Records are being set in the world wheat market this year.
For the first time, Russia is expected to be the world’s largest wheat exporter in 2016-17, surpassing the collective exports of the countries of the European Union.
Closer to home, analysts forecast that American farmers will seed the smallest wheat crop since the pioneer era.
Informa expects only 47.265 million wheat acres, down 5.8 percent from the 50.154 million seeded for harvest this year.
That would beat the previous record low of 1970 when 48.74 million acres were seeded.
The United States seeding statistics go back to only 1919, but to find a smaller wheat acreage you’d have to go back to a time when the European settlers were still breaking soil.
Of course, thanks to higher yields, U.S. wheat production will not be the smallest ever.
The situation with Russia and the U.S. is a result of the relative profitability of growing wheat, changes in exchange rates and the cropping options farmers have available.
Russia grew a record 72 million tonne wheat crop in the current crop year and it will likely export about 30 million tonnes.
That will surpass the EU’s 25 million tonnes. In the previous two years, the EU was the leading exporter, shipping about 35 million tonnes, but this year’s crop was hit by bad weather, which hurt production and quality.
The U.S. is expected to export 26.5 million tonnes, Canada 21.5 million and Australia 20.5 million
Russian wheat producers have benefitted from a weak ruble that makes their grain more attractive on global markets and raises the domestic price paid to producers.
In the last few years, Russian millers found they could not compete because international wheat sales made in U.S. currency generated large amounts of rubles, which led to bread shortages in Russia.
The Russian government imposed a tax to limit wheat exports and to encourage adequate domestic supply.
But with the huge crop this year there is enough supply for all and Russia dropped its export tax.
Officials promise a stable tax regime to give confidence to producers and exporters to continue to expand production.
Russia wants to drive production of wheat and other grains to 150 million tonnes by 2030, up from 117 million this year. Wheat exports would hit 50 million tonnes.
In addition to the weak ruble, Russian wheat farmers are competitive because of cheap, fertile land and proximity to some major markets. Ukraine and Kazakhstan also have plans to increase grain production.
Meanwhile in the U.S., its strong dollar has made its wheat uncompetitive on world markets, leading to reduced exports. Last year’s shipments of slightly more than 21 million tonnes were the smallest since 1971-72. Exports are recovering a bit this year but not enough to reduce year-end stocks, which are expected to rise to a record 31 million tonnes for a burdensome stocks-to-use ratio of 50 percent.
That is reflected in the weak price and U.S. farmers figure they can make more money growing high yielding soybeans or corn.
Informa expects U.S. soybean seeding to jump by five million acres to a new record high of 88.612 million acres.
Canadian wheat area has not crashed like it has in the U.S., but nor is it growing.
It has been 21 to 26 million acres over the last 10 years, although it is down five to 10 million acres from where it was 20 years ago.
Canola and pulse crops have taken what were wheat acres.
Oilseeds will likely continue to present a better opportunity for North American producers. The global market for oil and meal is growing much faster than it is for wheat and North American farmers are particularly skillful growing oilseeds.