London - The US and Russia
are engaged in a rivalry for dominance once again, this time in the wheat
market. After Russia
recently pulled ahead, the US
has fought back, with the help of a weaker dollar.
One irony of the situation is that the US is taking market share partly as the FBI
investigation into ties between President Donald Trump’s aides and Russia. The
probe has weakened the greenback and made American grain cheaper for overseas
buyers. That’s helping the US
to regain its position as the world’s largest wheat exporter for the first time
in three years, stealing back the title from Russia.
The fight to lead world wheat exports is always heated, with
suppliers including the US,
Russia and Canada
jockeying for position. American shippers were at a disadvantage after several
years of stronger dollar.
Now, with the greenback in decline, US supplies are cheap
enough that Egypt,
the top importer, bought two cargoes in a tender last week. That’s the first
such purchase in two years and shows how US grain has become more
competitive even with higher freight costs.
"Last week’s tender was kind of a watershed
event," Matt Connelly, a grains analyst at The Hightower Report in Chicago, said by phone.
"I don’t know if Egypt’s
going to be coming back consistently, but if they do and if the US is included
in the next tender, it should tell the market that we’re here to stay."
will ship 28.2 million metric tons of wheat in the season that’s about to end,
34 percent more than a year earlier, the US, Department of Agriculture
estimates. That will propel the nation’s overseas sales to surpass Russia’s,
forecast at 28 million tons. A stronger euro and poor crops are also making
supplies from the European Union less competitive.
sold 115 000 tons to the Egyptian government last week and has also shipped
about 612 000 tons to Algeria
this season, markets often dominated by Europe and the Black
Sea. Demand has also been spurred by China. The main US markets are Mexico
American shippers may not enjoy the benefits for long.
Nations in the Black Sea region will probably have good crops in the local
season that starts in July, while the US planted the smallest
winter-wheat area in more than a century. Cold and wet weather is also raising
concerns about the quality of the US winter crop, which is just
beginning to be harvested, according to Rabobank International.
may retain still an edge over European wheat as the euro gains and dry weather
hurts next season’s crop in Spain
Paris wheat for delivery in December was $21.50
a ton more expensive than the grain traded in Chicago, a record for that contract.
"I think the European exports will once again not reach
full potential compared to previous years, when we had exports close to 30
million tons," said Stefan Vogel, Rabobank’s head of agricultural
commodities research in London.
"That seems right now highly unrealistic."
While US shippers have finally captured the Egyptian market,
their sales are only a fraction of the 3.94 million tons supplied by Russia and the 1 million tons sold by Romania this
season, data compiled by Bloomberg showed. Still, it’s comparable to the 180 000
tons from France.
"We’re not going to be dominant like the Black Sea," Connelly said. "I don’t think
we’ll be close to that, but if we’re able to participate, it’s a solid
statement for the export market."