U.S. wheat shipments typically weaken at this time of year as soybean exports take the stage, but last week’s decline was unprecedented, reflecting the United States’ shrinking share of world wheat trade.
Only 71,608 metric tons of U.S. wheat were inspected for export in the week ended Nov. 2, the lowest for any week since records began in January 1983. That surpasses the previous low of 85,672 tons set in late December 2022.
The latest week’s export inspections, which are a proxy for exports, are preliminary and could be revised upward in next week’s report from the U.S. Department of Agriculture, though not enough to change the situation.
Looking at export inspection data versus export sales data suggests that the actual shipments, not demand, are the standout factor.
USDA predicts U.S. wheat exports at a 52-year low of 19.05 million tons in 2023-24, which began on June 1. As of Oct. 26, export sales totaled 11.4 million tons, some 60% of the full-year target, above the date’s recent average of 58%
Further, USDA’s export sales data shows that 60% of all 2023-24 wheat commitments had been shipped as of Oct. 26, the date’s lowest since 2007 and well below the year-ago 72%.
USDA’s projections call for 2023-24 U.S. wheat exports to decline 8% on the year, and export sales were down 7% as of Oct. 26. But wheat inspections were down 27% as of Nov. 2.
It is unclear why wheat shipments are lagging the sales to such a degree, but logistical problems caused by low Mississippi River water levels could be a culprit. Since June 1, wheat export inspections at the U.S. Gulf are down 40% from a year ago, while the Pacific Northwest volume is down 16%.
Pacific Northwest ports account for 52% of U.S. wheat inspected so far in 2023-24 and the Gulf accounts for 30%, compared with 47% and 38% over the same period last year, respectively.
One bright spot for U.S. wheat exporters is that China has recently made its largest U.S. wheat purchases in over a year, as heavy rains may have damaged up to 20% of China’s wheat crop. Chinese importers have about 813,000 tons of U.S. wheat on the books as of Oct. 26, up notably from a year ago but a bit less than in 2021.
The United States was easily the world’s top wheat exporter 20 years ago, accounting for at least 25% of annual exports. That share is set for a record low of 9% in 2023-24 as rival exporters continue to edge the United States out of the market. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
This article has been republished from The Money control