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


By Michael Anderson, USW Market Analyst

The first predictions for global wheat supplies and demand in the new U.S. marketing year (June 1, 2021, to May 31, 2022) are in. Most estimates call for relatively stable world supplies in 2021/22. Only time will tell the real story, but U.S. Wheat Associates (USW) will be watching several market factors closely over the next few months.

USDA published its initial supply and demand forecast for the new 2021/22 U.S. marketing year this month. According to the May World Agricultural Supply and Demand Estimates (WASDE), estimated world beginning stocks will be 295 million metric tons (MMT), down 2% from 2020/21, with ending stocks also projected at 295 MMT. While global wheat production is expected to reach a record 789 MMT, global consumption is also forecast at a record 789 MMT.

U.S. Stocks Decline

In the United States, except for soft red winter (SRW) wheat, the stocks-to-use ratio for the other wheat classes all declined in 2020/21. For example, soft white (SW) wheat stocks-to-use ratio went from 35% in 2019/20 to 15% in 2020/21.

Along with USW, buyers of soft white (SW) and hard red spring (HRS) wheat will want to monitor the weather across the PNW and Northern Plains, where conditions have been very dry for growing winter crops and newly seeded spring crops. Recent rain has been helpful but spotty. Timely rains will be needed to avoid a fall-off in production for those wheat classes and northern durum.

Late rain in the primary hard red winter (HRW) states has helped the new crop, but it is too soon to know if that precipitation came too late for wheat in sections of Colorado, Kansas and Oklahoma. USW’s Harvest Report is a helpful way to track crop conditions.

Supplies in Other Exporting Countries

Beginning stocks for the five major historic exporters, the United States, Canada, Australia, Argentina, and the European Union (EU), are forecast to be 45 MMT, down from 50 MMT in 2020/21. Ending stocks for 2021/22 U.S. marketing year are forecast to be 42 MMT, a decline of 3 MMT compared to 2020/21.

Ending stocks for the United States, Canada, Australia, Argentina, and the EU reached their highest on record in 2017/18 with 60.0 MMT of global ending stocks. Since then, stocks have fallen. If realized, USDA now expects 2021/22 ending stocks for those five major exporters will be the lowest since 2007/08 at 42 MMT, down 19% from the 10-year average. However, beginning stocks for 2021/22 for Black Sea exporters Russia, Ukraine and Kazakhstan are forecast at 15 MMT, up 67% from 2020/21. The ending stocks forecast for the Black Sea exporters was also raised compared to 2020/21 and double 2019/20 to 18 MMT.

Canada is experiencing dry weather in its key growing regions, adding to anxiety there, beginning stocks and production are all projected down.

Australia is poised for a second consecutive bumper wheat crop. Near perfect conditions ahead of planting season in April and May and favorable crop weather forecasts from the Australian weather bureau have traders there confident. One broker called for a 29.5 MMT crop compared to the WASDE forecast of 27 MMT.

The Rosario Grain Exchange (BCR), an Argentine association, projects a record 20.0 MMT crop for the lead South American wheat producer following a 3% increase in planted area.

Coceral, an EU-based association representing the cereals trade, revised its EU wheat output upward by 4.3 MMT after “excellent yield prospects in the Balkan countries and Spain.” Germany also increased winter wheat sown area by 3%. The European Commission increased its forecast for common wheat production to 126.2 MMT, 6% less than the most recent WASDE report forecast for 2021/22.

Russia Weighs In

It will be interesting to see how USDA adjusts its forecast for Russian wheat production in 2021/22 in its June WASDE report. The May WASDE forecasted 2021/22 production in Russia, the leading world wheat exporter, at 85 MMT, down slightly from the record 2020/21 crop. However, a separate report from the USDA Foreign Agriculture Service Attaché based in Moscow forecast Russian wheat production at a much lower volume. SovEcon, a Russia-based analyst, forecast in May that the Russian wheat crop will be 81.7 MMT.

China Demands Attention

Monitoring China’s actions in global grain trade will be important over the next few months.

Record corn imports have slashed world corn stocks. China has purchased 11.38 MMT of U.S. corn in the current marketing year, and an additional 11.98 MMT is still awaiting shipment. China purchased $400 million of U.S. corn in May 2021 alone.

