The international wheat export market, driven by a strong dollar, cheap oil and expanding harvests, is poised to shift this year, with once dominant exporting countries falling behind newly competitive ones, the Wall Street Journal reported Saturday.
Canada, the biggest exporter of wheat, and the United States, which falls second behind Canada, is set to fall behind Russia during this year’s harvest. Russia is poised to export 23.5 million tons of wheat this year, an increase of 3 percent, while Canada is set to export 20.5 million tons and the U.S. is set to export 21.8 million tons, the lowest level in 44 years.
“Unless emerging-market currencies stop falling, the U.S. will lose more export market share and will begin to see more foreign product coming in,” Michael McDougall, director of agricultural commodities at Société Générale SA in New York, told the Journal.
The strong dollar has made it more expensive for buyers from other currency markets to buy American wheat, but the increased competition in the wheat market also has driven food prices to their lowest in seven years. Against the American dollar, Russia’s currency was at its weakest in January, driving down prices and allowing Russia to take shares of what had been well-established markets, such as Egypt.
“This season we’re selling more to distant destinations like Nigeria … and we also supplied some wheat to Mexico,” Andrey Sizov, managing director of Russian agriculture consulting firm SovEcon, told the Journal.
Low demand and low prices have hurt U.S. farmers, with forecasters predicting corn exports will hit a three-year low this year. By December, pork and beef shipments had dropped 10-15 percent in value.
— Deere MachineFinder (@machinefinder) January 29, 2016
"The dollar’s strength is becoming a much bigger issue for farmers than we’ve seen for a while," Chad Hart, Iowa State University Extension grain market analyst, told the Iowa Farm Bureau. "It’s really having an impact this year."