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US Wheat Exports Set to Surge Amidst Global Supply Concerns

The US wheat market is poised for a strong year, with exports expected to rise as global production faces challenges and competition shifts, according to the latest report from the USDA.

The USDA projects US wheat exports to reach 800 million bushels in the 2024/25 marketing year, a 25-million-bushel increase from the previous forecast. This increase is driven by a combination of a larger domestic crop and reduced competition from key exporting rivals.

"U.S. wheat exports for 2024/25 are forecast up 25 million bushels to 800 million bushels based on larger domestic supplies and reduced competition from other key exporters," the report states.

The report highlights the impact of adverse weather conditions on wheat production in key global exporting regions. Russia's wheat production has been revised downward due to freezing temperatures in May and prolonged drought and heat during the growing season. The European Union, particularly France, is also expected to see lower production due to excessive moisture, while Ukraine faces intensifying dryness.

"Russia’s production is forecast down 5 million metric tons (MMT) this month," the report states. "The European part of Russia, where winter wheat is primarily grown, was beset by freezing temperatures in May and drought and heat through much of the growing season. Production is also expected lower for the European Union (excessive moisture in France) and Ukraine (intensifying dryness)."

These challenges in key exporting regions have resulted in a narrowing price gap between US wheat and other major exporters. The report notes that the spread between US Hard Red Winter wheat at the Gulf and French wheat has significantly narrowed, while other US wheat classes remain highly competitive.

Strong US Production Drives Exports

The optimistic outlook for US wheat exports is underpinned by a larger domestic crop, driven by improved winter wheat conditions and increased planted area. The USDA forecasts US wheat production for the 2024/25 marketing year at 1,875 million bushels, a 3% increase from the previous year.

"US wheat production for the 2024/25 marketing year is forecast at 1,875 million bushels," the report states. "This represents a 3% increase from the previous year and is supported by improved winter wheat conditions and increased planted area."

Global Wheat Market Faces Challenges

While the US wheat market is experiencing a positive shift, the global wheat market is facing a complex situation, with overall global exports forecast to decline due to reduced supplies from key producing countries like Russia and Ukraine.

"Global wheat exports for the July−June 2024/25 trade year (TY) are forecast down 2.4 MMT to 213.0 MMT," the report states.

The report highlights the specific challenges faced by Russia and Ukraine, both major wheat exporters. Russia's production is forecast to decrease by 5 MMT, driven by unfavorable weather conditions. Ukraine's production is also expected to be lower, impacted by intensifying dryness.

The EU's wheat production is forecast to decline as well, due to lower expected yields in France, where crop conditions are reported to be the lowest in four years.

Despite these challenges, the report notes that Egypt and Serbia are expected to increase their wheat exports, with Egypt anticipated to see stronger flour and product shipments to regional destinations, while Serbia is expected to draw down stocks due to diminished competition from Russia.

The report projects a decrease in global wheat imports for the 2024/25 marketing year, with reductions expected in the EU and Turkey.

"Global imports for TY 2024/25 are forecast down 2.3 MMT to 207.0 led by downward revisions to the EU and Turkey," the report states.

The report concludes by highlighting the tight supply situation in the global wheat market, with ending stocks for key exporters collectively adjusted lower.