The effect of China’s unprecedented corn demand on the wheat market should draw any wheat buyer’s attention. China’s unusually large wheat imports beginning in early 2020 through most of 2020/21, including 3.2 MMT of U.S. wheat, helped pull up global wheat prices. Then, as China’s government buyers ramped up corn imports, the price relationship between corn and wheat narrowed and even reversed at times.

Market watchers know that USDA expects wheat feeding in China to reach 40 MMT in 2021/22 but also expects its notoriously large volume of wheat stocks to decline by only 3.0 MMT. And China, notoriously, holds half the world’s wheat stocks, but USDA’s forecast expects ending stocks to be 3.0 MMT less than 2020/21.

IGC Expects Higher Prices

In its May Grain Market Report, the International Grains Council (IGC) noted that despite an increase in wheat production, a rise in consumption and tightened ending stocks in 2020/21 will lead to a drawdown in global grain stocks for 2021/22. The IGC said that ending stocks will be at a seven-year low.

As the 2021 U.S. wheat harvest moves north, USW colleagues, our state wheat commission members and farmers across the country will continue monitoring the critical market factors that affect our overseas customers.


The U.S. Wheat Associates (USW) Board of Directors includes wheat farmer leaders appointed to represent each of the 17 state wheat commissions that are members of USW and meets three times during each marketing year (June to May). For each of the meetings, the USW Market Analyst prepares a “Wheat Supply and Demand Outlook” report based on USDA market data to provide an update on the global and U.S. wheat market. The full Winter 2021 report is posted at

The report includes sections on world wheat supply and demand, wheat production in the major wheat exporting countries and regions, including U.S. wheat production by class, timely reports such as U.S. wheat seeded area, and U.S. commercial wheat sales.

World Production and Use data from the Winter 2021 Wheat Supply and Demand Outlook

The latest report, prepared Jan. 27, 2021, indicates marketing year 2020/21 is a significant one, with several records set. For example, USDA expects global wheat production to reach 773 million metric tons (MMT) following increased annual production in Australia, Russia and Canada among exporting countries. World wheat trade is expected to increase 1% to a record 194 MMT, which would be 7% more than the 5-year average. With strong carryover from 2019/20 and increased production, global wheat ending stocks are projected at 313 MMT, with China expected to hold 159 MMT and India 31.3 MMT of that total at the end of 2020/21. U.S wheat ending stocks, however, are expected to be the lowest since 2014/15.

USDA has also reported that U.S. winter wheat seeded area (including hard red winter, soft red winter, fall seeded soft white, hard white and Desert Durum®) increased for the first time since 2013/14. Hutchins notes in the report that beneficial field conditions and strong farmgate price potential at planting time motivated hard red winter and soft red winter wheat producers to increase planted area from last year.

U.S. Winter wheat planted area data from the Winter 2021 Wheat Supply and Demand Outlook

View the full Winter 2021 Wheat Supply and Demand Outlook at


By Claire Hutchins, USW Market Analyst

USDA pegs 2020/21 world wheat production at a record 773 million metric tons (MMT), up 1% from last year and 3% above the 5-year average of 721 MMT. Total global supplies are forecast to reach a record 1,072 MMT, 2% more than last year. USDA projects significantly higher production in several of the world’s major exporting regions including Australia, Canada and Russia. Specifically, in Australia, production is expected to rebound 87% on the year to 28.5 MMT as favorable precipitation during the growing season pulled the country out of a severe, three-year drought. USDA estimates 2020/21 world wheat ending stocks will reach a record 321 MMT, up 7% from last year and 16% more than the 5-year average.

Higher global production and ending stocks are matched by increased global demand, lending confidence to the 26.5 MMT USDA forecast for the final 2020/21 U.S. wheat export volume. USDA expects total global consumption will reach a record 751 MMT this year, slightly higher than last year and 2% more than the 5-year average. Increased total global consumption is driven by a significant increase in human consumption which more than offsets reduced feed wheat use. Global human wheat consumption is expected to increase 2% on the year to a record 613 MMT. USDA expects global wheat trade to reach 190 MMT, slightly below last year’s record but 5% more than the 5-year average.


By Michael Anderson, USW Assistant Director, West Coast Office

For the past several days, many wildfires across the western United States have left devastating damage and loss of life. Across the Pacific Northwest. Unusually high winds on Sept. 7 dramatically expanded the fires in Washington state and Oregon. While many of the fires have been contained, the smoke has caused dangerously high levels of air pollution over the entire region.

