Canada may beat U.S. in wheat exports

Canada could export more wheat than the United States for the first time in decades.

“I certainly think it’s possible,” said G3 weather and crop specialist Bruce Burnett.

The U.S. Department of Agriculture forecasts all wheat exports of 21.8 million tonnes for the U.S. and 20 million tonnes for Canada.

However, the U.S. is in danger of missing its target. The country has shipped 9.3 million tonnes of wheat and durum since the U.S. marketing year began June 1.

That is almost two million tonnes or 16 percent below last year’s pace, and the prime exporting season is already in the rearview mirror.

“They’re probably going to have great difficulty in making that current forecast,” Burnett said.

The caveat is that his prediction is based on the U.S. dollar remaining strong.

Agriculture Canada forecasts 20.2 million tonnes of Canadian wheat and durum exports this year, which would be down 15.6 percent from the 2014-15 export program.

That degree of decline seems highly unlikely, given that this year’s wheat and durum exports are only 8.2 percent off last year’s pace through week 15 of the crop year.

In fact, wheat-only exports are down only about three percent.

The “fly in the ointment” is Canada’s sluggish durum sales, which Burnett estimates are 450,000 tonnes or about 25 percent behind this time last year.

He does not anticipate exports catching up much because the eastern shipping corridor has closed due to freeze up and the good start to crops in the Mediterranean Basin could temper demand.

However, there is still a good chance Canada will ship more wheat and durum than Agriculture Canada’s 20.2 million tonne forecast, even if durum sales do not pick up, because spring wheat sales have been brisk.

The stronger than expected Canadian export program and a weaker than anticipated U.S. export program means Canada could overtake the U.S. in wheat and durum sales for the first time since at least 1960.

If that scenario plays out, Russia, which is forecast to ship 23.5 million tonnes, would be the only country to export more wheat.

Burnett said there are many reasons why the U.S. is expected to have the smallest wheat export program since 1971.

“If you want to (condense) it to just one factor, it is the fact that the U.S. prices on a global basis are very high relative to some of the other exporters,” he said.

The strong U.S. dollar is making U.S. wheat uncompetitive with product out of the European Union and Black Sea region. There are also quality problems with the U.S. soft and hard red winter wheat crops.

Sales of U.S. spring wheat and durum have not been nearly as bad as the other classes of wheat. Spring wheat exports are only 577,000 tonnes behind last year and durum exports are more than double.

Burnett said that is because markets for those two crops are not as price sensitive and do not face stiff competition from the EU and Black Sea region.

There is one other important factor.

“This year the quality in the U.S. has been excellent in terms of both the spring wheat and the durum,” he said.

However, even with good spring wheat and durum sales, the U.S. is forecast to end the year with the second highest wheat stocks since 1999, and only if it meets the USDA’s ambitious export forecast.

About the author

Comments

Markets at a glance

Copyright © 2018. All market data is provided by Barchart Market Data Solutions. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

explore

Stories from our other publications