EU to overtake US as world's top wheat exporter

Europe is to become the world's top wheat exporter next season for the first time since at least the 1950s, overtaking the US, whose shipments will be sapped by the dent to production from drought.

The European Union will ship 27.5m tonnes of wheat, including durum, in 2014-15, the US Department of Agriculture said in its first forecasts for next season.

That would be a figure second only to the 30.0m tonnes that the EU - which as a bloc is the world's top wheat producer – is expected to export this season, ending next month.

And it would take the EU's current 28 nations (counted pro-rata before the bloc's creation) to first in the league of world wheat exporters for the first time on records going back to 1960s, during which the US has dominated top rank.

US woes

The EU's promotion reflects the extent of the damage to the US winter wheat crop from drought in the southern Plains belt which grows the hard wheat used in making bread, with production of the soft wheat used in making biscuits, and grown in the Midwest, hurt too by lower sowings and frost damage.

 "Large supplies in other major exporting countries and tight domestic supplies of hard red winter wheat [will] limit US wheat shipments," the USDA said.

In fact, the US hard red winter wheat harvest, while falling well short of earlier estimates, is still expected to show a small rise this year, of 2.13m bushels to 746.2m bushels, helped by higher output in its northern growing range.

"The three main hard red winter wheat states - Kansas, Oklahoma and Texas - are predicted to harvest 33% less wheat than a year ago," Gail Martell at Martell Crop Projections said. 

"However, the other four bread wheat states - Montana, Colorado, Nebraska and South Dakota - are expecting a 52% increase in wheat production, bolstering bread wheat supplies.

But last year's harvest was too small to prevent US hard red winter wheat stocks tumbling an estimated 50% to 193.2m bushels over 2013-14.

UK recovery

Meanwhile, the EU is expected to see a small rise in production in 2014-15, by 1.56m tonnes to 144.9m tonnes, the third biggest harvest on record, lifted by a recovery in production in the UK.

Indeed, while output from France and Germany, the top two producers, is expected to show a small decline this year – of 1.0% to 38.1m tonnes and 3.8% to 24.0m tonnes respectively – the third-ranked UK will see a 27% jump in its harvest to 15.2m tonnes.

The increase reflects the improved weather from last season, when autumn sowings were slashed by the second wettest year on record, which also left the UK with an unusually poor-quality crop in 2012.

Indeed, given domestic consumption which averages less than 14m tonnes, the UK should return to being a net wheat exporter in 2014-15, after two seasons as a net importer, although that reversion could be jeopardised by any ramp up at the two large ethanol plants – Ensus and Vivergo – currently operating well below capacity.

Ukraine setback

In fact, most major exporting wheat exporters will see reduced shipment volumes, a decline reflecting reduced production in Australia and Canada, as well as in the Ukraine, where the financial hiccups stemming from political crisis will curtail output.

For Ukraine, the USDA forecast that "despite the excellent current conditions… yield will drop from last year's level due to a likely reduction in the spring application of mineral fertilizers and a reduction in the use of herbicides and other agricultural chemicals".

Argentina - where wheat is broadly expected to improve in popularity, amid talk of some easing back by the government on export restrictions - will re-emerge as a major shipper, with volumes seen trebling to 6.5m tonnes.

Importers' fortunes

Among import nations, Brazil and China, which suffered unusually poor harvests last year, are seen cutting their need for purchases.

However, Turkey's imports are forecast rising 38% to a record5.5m tonnes, thanks to drought and a late frost blamed for cutting wheat output by tonnes from last year, to 15.0m tonnes.

"Persistent dry weather and then a freeze in early April over the Anatolia plateau when the crop was in early flowering have been the primary factors leading to the decrease in forecasted production," the USDA said.

Imports by Syria, which "is experiencing a continued drought along the western grains region, are also seen reaching a record high, of 2.0m tonnes.

 Egypt, the top importer, is seen buying in 10.8m tonnes, up 300,000 tonnes year on year.

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