Despite the choking smoke and destructive force of the blazes, damage to the U.S. wheat crop and infrastructure has been limited. Export facilities and wheat export logistics are still operating as usual. The export facilities in the Columbia River system continue to operate normally and without delay.

Smoke from massive wildfires obscures the familiar view of a vessel being loaded across the Willamette River from USW’s West Coast Office in Portland, Ore.


While there were no delays in vessel loading, sadly, fires in Eastern Washington state ignited recently harvested wheat piles next to the Pine City Grain Elevator south of Spokane. Rural communities in both Washington and Oregon have been heavily impacted. Some wheat fields in both Oregon and Washington received some low-level fire damage but much of the crop was already harvested. Far worse, the fires have killed many people.

Low visibility has caused barges to limit the amount of wheat they can carry west to Portland, but the barge companies are accustomed to such hazards as limited visibility caused by fog is common in the Pacific Northwest.

Smoke is expected to continue expanding east across the continent with haze reported as far east as New York, N.Y., and the Arlington, Va., headquarters of U.S. Wheat Associates (USW) nearly 3,000 miles away.

Everyone at USW shares concerns about the people who grow and deliver U.S. wheat and our colleagues in the Pacific Northwest. A change in the weather pattern that will help end this natural disaster is very much needed.

Photo at top by Bongil Lee.


In its latest World Agricultural Supply and Demand Estimates (WASDE) report, USDA provided a look at what is shaping up to be another record year for wheat production, use and stock levels. Worth noting is the fact that USDA expects two traditionally non-exporting countries, China and India, will control more than 61% of the world’s wheat stocks at the end of marketing year 2020/21.

Each month, U.S. Wheat Associates (USW) updates a graphic summary of USDA’s WASDE report that includes global wheat market factors, major country and regional export history and U.S. wheat supply and demand summaries by class.

Here are some notable highlights from USW’s August World Wheat Supply and Demand report:

Global wheat production to hit another record of 766 million metric tons (MMT). USDA expects increases in Australia, Russia, Argentina, Canada and other countries to offset lower production in the European Union and the United States. Global use continues to grow and USDA expects it to reach another record in 2020/21 at 750 MMT.

Source: USDA World Agricultural Supply and Demand Estimates.

Global ending stocks are now projected at a record level of 317 MMT. If realized, that volume would be 5% more than 2019/20 and 14% more than the 5-year average. A more in-depth analysis of ending stocks shows the stockpiling of wheat in China and India continued unabated in large part because of government price guarantees that artificially incentivize wheat production and distort world trade. China’s record 2020/21 beginning stocks of 152 MMT could increase through the marketing year to end at 163 MMT and USDA expects India to hold a record level of 30.7 MMT at the end of 2020/21. China will not export any of its stocks. India, however, may start exporting as it has periodically when its subsidized production exceeds its ability to store and distribute it domestically.

Source: USDA World Agricultural Supply and Demand Estimates.

U.S. ending stocks are expected to decrease 11% from last year, the lowest in 6 years. The expected drop in U.S. ending stocks from 28.4 MMT in 2019/20 to 25.2 MMT in 2020/21 would be the fourth consecutive year of declining U.S. stocks.

Yet profitability from wheat is not a certainty for U.S. farmers. In fact, USDA indicates a decline in the average price U.S. farmers will receive per bushel, from $4.58/bu ($168/MT) last year to $4.50/bu ($165/MT) in 2020/21.

Partly as a result, all wheat area planted for harvest in 2020 was estimated at almost 44.5 million acres (about 17.9 million hectares), down 2% from 2019 and the lowest since USDA records began in 1919.

Source: USDA World Agricultural Supply and Demand Estimates.


By USW Market Analyst Claire Hutchins

Between January and February 2020, USDA raised its total U.S. wheat export estimate from 26.5 million metric tons (MMT) to 27.2 MMT, 7% greater than last year, if realized. U.S. Wheat Associates (USW) believes the United States is on track to reach USDA’s export estimates due to favorable marketing trends in the first half of 2019/20 that led to a strong export pace between June 2019 and February 2020.

