martin J. Oberman’s statement on the President’s Executive Order). Many industry watchers are even speculating that the focus on increasing competition and attention on consolidation will factor into the STB’s consideration of the proposed Canadian National Railways purchase of Kansas City Southern Railroad – something the USW Wheat Transportation Working Group is closely watching.

In USW’s mission “to enhance wheat’s profitability for U.S. wheat producers and its value for their customers,” a potential solution may be found in the President’s directive if it indeed does rebalance the relationship between railroads and their customers.

By Michael Anderson, USW Market Analyst

“Competitive switching” is a policy proposal in which a rail customer such as an inland country grain elevator could seek bids for service from nearby competing railroads even if the customer is not located directly on the competing railroad’s track. It is designed to inject competition into what is otherwise a captive transportation market, where many rail customers, especially grain elevators, have direct access to only a single freight railroad, leaving them with little to no bargaining power over shipping rates. Freight rail reform advocates who have sought such policies for a long time are enthusiastically looking to the President’s “Promoting Competition in the American Economy” executive order to add momentum to the call for greater competition.


While drought has dominated the headlines about U.S. wheat, the outlook for the 2021 soft red winter (SRW) wheat crop is a more positive story. Farmers growing this weak gluten class in the eastern third of the United States enjoyed timely rainfall and mild temperatures as the crop developed, leading to good yield potential and at least average quality so far.

The July 6 Crop Progress report published weekly by the National Agricultural Statistics Service indicated the percentage of SRW crops rated in good to excellent condition were 50% in Arkansas, 49% in Missouri, 74% in Illinois, 78% in Indiana and 74% in Ohio.

Big Crop Ahead

Many of the SRW producing states saw planted area increase for the 2021 crop from 5.63 million acres in 2020 to 6.59 million acres according to USDA’s June 30, 2021, Acreage Report.  With yield potential up, too, the 2021 SRW crop is expected to be significantly bigger. At the spring conference of the North American Millers’ Association, millers estimated SRW wheat production for 2021 to increase 25% compared to 2020, to 332.7 million bushels (9.05 MMT). The most recent crop production estimates, published by the USDA in June, forecast SRW bushels to be 335.4 million. Either way, there will be plenty of high-quality SRW available.

2021 soft red winter wheat crop image

Grown in the eastern third of the United States and shipped via Gulf, Atlantic, and Great Lakes ports, soft red winter (SRW) wheat is a high-yielding wheat with low protein, soft endosperm, red bran, and weak gluten. It is used in pastries, cakes, cookies, crackers, pretzels, flatbreads and for blending flours.

The 2021 SRW harvest is well underway. Even with recent rains slowing progress, the July 2 USW Harvest Report showed 57% of the growing region has completed harvest. The report, which will be updated July 9, included grade and non-grade data from analysis of 135 SRW harvest samples from the southern and southeastern states. That data showed an improvement in grade from to U.S. No. 2 week-over-week. Both test weight (TW) and falling number (FN) increased this week compared to last. USW’s goal is to test a total of 300 samples for its 2021 SRW Crop Quality Report.

Better Quality than Expected

Jason Scott, 2016/17 USW Chairman and a Maryland SRW wheat farmer, just completed his harvest and said that the crop was “way better than expected despite a very wet fall.” He added that disease concerns are minimal including limited vomitoxin levels. He said conditions during mid-spring at flowering were dry, which helped hold back pressure from the fusarium (scab) disease that causes vomitoxin.

The image shows a crop and sprayer to illustrate the 2021 soft red winter wheat crop.

A field of soft red winter wheat growing toward maturity on Jason Scott’s farm in Maryland. Scott’s 2021 soft red winter wheat crop produced higher yields and better quality than he expected.

Shawn Branstetter, a SRW wheat trader with The Andersons, noted that SRW quality is good overall in the Mid-Atlantic region, and prospects are expected to stay good.

Brad Reynolds, Communication Director for the Ohio Small Grains Marketing Program (OSGMP), said that with increased production and good quality, overseas customers are interested in the Ohio SRW crop. To date, total SRW exports are up 75% in the 2021/22 marketing year that began June 1 compared to 2020/21. Exports to Mexico, a leading importer of SRW from the U.S., are up 129% compared to the same time last year.

USW Trade Support Included

USW works closely with its state wheat commission members and the U.S. government to help customers get the most value from their U.S. wheat purchases. In 2020, for example, USW’s Mexico City regional office arranged for quality control managers from a Mexican mill to meet with the USDA-ARS Soft Wheat Quality Laboratory in Wooster, Ohio, and OSGMP to identify SRW quality and supply. OSGMP collected samples that were analyzed at the ARS laboratory. Based on the two rounds of tests, the mill identified SRW harvested in 2020 from southern Ohio as having the flour and baking qualities needed to meet their snack food customer’s needs. Supported by additional trade service information from USW and OSGMP, the mill purchased Ohio SRW that was loaded in Toledo, shipped via the St. Lawrence Seaway.

With strong production numbers, promising quality data, and dependable export service, the outlook for the 2021 SRW wheat crop should remain positive.

By Michael Anderson, USW Market Analyst


U.S. wheat Associates (USW) Market Analyst Michael Anderson recently prepared a Wheat Supply and Demand Outlook report based on USDA’s latest market data published in May 2021.

The report is shared with the USW Board of Directors three times per year. Directors include wheat farmer leaders representing the organization’s 17 state wheat commission members.

Vie the full Summer 2021 report online here.

The World Wheat Supply and Demand Outlook includes the first look at USDA’s estimates of marketing year 2021/22 (June 1 to May 31) world wheat supply and demand and production in the major wheat exporting countries and regions. U.S. by-class estimates for 2021/22 are not published until July, but this report includes USDA’s estimate of U.S. commercial wheat sales for 2020/21 and its first forecast for 2021/22.

USDA Production and Use data to support world wheat supply and demand outlook.

USDA’s latest forecast continues the trend of record world wheat supply and demand.

USDA sees a record-setting trend in world wheat production and use continuing in 2021/22. Based on USDA’s May estimates, total world wheat production is expected to reach a record 794.4 million metric tons (MMT). Among exporting regions, production is forecast to increase in the United States, the Black Sea (Russia, Ukraine, Kazakhstan), the European Union (EU) and Argentina. Declines are expected in Australia and Canada. USDA estimates 2021/22 world wheat ending stocks will reach 296.8 MMT, a volume similar to last year.

Higher global production is matched by increased global demand as USDA expects total global wheat consumption will reach a record 791.1 MMT, or 9.6 MMT more than last year. This forecast is driven primarily by higher feed and residual use. Global human consumption of wheat is expected to increase 1% on the year but still a record level of 630.4 MMT. USDA expects global trade to reach 203.2 MMT, up 4.1 MMT from last year.

2021/22 U.S. Commercial Sales

Throughout the year, even in the face of the pandemic restrictions on travel and meetings, USW representatives were able to sustain a strong level of service and information flow to its customers, with support from its state commission members and USDA’s Foreign Agricultural Service export market development programs.

The World Wheat Supply and Demand Outlook report shows USDA’s final estimate of total 2020/21 U.S. wheat commercial sales was 25.5 MMT, 4% less than in 2019/20. In part because of larger exportable supplies in other major exporting regions, USDA currently expects 2021/22 U.S. wheat export sales to be 24.5 MMT.

2020/21 U.S. wheat commercial sales by class and importing country