Growing Competition in the World Wheat Market Choking US Export Demand Out, Kim Anderson Reports

Mar 29, 2019

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Prices continue to struggle this week as wheat producers are beginning to grow understandably concerned about when they might expect to see some relief from the persisting depression in grain markets. Oklahoma State University Extension Grain Market Economist Dr. Kim Anderson joins SUNUP host Lyndall Stout this weekend to attempt to address those concerns. In all frankness, Anderson says the general expectation a few months ago was that prices would be significantly higher by now. However, that has obviously not been the case.
 
Anderson attributes the market’s poor performance to a lack of export demand resulting from increased worldwide competition, specifically from the Black Sea Region which includes major contenders like Russia and Ukraine that have dominated the global wheat markets in 2018-2019. Initially, before the end of last year, speculators believed these countries would run out of exportable wheat and demand for US wheat would return. While those countries are now finally reporting limited supplies, demand has failed to return to the US due to the rise of a new generation of competitors in the wheat market.
 
By harnessing new technologies and varieties and the implementation of modern infrastructure, countries that were once considered Third World, have been able to increase their production and improve the quality of their crops and for the first time – have been able to attract export business away from the US.
 
Anderson predicts this trend will continue for a few years as countries like Romania, Hungary, Poland, Bulgaria and Paraguay continue to grow their wheat industries. At the same time, too, he says many importing nations are also increasing their production, which means they will be importing less product. While the situation may sound dire for the American producer, Anderson reassures that demand will eventually come back to the US. According to him, consumption is increasing faster than production. As economies around the world continue to grow, people around the world are demanding higher quality food. As consumption grows and economic success builds, Anderson says the world will turn to the US, which has been and continues to be the residual supplier of quality wheat.
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