Russia, Arg. and Canada displace US, Europe in global wheat trade

30 Jan 2018 | Tom Houghton

The global wheat trade saw a rebalancing from June to November 2017 as Russian, Argentinian and Canadian sales increased at the expense of the EU, the US, and Ukraine, Agricensus data analysis has shown.

Russian, Argentinian, and Canadian exporters saw a 6.58 million mt net increase in wheat sales over the first five months of the 2017/18 marketing year, collectively increasing their share of the global wheat trade to 38% from 29%.

At the same time, the EU, the US, and Ukraine have seen year-on-year sales drop by 5.82 million mt, with their total share of global trade falling to 40% from 47%.

The displacement of traditional suppliers such as Europe and the US comes as Argentina and Russia seek to incentivise further exports, while the US could face being excluded from Asia's key multilateral trade agreement - the Trans-Pacific Partnership.

Two years ago, Argentina cut export taxes for wheat, while Russia is hoping to boost output by subsidising transport of grains from rural parts of the country.

In March, Canada will sign the TPP with 11 other Pacific nations, a move that will likely give their wheat exporters a big advantage by selling tariff-free goods to big buyers, such as Japan.

On the up

Russia – by far the biggest exporter this marketing year – has seen a 34% boost in sales, as its share of the global wheat export market rose to 23% from 17% last year.

It has expanded sales to traditional customers such as Egypt and Turkey, as well as increasing sales to South East Asia and Sub-Saharan Africa.

Argentina, meanwhile, has seen sales expand 71% on last year to 3.75 million mt, as it has significantly increased sales to neighbouring Brazil, Chile and Peru, as well as finding new markets in Algeria and Bangladesh.

Still early in its marketing year, Argentinian sales have seen it expand its share of global trade from 3% to 5%.

“Marketing for 2017/18 Argentinian wheat is advancing at full speed,” Bolsa de Comercio de Rosario analyst Emilce Terré wrote in a recent research note.

He added that “exporters and millers have already bought 8.9 million mt,” the second highest volume on record.

Canada has seen a more modest increase in year-on-year sales of just over 750,000 mt – boosting its share of the global wheat trade to 11% from 10%.

On the slide

The biggest decrease has been in the EU, which has seen its share of global exports continuing to decline each year since hitting a high in 2014.

EU exporters – with high prices driven by internal demand and a strong euro, as well as increased competition from Russia – have turned to intra-EU sales rather than the international market as sales have fallen 20% to 10.78 million mt.

Its share of the global wheat trade has fallen from 18% to 14%.

Ukraine has also seen its share of global wheat exports decrease, driven primarily by increased competition with Russia which has sold heavily to big customers India and South Korea.

Meanwhile, previous big buyers of Ukrainian wheat in Thailand and Morocco are yet to return for similar volumes because they bought in previous years.

July-November sales fell 13% year-on-year to 10.02 million mt, and its share of global trade dropped from 15% to 13%.

Uncompetitive at the global stage despite a weakening dollar, the total US share of global wheat trade over the period fell 2% to 12% in the first five months of the marketing year.

The US saw sales over the same period drop 15%, losing out to increased sales from Argentina in Latin America – particularly Brazil – which reduced imports by over 950,000 mt and Chile which cut 230,000 mt.