U.S. wheat farmers continue to produce an abundant supply of high-quality wheat, which is always a factor in overseas demand. Export prices have certainly attracted customers’ attention in marketing year 2019/20. And if they compare current price trends to what has happened at this time of year on average the past five years, customers can also see an unusual buying opportunity.

HRW. USDA expects 2019/20 HRW exports will reach 10.6 MMT, 18 percent greater than last year, if realized. Relatively low HRW prices during the first half of 2019/20 boosted HRW exports into early 2020. Between early June 2019 and late December 2020, the average Gulf HRW 11.5% protein (on a 12% moisture basis) FOB price trended about 7 percent below the 5-year average price. As of Feb 13. 2020, HRW exports to all destinations total 6.44 MMT, 33 percent greater than this time last year and 61 percent of USDA’s 2019/20 forecast. HRW prices climbed between late August and early January but have fallen back 4 percent between to $226/MT FOB, offering a price incentive for the final months of the marketing year.

HRS. USDA forecasts 2019/20 HRS exports will reach 7.48 MMT, 6 percent greater than last year, if realized. As of Feb 13. 2020, HRS exports to all destinations total 4.62 MMT, slightly below last year and 62 percent of USDA’s 2019/20 forecast. Gulf HRS 14% protein prices trended dramatically below 2018 values and the 5-year average price between early June and late September, until concerns of a wet harvest brought prices more in line with 2018 levels at about $270/MT. However, HRS prices are trending down in the second half of 2019/20 and are, on average, 5 percent lower than the 5-year average FOB trendline at about $264/MT. Industry experts believe HRS FOB prices could continue their downward trend on cheaper nearby secondary rail rates and light export demand, beneficial for deliveries in April and May 2020.

SRW. USDA predicts SRW exports will total 2.72 MMT, 22 percent lower than last year, if realized. USW reported Feb. 5, soft red winter (SRW) export prices had been climbing steadily since the end of the 2019 harvest on reduced production, tight ending stocks and stable domestic and overseas demand. However, after Jan. 24, a dip in export demand pressured prices, offering an opportunity for SRW importers to lock in a lower price through the end of marketing year 2019/20. Between Jan. 24 and Feb.14, 2020, SRW prices fell 6 percent to $247/MT FOB. Despite reduced production and higher than average prices, SRW exports to date are in line with this time last year at 1.83 MMT, 67 percent of USDA’s final forecast.

White wheat (soft and hard). USDA predicts 2019/20 white wheat exports will total 5.31 MMT, in line with last year and 15 percent greater than the 5-year average of 4.60 MMT. For the majority of the first half of 2019/20, soft white (SW) wheat (representing 99 percent of U.S. white wheat production) 10.5% maximum protein prices trended well below the last year’s price and the 5-year average price over the same time period, providing overseas customers with ideal white wheat buying opportunities. As of Feb. 14, the SW 10.5% protein maximum FOB price was $237/MT, 2 percent lower than this time last year and 5 percent below the 5-year average. As of Feb. 13, 2020, all white wheat exports total 3.56 MMT, 3 percent greater than last year and 67 percent of USDA’s final white wheat export forecast.

Durum. USDA predicts 2019/20 U.S. durum exports will total 1.10 MMT, 83 percent greater than last year and 54 percent greater than the 5-year average. Durum exports to Italy, the largest market for U.S. durum, are more than double what they were this time last year at 439,000 metric tons (MT) due to a 12 percent reduction in European Union (EU) durum production in 2019. Year-to-date U.S. durum exports now total 655,000 MT, nearly double last year’s export pace and 60 percent of USDA total 2019/20 durum export forecast.


By USW President Vince Peterson

Recently, I have heard several of the farmers that U.S. Wheat Associates (USW) represents say they are hoping for a much better year in 2020. No wonder, given the low farmgate prices, trade uncertainty and difficult harvest conditions last year. A better year would be good for our farmers and for our overseas customers, too, who want farmers to have the incentive to continue producing a reliable supply of high-quality U.S. wheat.

From the perspective of global supply, demand and trade factors, we do see mostly positive influences hovering just out in front of us as we start the new year. After a long-term bear market that pulled Chicago wheat futures down from $9.50 in 2012 to a bottom of nearly $3.50, recent firmness in prices represents possible change and momentum on the horizon.

