Canadian wheat exports are booming, but American exports have slumped well below expectations.
United States wheat exports so far this year are down 17 percent from last year while Canadian wheat exports are up 53 percent, due partly to much improved quality.
America’s slow wheat exports are attributed to a combination of the ethanol-corn effect that is affecting so many markets, and changes in production.
“The domestic market has been pretty strong compared to last year,” said Erica Peterson, a marketing specialist with the North Dakota Wheat Commission.
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“We’ve seen the wheat market take off after the corn market basically to stay competitive and compete for acres.”
That means domestic prices are better than what can be had on the export market, keeping wheat at home.
Another factor is that dry weather last summer reduced U.S. wheat production. Winter wheat fell by 13 percent from the year before and hard red spring wheat by nine percent leaving less available for export.
Hard red winter wheat exports have lagged far behind projections. At harvest the U.S. Department of Agriculture forecast winter wheat exports of 8.3 million tonnes, but has since reduced the forecast to 7.2 million tonnes.
“At (the pace until recently) we’d have real trouble meeting even that target,” said analyst Kim Anderson of Kansas State University.
In the past few weeks U.S. wheat exports have increased but only to match the pace they need to hit the reduced projections.
That’s good news for Canada, because the United States is a key competitor on world markets, and if the U.S. domestic price is keeping wheat at home, offshore sales should be easier for the Canadian Wheat Board.
Peterson said the U.S. has managed to keep its premium export customers but has lost low-value sales to the high domestic price.
“For some of our biggest markets, like Japan and the Philippines, exports to both are actually above last year,” she said.
“It’s some of the more price sensitive markets that have actually gone down.”
The U.S. has also had trouble getting into the European Union market this year because of tougher phytosanitary standards that have held up or stopped sales.
The pickup in U.S. wheat exports in the last few weeks is probably due to the recent weakening domestic price, which has narrowed the spread between world and U.S. prices, Peterson said.
The outlook for U.S. exports for the rest of the year will probably depend on where domestic U.S. wheat prices go compared to the world price.
Corn now seems stronger than wheat, probably due to ethanol demand. Wheat has been carried along by corn but not in complete lock-step.
“Ethanol demand is driving everything,” Anderson said.
But as spring approaches, Peterson expects the wheat market to try to “buy acres” so that the anticipated increase of 10 million acres of corn does not come at the expense of wheat.
