Ethiopia Emerges in US Wheat Export Market
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According to data from the International Grains Council (2021), the estimated Wheat production in the 2019/2020 period was 763.7 million tons, of which more than 523.3 and 137.4 million tons were used for food and feed for livestock, respectively. After the harvest, most Wheat ends up with a handful of buyers: a list of global traders that has shrunk from a few dozen to four dominant multinationals after mergers in recent decades. These multinationals are collectively called ABCD: ADM, Bunge, Cargill, and Louis Dreyfus.
They are not well known because they mainly deal in bulk goods and make products such as fodder, corn syrup, or flour — not exactly something everyone would see in eye-catching ad campaigns. However, these companies are powerful, trading more than 70 percent of the Grain and reselling it to the highest bidder. Cargill is the seventh largest food giant in the world, after companies such as Nestlé, Pepsi, Coca-Cola, Philip Morris, and Unilever.
In 2021, Wheat was the world’s 71st most-traded product, with a total trade of $61.8 billion. Between 2020 and 2021, the exports of Wheat grew by 19.3%, from $51.8B to $61.8B. Trade in Wheat represents 0.0029% of total world trade. In 2021, the top importers of Wheat were Egypt ($4.53 billion), Nigeria ($3.32 billion), Indonesia ($2.98 billion), China ($2.94 billion), and Turkey ($2.49 billion).
The same year, the top exporters of Wheat were Russia ($8.92 billion), the United States ($7.83 billion), Australia ($7.36 billion), Canada ($6.91 billion), and Ukraine ($5.87 billion). According to AgFlow data, the United States shipped 4.2 million tons of Wheat in Q1 2023. The leading markets were Mexico (160,828 tons), China (136,890 tons), the Philippines (112,978 tons), and Ethiopia (83,220 tons).
Global production is forecast to be slightly higher this month as a production increase for Ethiopia is only partially offset by reductions for Argentina, the European Union, and Saudi Arabia. Global trade is down, with reduced exports from Argentina, Brazil, and the EU offsetting greater Black Sea exports which continue to flow with competitive prices and an extension of the Black Sea Grain Initiative. Imports are forecast down with reductions for Indonesia and many countries in Asia and South America. Total consumption is up significantly in China and the EU on more Wheat feed and residual use; food, seed, and industrial (FSI) consumption is up in India.
Global Wheat Prices
The U.S. season-average farm price forecast is lowered 10 cents to $8.90 per bushel. Since the March WASDE, U.S. quotes have fallen for all classes except Hard Red Winter (HRW). HRW prices rose $22/ton as dry conditions returned to the already drought-affected areas in the Southern Plains. Hard Red Spring (HRS) prices were nearly unchanged, down $3/ton from last month to $371 on slow demand. Soft White Winter (SWW) fell $14/ton to $298 as prices declined in key competitor Australia. Soft Red Wheat (SRW) fell $21/ton to $285, reflecting favorable weather for the new crop and downward pressure from international prices.
Global Wheat prices have fallen since the March WASDE for all origins, excluding the United States, with reduced import demand and the extension of the Black Sea Grain Initiative. Argentine quotes fell $11/ton but remain above other origins because of drought-induced tight supplies. Canadian quotes fell $4/ton. Australian quotes fell $10/ton on weaker demand for feed-quality Wheat in South Korea and Southeast Asia. Russian quotes slipped $20/ton on ample supplies. EU quotes fell $15/ton on sustained competition from Black Sea exporters. U.S. HRW quotes, by contrast, rose $22/ton on lower expected supply owing to drought conditions in key growing areas, becoming even less price competitive compared to major global suppliers.
Other sources: WUR
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