In the next few months, wheat markets look gloomy, at best. Longer term, however, many experts are painting a brighter picture for world wheat demand. In the next 10 years, developing countries with rising incomes and growing populations will drive wheat industry growth, but U.S. market share is expected to decline due to rising Black Sea wheat production and trade, according to USDA’s Agricultural Long-term Projections Report. In the annual report, USDA predicts that annual world wheat imports will reach 157 MMT by marketing year 2021/22, which is 15% greater than the 2011/12 estimate of 137 MMT.
According to USDA’s projections, the 15 countries of the Economic Community of West African States will have the largest increase in wheat imports for any region, growing 31% to 8.2 MMT. The report projects imports by Middle East countries, excluding Egypt, will rise 24% to 19.6 MMT. Together, the West Africa and Middle East countries will account for 51% of the total expected increase in world trade in the next 10 years. USDA expects Egypt to maintain its position as the world’s single largest wheat buyer, as estimated imports could climb 17% from 10.5 MMT in 2011/12 to 12.5 MMT in 2021/22. According to projections, Saudi Arabia will experience the greatest percentage increase in imports, jumping 52% to 3.2 MMT, due primarily to the government’s decision to eliminate wheat production by 2016 because of water scarcity issues.
With the increase in demand, what countries will supply the wheat needed? USDA expects that producers in the Black Sea region, mainly Russia, Ukraine and Kazakhstan, will grasp a much larger share of the world export market by 2021/22, to the detriment of the traditional five largest wheat exporters. USDA projects the Black Sea region will increase market share from 26% this year to 29% in 2021/22. If realized, Russia will be the third largest exporter at 23.8 MMT, accounting for 15% of total world market share. USDA noted in the report that the region is prone to volatility in production and trade due to highly variable weather and yields. The most recent example of this volatility was 2010/11 when the region’s market share dropped to 11% because of severe drought that lead to a government-imposed export ban.
The European Union and Argentina are the only traditional exporters expected to increase market share in the next 10 years, by 3 and 1%, respectively. USDA predicts that with 25.9 MMT, the European Union will surpass the United States as the world’s largest exporter in 2021/22. USDA expects U.S. exports to decline 5% to 24.5 MMT by 2021/22. Total U.S. market share is projected to drop from 19% in 2011/12 to 16% in 2021/22 — well below the 24% average of the past 10 years. Canada’s projected market share will drop almost 2% and Australia will lose about 1% market share, if realized.
USDA’s long-term predictions indicate a steady growth for the wheat industry through 2021/22. However, the landscape of the industry may look very different as the world will experience a shift in both the major wheat importers and exporters if these projections materialize.