Released: August 09, 2002

Wheat Exports Hit 28-Year Low--Smaller Canadian Crop May Spark Turnaround

MANHATTAN, Kan. – U.S. wheat prices have rallied in recent weeks, but exports continued to slump, falling to a 28-year low as of mid-July. A smaller crop in Canada than earlier expected, however, may help turn the tide, said Kansas State University agricultural economist Bill Tierney.

"One of the problems is the slow pace of soft red winter wheat export commitments," said Tierney, who is the crops marketing specialist with K-State Research and Extension. As of mid-July, SRW sales totaled about 35 million bushels.

Typically, about 42 percent of total annual soft red winter wheat exports are booked by that date. This year just 31 percent of the U.S. Department of Agriculture’s projected SRW exports were booked.

Tierney cited a record-large wheat crop – much of it soft wheat – in Europe as big competition for U.S. wheat, although the effects of the European Union’s crop were countered somewhat by drought in Australia and smaller-than-projected production in Argentina.

As a result of the slow business, sales are behind the pace needed to meet government export projections for the year, he said.

"Export commitments, which include exports-to-date plus undelivered sales, were 241 million bushels as of the middle of July. That includes an estimate for food aid donations. That’s the lowest figure for that date in 28 years and is 5 million bushels below last year," he added.

On average, 31 percent of U.S. annual wheat grain export sales are booked by mid-July.

"If the average bookings-to-annual-sales ratio is applied, this would project total annual wheat [grain only] exports of 777 million bushels. That is well below the USDA’s July implied projection for total wheat grain exports of 865 million bushels," Tierney said.

News from the Canadian Wheat Board on Aug. 7 put wheat production in its prairie provinces at 16.54 million metric tons [MMT].

"Add 1.1 MMT for wheat grown in eastern Canada and that puts total Canadian wheat supplies at 898 million bushels [2002 crop plus beginning stocks and imports]," Tierney said. "That’s down 245 million bushels or 21 percent from last year and the smallest supply since 1988."

Tierney said that despite the sluggish showing U.S. wheat exports have made so far this year, it’s likely that the USDA will raise its wheat export projections in its Aug.12 Supply and Demand Report.

"In addition to lower wheat exports from Canada, the USDA will have to factor in the expectation of lower exports from Australia and Argentina," he said.

For more information on grains marketing, interested persons can visit http://www.agecon.ksu.edu/risk.

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K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Mary Lou Peter, Communications Specialist
mlpeter@oznet.ksu.edu
K-State Research& Extension News