To highlight the primary market factors, we can start with a look at the Southern Hemisphere. Australia remains in the grips of drought that has reduced this year’s harvest outlook by 35 percent below their 10-year average. Australian wheat export prices are currently among the world’s highest at around $265 per metric ton (MT) FOB. In Argentina, the newly elected government has increased export taxes again for wheat from 7 percent to 12 percent (soybean export taxes were raised by 30 percent!). The bump in wheat export taxes raises FOB prices by more than $10 per MT, allegedly to protect domestic producer prices. That is not good for their importing customers, particularly for Brazil. However, after more than a dozen years of negotiations, Brazil on January 1 opened its 750,000 MT duty free tariff rate quota (TRQ), potentially advancing wheat import demand from outside Mercosur. When Mercosur wheat supplies have been tight, U.S. farmers have supplied an average of 80 percent of Brazil’s non-Mercosur needs.

In the Northern Hemisphere, Russian wheat export expectations have been reduced based on lower domestic supplies and prices for their standard 12.5 percent protein wheat (calculated on a dry matter basis and is most closely comparable to U.S. HRW 11 protein calculated on a 12 percent moisture basis). Russian FOB export prices are now around $219 per MT, with U.S. hard red winter (HRW) 11 percent at approximately $222 FOB from the Gulf. Long gone are the $40 to $50 per MT FOB discount spreads that have disrupted what would be normal logistical trade patterns in some recent years.

In its December “Wheat Outlook” report, USDA noted that cuts in wheat production in Argentina, Australia and Canada create potential opportunities for U.S. wheat exports in marketing year 2019/20.

In trade, despite the uncertain slog of negotiations, the United States has completed trade deals with Mexico through the finalization of the U.S.-Mexico-Canada Agreement (the new NAFTA) and through an initial bilateral agreement on agriculture with Japan. U.S. wheat export shipments to Mexico in marketing year 2019/20 already stand at 2.74 million metric tons (MMT) versus sales at the same date last year of 2.18 MMT. Together, Mexico and Japan account for more than 4.0 MMT and 25 percent of all U.S. wheat export sales to date.

Finally, trade negotiations with China, which have been perhaps the biggest weight on U.S. wheat market fundamentals and psychology, appear to be at a more hopeful position. This week, President Trump announced that the U.S. and China will sign a so-called Phase One deal on January 15. Based on information provided by the Office of the U.S. Trade Representative, China has agreed under the Phase One agreement to cancel retaliatory tariffs and import significantly more U.S. agricultural products, including wheat. Running parallel to this potential demand, China has also agreed to start filling its annual 9.6 MMT reduced tariff TRQ for imported wheat. In the five years before the start of the U.S.-China trade “war” in 2018, U.S. wheat exports to China averaged 1.5 MMT per year. That provides a logical basis for a more robust world and U.S. wheat trade with China.

Over the last five years or so, U.S. wheat producers have shouldered many challenges and continued to produce the highest quality, most wholesome milling wheat in the world, as they have done for decades. We do not yet know if these positive shifts in market and trade factors will provide the economic boost they need. But in that hope, our team at USW will be watching how they affect the markets – and how that will affect our overseas customers.


By Claire Hutchins, USW Market Analyst

In its December World Agricultural Supply and Demand Estimates (WASDE) report, USDA now expects world wheat production for marketing year 2019/20 to increase by 5 percent to 765 million metric tons (MMT) from last year’s 731 MMT. Lower expected production in Argentina and Australia likely encouraged USDA to also increase its forecast for U.S. wheat exports in 2019/20 by 4 percent. Already expected, record-setting total use was also raised.


USDA said increased wheat production is mainly in the Northern Hemisphere. The report noted European Union (EU) 2019/20 wheat production increased 12 percent over last year to 154 MMT, total Black Sea wheat production increased 6 percent over 2018/19 to 131 MMT, and U.S. wheat production increased 2 percent year-over-year to 52.3 MMT.

That volume more than offset lower output south of the equator where prolonged droughts continue to challenge wheat producers in Argentina and Australia. Argentinian wheat production is forecast to fall 3 percent from last year to 19.0 MMT. Australian wheat production is expected to decline by 7 percent year-over-year to 16.1 MMT, the country’s lowest wheat output since 2007/08.

