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Column: USA, former wheat giant, posts a 40-year export low as demand sags

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NAPERVILLE, Ill., Jan 9 (Reuters) – Wheat exporters in the United States, formerly the world’s breadbasket, ended 2022 on the lowest note in over four decades as short supplies and cheaper overseas competition continued pushing U.S. wheat aside.

The paltry shipment volumes are not necessarily disappointing considering expectations, and the new year may bring some better luck to exporters as U.S. supplies may build in 2023.

Only 85,672 tonnes of U.S. wheat were inspected for export in the week ended Dec. 29, the smallest on record for any week in data back to January 1983. That breaks the prior low of 127,306 tonnes set in late December 2008.

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That number was originally published last week, but no adjustments were made on Monday morning, meaning the record is more likely to stand. The meager performance continued into 2023 as preliminary wheat inspections for the week ended Jan. 5 totaled 201,673 tonnes, the lightest for that week in more than 40 years.

The United States was gripped by a frigid Arctic blast in late December, affecting transportation and commerce. But wheat inspections had already flirted with record lows in the prior months amid very thin demand.

The U.S. Department of Agriculture already projects 2022-23 U.S. wheat exports at a 51-year low of 21.1 million tonnes (775 million bushels). Late fall through winter is also the slowest period for shipments.

That volume is 26% lower than in 2016-17, the last time the United States was the world’s leading wheat exporter. It is projected at No. 4 in 2022-23 with a record-low 10% share of global shipments.

One positive for U.S. wheat is that in recent years, exports have declined by a lesser degree than production. Another plus is that exporters got a leg up in the first half of the current marketing year, perhaps leaving room for the weak December showing without needing to further shrink exports yet.

Through the first half of 2022-23, which began on June 1, U.S. wheat exports covered 54% of USDA’s December forecast. That is a nine-year high and a few points above average.

Recent shipments have been limited by poor export sales, which are at more than 20-year lows for the date with plentiful, cheaper wheat in rivals like Russia, Canada and Australia commanding market share.

But so far in 2022-23, cumulative U.S. wheat exports as a percentage of total sales are near historical averages, meaning shipments have not been relatively worse than demand levels would suggest.

Weekly U.S. wheat export inspections
Weekly U.S. wheat export inspections

MORE WHEAT IN 2023?

U.S. wheat supplies have contracted after two disappointing harvests, driven by both low area and yield. Analysts peg U.S. wheat stocks as of Dec. 1, the halfway point of 2022-23, at 1.344 billion bushels, a 15-year low for the date and down 2.5% from a year ago.

But stocks may have bottomed out this year if planting ideas are realized and the weather cooperates. USDA on Thursday will publish U.S. winter wheat seedings for the 2023 harvest, and the average trade guess of 34.485 million acres would be a seven-year high, up 3.6% on the year.

Widespread drought still threatens much of the U.S. Plains and crop health is low, raising yield risks. However, things are heading in the right direction as 64% of all U.S. winter wheat areas were covered by drought last week, down from the November peak of 75%.

Winter wheat drought coverage was 65% at the start of 2022 and 32% the same week in 2021.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

Reporting by Karen Braun Editing by Matthew Lewis

Source - Column: USA, former wheat giant, posts a 40-year export low as demand sags

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