I just happened to stumble on to a June 2010 report from the USDA's Economic Research Service which forecast that Russia will overtake the United States as a wheat exporter to the world within a 10-year period. The study also pointed to exports from Ukraine, Kazakhstan and Russia increasing by 50% from the 35 million metric tons exported in the previous 2009/10 crop year to more than 50 million metric tons by 2019.
Not only did these forecasts prove accurate, but the forecasts have been reached early. Friday's monthly USDA World Agricultural Supply and Demand Estimates report shows these three countries are forecast to export 52.5 mmt in 2016/17, up from 50.3 mmt estimated for 2015/16. As well, the most recent report shows month-over-month adjustments which pegs Russian exports of wheat at 30 mmt as compared to the 25.86 mmt estimated for the U.S.
The move came just weeks after the USDA's Foreign Agricultural Service Russian Federation Grain and Feed Update reported total production at 65 mmt and export potential of 24.5 mmt, stating that Russian exports could be "less competitive in world markets." Friday's USDA report boosted Russia's production potential by 7 mmt from the previous month to a record 72 mmt, while pushing their export potential to a record 30 mmt. This compares to Friday's estimates of 27 mmt for the European Union, 25.86 mmt for the U.S., 21.5 mmt for Canada and 18.5 mmt for Australia.
According to the USDA, the improved export potential for Russia is due to that country's third consecutive record crop, flat domestic demand and tighter supplies available in the European Union. Even with higher exports, Russia's carryout for 2016/17 is set to grow to 9.63 mmt based on current projections, up 4 mmt from the 5.63 mmt estimated for 2014/15.
While time will tell whether this forecast becomes reality, one forecast released on Friday which may prove a challenge is the U.S. export target of 25.86 mmt, which is 22.6% higher than the current estimate for 2015/16. This would be the largest year-over-year increase in export volumes achieved since the 2010/11 crop year. Year-to-date inspections are on track, currently 30% ahead of last year's cumulative volume.
The August report also increased Canada's all-wheat production by 1 mmt, to 30 mmt, a volume which is 1.5 mmt higher than AAFC's July estimate. The USDA's report saw Canada's export potential increased to 21.5 mmt, 1 mmt higher than AAFC's July outlook and 300,000 mt below the current AAFC estimate for the current 2015/16 crop year.
Statistics Canada will release its initial survey-based production estimates on Aug. 23, while the latest crop condition assessments in both Alberta and Saskatchewan may be pointing to the potential for upward revisions in Canada's potential in global markets.
Cliff Jamieson can be reached at email@example.com
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