Dive Brief:
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U.S. wheat exports are expected to remain at the lowest level on record due to drought, increased competition from other countries and a sharp decline in the number of domestic farms.
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The U.S. Department of Agriculture reduced its annual wheat export estimates by 15 million bushels to a total of 710 million, the lowest since the 1971-72 marketing year, according to a market outlook published last week.
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Years of drought hurt supplies of Hard Red Winter wheat, normally the largest class of shipments. That’s shifted trade toward more competitively priced products from other countries and resulted in the recent cancellations of U.S. sales from China.
Dive Insight:
Wheat farms have been on the decline for the past two decades as farmers shift to more profitable commodities like soybeans and corn. The number of U.S. wheat farms has plummeted more than 40% since 2002, according to census data.
Some of this is due to wheat becoming a rotational crop, which farmers grow mixed with other, more profitable commodities. U.S. production of wheat has varied, with some years yielding higher results than others despite a decline in farms. However, production has not topped 2 billion bushels in the last seven years.
Recently, U.S. wheat exports have largely mirrored production, remaining below 800 million bushels since the 2020-21 marketing year. In addition to lower planted acreage, serious drought has ravaged supplies of Hard Red Winter wheat to a record low volume for the current marketing year.
Exports of Soft Red Winter wheat, which have been buoyed by strong sales to China, have also been lowered after the country recently canceled some sales as prices weakened on the global market.
Meanwhile, major traders Russia, Australia and Argentina increased their monthly production estimates, pushing global wheat supplies to one of its highest levels.
U.S. wheat producers have been some of the strongest proponents of expanding export opportunities in new markets. Trade group U.S. Wheat Associates joined the USDA on a trade mission in Angola, for example, to gain a market foothold in the country.