You have to give it to the Russians.
They’re crowding the world with sub-12.5%-protein wheat and getting paid well for it too.
What does the future have in store for Russian exports?
Russian export numbers are critical to monitor if you’re growing winter or spring wheat. While U.S. supply concerns remain in focus, global prices are being driven by the amount of wheat exported from Russia.
The USDA said that Russian 2017/18 exports will come in at 39.5 MMT. That would be a 42% increase from the previous marketing year when exports came in at 27.8 MMT.
Not a bad growth rate at all!
In the coming year, Russian exports aren’t expected to fall back down to those levels. The USDA projects that total exports will come in at 36.5 MMT for 2018/19.
Looking ahead, Russia is expected to continue providing a significant amount of wheat to Indonesia, which is currently the world’s top import market. Indonesia purchased 11.4 MMT of Russian wheat from July 2017 to March 2018, according to Russian data.
This week, an official at the Australian Export Grain Innovation Centre (AEGIC) said that Indonesia will continue its buying frenzy from Russia. Millers across the country have increased the proportions of Russian wheat and the end product is not significantly impaired, according to AEGIC officials.
Looking ahead, Australia will do its best to protect its market share in Indonesia, which is its largest export market. The country will also likely begin trying to capture market share from its TPP partner Japan, which is the largest market for U.S. wheat.
Given that the U.S. pulled out of the trade deal last year, U.S. rivals like Canada and Australia will have a significant advantage due to the lack of tariffs on their shipments.
Russia’s increased export presence will continue to force the U.S., Canada, Argentina, and Australia to revisit their wheat export policies and the traditional markets that they’re trying to penetrate. This could create some price volatility as the game of musical chairs picks up in the global wheat market.