Source: U.S. Wheat Associates Wheat Letter

Global trade in wheat is expected to increase by nearly 20% in the next 10 years, after having been more or less flat for the last two decades, according to the recently released annual USDA Agricultural Baseline Projections. If the analysis is correct, it could be very good news for U.S. wheat producers.

Vince Peterson, US Wheat Associates vice president of overseas operations, saw some major points of importance to U.S. wheat export prospects.

"I'll admit to viewing these kinds of long term projections with some reservation, as so often changes in broad market conditions over time come with agronomic, political and economic drivers that are unknown now, and therefore their impacts are very difficult to anticipate into the future," Peterson said. "There are, however, some interesting trends revealed in the USDA analysis."

The growth areas are widely dispersed around the globe, Peterson points out, but occur in areas where USW is historically or increasingly active in market development work. USDA sees a 5 million metric ton increase in wheat trade to both the Middle East and Latin America, another 3 MMT increase to both the north African and the south Asian regions, a 2 MMT increase to Subsahara Africa, and a million more tons of trade in Europe.

"If we look at these markets more closely, we see that the U.S. has a good chance of being competitive for about 19 MMT in increased trade, out of the 21 MMT that USDA is projecting worldwide," Peterson said.

Specific markets with a 1 MMT or greater growth potential, accounting for over 55 percent of the projected increase in world wheat trade by 2014, are Algeria, Brazil, Egypt, EU-25, Indonesia, Iran, Iraq, Mexico, Morocco and Nigeria. USW has included all ten countries in market development plans, and maintains offices in five of the ten.

"Interestingly, the Economic Research Service analysts appeared to wave a white surrender flag with regards to trying to reliably forecast China's import situation, as Chinese imports were left at a flat 8 MMT throughout the period," Peterson points out. "If anything, it's safe to assume that the Chinese situation won't be flat!"

Other points of interest Peterson drew from the numbers:

• On the demand side, East Pacific markets are re-confirmed as significant, steady markets, accounting for about 15 MMT of total world trade.
• In the FSU, imports (mostly internal trade) will increase by 1.5 MMT. At the same time, exports from Russia and Ukraine are expected to be flat and remain at no more than current levels.
• On exports, the USDA projects that the U.S. is poised to capture the largest gains, increasing another 7 MMT to almost 33 MMT. They base their projection on the assumption that the U.S. would maintain at least 25 percent share of world trade.
• As regards export competition, USDA projects significant gains by Australia and Argentina, with 6 and 4 MMT export increases, respectively.