U.S. wheat exports are projected at 26.5 million metric tons (MMT) in marketing year 2004/05, down nearly 16 percent from 2003/04, reports USDA. The drop is anticipated due to increased competition from Europe and Black Sea wheat exporting nations, where wheat production has recovered from 2003/04 drought-damaged levels.

The quantity of European and Black Sea exports remains unknown, because stocks need to be replenished. Signs of increased competition from these regions can already be seen in Indonesia's recent purchase of 50,000 metric tons of Black Sea-origin milling wheat and Egypt's large French milling wheat purchases. U.S. export sales to Indonesia are well above last year's level (indeed U.S. export sales to South Asia are up 68% over last year), but U.S. export sales to Egypt are off 26 percent from last year at this time.

The quality of competitor and U.S. wheats is also going to be a factor in 2004/05 trade. Recent wet weather in the Black Sea region has raised quality concerns. Russian State Bread Inspectorate rated 22 percent of Russian wheat harvested this year as quality milling wheat (Class III), compared with 38 percent last year, leaving lower quality (Class IV and feed wheat) for export. Likewise, the government of Ukraine recently lowered its grain export projections, announcing they are unlikely to export milling wheat.

Other competitors are not immune from production and quality concerns. Australia's exports, (which USDA forecasts at 17 MMT, just under the previous year's record crop) could also slip if dryness continues, says Informa Economics. It is still too early to estimate Argentina's production and quality; the government recently announced 85 percent of wheat acreage had been seeded with good soil moisture reported. Canada's spring wheat quality is still unknown, but Saskatchewan's crop condition was recently reported as more than 80 percent good to excellent. USDA reports that 70 percent of U.S. spring wheat is either of excellent or good quality compared with 60 percent in 2003/04; some sprout damage has been reported in the U.S. hard red winter crop.