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Hard Red Spring Wheat Exports Have Tremendous Year in 2007-08

Hard red spring wheat exports reached their second highest level in 12 years in the 2007-08 marketing year at 305 million bushels. Sales were made to 55 different countries with the top ten markets accounting for 70 percent of the overall sales. This illustrates the strong traditional customer base U.S. hard red spring wheat has built due to its inherent quality attributes which helps hold a base of demand even in the face of the notable market premium for hard red spring in early 2008.

Higher export levels for all classes of U.S. wheat were supported by continued world demand growth, tight world supplies of wheat and export restrictions and embargoes by many competitor countries. For hard red spring wheat a valuable attribute in attracting strong export sales at the higher price levels last year was a second straight year of high grades and strong functional performance in our crop. Exports to Europe were up most dramatically, as millers there sought U.S. hard red spring to upgrade their lower protein, lower quality crop. Sales to Spain set a record high. Demand from markets in Central and South America also made appreciable year-to-year gains with less aggressive competition from Canada. Mexico reached a record high, as increasing incomes in that market are expanding the demand for end-products that need higher protein, higher quality wheat.

Sales to Asia were down slightly from 2006 due primarily to a more tempered buying pace from Japan which had set a record import level the previous year. Exports to Indonesia doubled however and pushed them into a top ten market. Higher export volumes were attained in Africa and the Middle East with increased sales to traditional buyers like Nigeria and Morocco, but we also gained sales to some new markets which typically pursue cheaper classes of wheat.

In the 2008 marketing year to-date, overall sales of hard red spring are running below the tremendous export pace in 2007. A record world crop is keeping world prices well below U.S. values which are hindering our sales to more price sensitive markets. Declining confidence in world economies has also tempered demand volumes in some traditional markets. In addition, a larger Canadian crop and aggressive pricing posture by the Canadian Wheat Board is challenging U.S. hard red spring wheat exports in parts of Asia and Central and South America. Our top ten markets are essentially the same as a year ago with the only exception being the Dominican Republic replacing Italy. Sales have been made to nearly 50 countries with the top ten buyers accounting for 77 percent of our total sales to-date. An over abundance of sales of low quality, low protein wheat on the world market in the first half of the marketing year is increasing the potential for expanding demand for hard red spring for blending purposes in the second-half of the year.

Durum exports higher in 2007-08, as world demands quality

U.S. durum exports reached 42 million bushels in the 2007-08 marketing year, as quality deficiencies in the EU crop propelled strong early season buying of U.S. durum for blending purposes. Tight world supplies of durum in major competitor countries also opened opportunities for the U.S. to make sales to non-traditional buyers. Italy remained our top market accounting for nearly 40 percent of sales. Punctuating the acute shortage of both quantity and quality in the 2007 EU domestic durum crop was the addition of three new EU countries to the top ten list of buyers, Portugal, the Netherlands and Switzerland.

Export sales to Central and South America markets were nearly double the previous year driven primarily by large sales to our long-time customer Venezuela. Sales to North Africa as a region were down slightly on the year, as the premium for durum versus other classes of wheat drove markets like Morocco and Algeria to blend in other classes for some of their pasta and couscous needs. A relatively large domestic crop in Algeria also tempered their demand. In contrast, domestic crop problems helped push U.S. exports of durum to Tunisia to the highest level in 8 years and moved them up to our number two market. The 3.4 million bushels in sales to Nigerian represented a sixth straight year of gains.

The 2008 marketing year export pace is currently less than half of last year’s pace, as a rebound in the size and quality of the EU crop has dramatically reduced their import needs. In addition, a very large Canadian crop has added to the world availability of durum which is keeping world values well below U.S. market prices. Exports of U.S. durum will likely continue to be challenged for the remainder of the marketing year by the larger world crop produced in 2008. Expectations for reduced durum plantings in many of the major producers in 2009 should support greater export potential as the 2009 marketing year begins however.