USDA forecasts total U.S. wheat exports in 2019/20 will reach 26.5 MMT, up from its November estimate of 25.9 MMT and 4 percent greater than last year’s 25.5 MMT. As of November 28, according to USDA export sales data, total U.S. wheat exports of 16.5 MMT outpace last year’s sales by 9 percent. Exports to five of the top 10 markets for U.S. wheat are ahead of last year’s pace. Notably, U.S. wheat exports to Mexico are up 27 percent on the year. Hard red winter (HRW) and durum exports in 2019/20 both outpace last year’s sales.

Pacific Northwest (PNW) and Gulf hard red spring (HRS) free on board (FOB) prices have remained steady and high following a wet, difficult harvest and minimal farmer selling. Despite these higher price levels, USDA increased its HRS export estimate from 6.94 MMT in October to 7.08 MMT in December.

USDA also predicts a significant increase in total wheat consumption in 2019/20 compared to last year. Total global consumption is expected to reach a record 754 MMT, 2 percent greater than 2018/19. USDA expects the top three importers of wheat, Egypt, Indonesia and Brazil, to increase total wheat imports year-over-year. Total wheat imported by these three countries is expected to increase 4 percent over last year to 31.2 MMT.


By Claire Hutchins, USW Market Analyst

Extremely high temperatures and below-average precipitation levels prompted USDA to reduce its Russian wheat production forecast from 78.0 million metric tons (MMT) in its June World Agricultural Supply and Demand Estimates (WASDE) report to 74.2 MMT in its July WASDE report. That is a 5% reduction month over month. Russia’s leading agriculture consultancies also reduced their Russian wheat production forecasts. Between June 11 and July 24, SovEcon reduced its 2019/20 Russian wheat production forecast by 10% from 82.2 MMT to 73.7 MMT. Between early June 12 and August 5, IKAR reduced its Russian wheat production estimate by 6% from 80.2 MMT to 75.5 MMT.

All sources point to lower Russian wheat production, but SovEcon and IKAR differ in how they see reduced exportable supplies affecting Russian export prices. Despite reducing its wheat production forecast, SovEcon estimates “Russia’s wheat crop issues are not big enough to impress the market.” Accordingly, it quoted Russian FOB values for 12.5 protein wheat (equal to 11.0 protein on a 12% moisture basis) at $197/MT on July 29 and at $195/MT on August 2. IKAR, on the other hand, believes the country’s reduced exportable supplies contribute to rising FOB values. According to IKAR, Russian FOB values for 12.5 protein wheat rose from $193/MT on July 23 to $196/MT on July 30.

How should these price differentials be interpreted? A look at recent tenders from Egypt’s state commodity-procurement agency, the General Authority for Supply Commodities (GASC) provides some insight. Through GASC, Egypt publicly offers to purchase wheat in set amounts from global exporters. Grain trading companies source wheat from multiple origins to bid on the GASC tenders, vying to offer the lowest FOB prices available. The tender results are available to the public, offering a clear picture of current export prices by origin source.

Often, conditions affecting exportable supplies in the Black Sea are apparent in GASC tender results. For instance, between May and July 2018, USDA reduced its Russian wheat production forecast by 7% on abnormally wet conditions affecting spring wheat planting and abnormally dry conditions affecting winter wheat areas. In 2018, for example, Black Sea supply concerns made their way into GASC’s tender results. On June 12, 2018, Russia’s lowest offer at the GASC tender was $209/MT FOB. By August 2, 2018, Russia’s lowest offer reached $235/MT FOB as supply concerns worsened.

While Russian 2019/20 wheat production is expected to increase 3% over 2018/19 levels to 74.2 MMT, its exportable supplies (beginning stocks plus production minus domestic consumption) are expected to fall 2.0 MMT from last year to 49.0 MMT in 2019/20. This year’s weather challenges are again present in recent Egypt’s GASC tender results. Between June 11 and August 6, the lowest FOB offer Russian wheat increased 4% from $197/MT to $204/MT. It is worth noting that the August 2 U.S. Wheat Associates (USW) Price Report estimated Gulf FOB export price for U.S. hard red winter (HRW) with equivalent protein for September delivery at $205/MT.

U.S. Wheat Associates (USW) believes these price trends could continue if hot, dry conditions persist across Russia’s predominant wheat growing regions.

Every month, USW publishes a graphic summary of the latest data from USDA’s WASDE report, including global wheat market factors, major country and regional export history and U.S. wheat supply and demand summaries by class. View the monthly summary here.