As wheat farmers planted winter wheat, they looked back on a year hit by drought. This summer’s drought in the Dakotas and Minnesota eased enough to let corn and soybeans rebound to better-than-expected yields in those areas, but the moisture came too late for the wheat crop. Some Minnesota wheat farmers are reporting only half the yields they were hoping for.
Drought in Montana and the Pacific Northwest hurt yields this past year as well, but relatively high prices may help offset the yield loss. In Montana, according to a survey by the U.S. Department of Agriculture’s National Agricultural Statistics Service, 63.7% of Montana’s barley and wheat growers said their operations did the same financially as the year before, while 17.3% were better off and 19% said they were worse off.
Export forecast
Wheat exports got off to a “slow start,” according to the USDA’s latest report, with U.S. wheat total export commitments representing only 41% of the (projected) marketing year total, which is down from 47% last year.
The 2021-22 all-wheat export forecast is unchanged at 875 million bushels, but there were changes to individual classes. Hard red winter exports were cut 5 million bushels to 355 million based on slow export sales, while soft red winter wheat was boosted 5 million to 120 million. Exports of both HRW and SRW are projected up from last year.
In 2020-21, U.S. farmers produced a total of 1.8 billion bushels of winter, durum, and other spring wheat were harvested from 36.7 million acres, according to the USDA. “The U.S. has become a residual supplier” in some parts of the international market where price is the main consideration, according to Ken Eriksen, senior vice president-agribusiness at IHS Markit.
As of Sept. 2, total U.S. commitments—accumulated exports plus outstanding sales—are approximately 9.8 million metric tons, down 23% from last year. Exports for the full June-May marketing year, at 875 million bushels, were projected down 12% from the previous year.
Shipments and sales lagged in the early months of 2021-22, but are expected to pick up later in the marketing year, with more buyers anticipated to return to U.S. wheat as competitor supplies become tighter.
Kansas wheat exports, ‘Oats knows’
About half of all U.S. hard red winter wheat is exported, and more than 70 different countries bought U.S. wheat last year. About 25% of Kansas’ wheat production goes to export, according to Justin Gilpin, CEO of Kansas Wheat. Roughly 28% of all U.S. winter wheat was produced in Kansas last year.
This year, Kansas wheat production was about 379 million bushels; the ten-year average is 331 bushels, and the five-year average is 324 bushels.
“This year’s harvest was drawn out a bit due to cooler weather,” said Gilpin. “It’s usually over by mid-July,” but dragged out this year until the end of July. Every single wheat class had some unique challenge this year.
Gilpin said that back on the old wheat-trading floors, traders used to regard the price of oats as a leading indicator for the price of wheat. “They used to have a saying, ‘Oats knows,’” Gilpin said. This year, the price of oats reached an all-time high of $5.90 a bushel.
Russian customs duties
U.S. wheat exporters were helped by Russia this past year. Russia is normally the world’s largest wheat exporter, and controls about 25% of the world’s total wheat exports. But this year, it was concerned with keeping domestic bread prices from rising too high.
Since February, Russian President Vladimir Putin has enacted customs duties on exported wheat, even though Russia had a massive wheat crop in the past marketing year. The duties were recalculated downward in July. The Russians were apparently trying to offset the effects of strong foreign demand for Russian wheat, coupled with a weak ruble that made it especially attractive—at least, until the customs duties kicked in.
Ag publications speculated that the duties could cause Russia to forfeit its position as the world’s leading wheat exporter.
Customers
Like U.S. corn and soybeans, American wheat quality carries a premium that many markets are willing to pay. Mexico is the single biggest market for U.S. hard red winter wheat, according to Marsha Boswell, vice president of communications for the Kansas Wheat Commission. Japan, the Philippines, Vietnam, Nigeria and Latin America are major customers.
“In some parts of north Asia, the U.S. is the principal [wheat] supplier,” said Steve Mercer, vice president of communications at U. S. Wheat. Most hard red winter wheat goes out via the western Gulf of Mexico.
Wheat requires fewer inputs than corn or sorghum, which may be a factor in this year’s plantings because the ongoing logistics difficulties may affect the availability of fertilizer, which has also become more expensive.
David Murray can be reached at [email protected].
