Though the volume of world wheat trade has changed little in the
past 15 years, shares of trade volume in exporting countries have
changed quite a bit. The U.S. remains the largest exporter, but
U.S. farmers are increasingly producing other crops, like corn
and soybeans, so the U.S. share of the wheat market has fallen
from 40 percent in the 1970s to 23 percent (forecast) for 2002/03.
This shift in U.S. agricultural production, combined with rising
prices caused by drought in three of the largest exporters—U.S.,
Australia, and Canada—has created opportunities for “nontraditional” wheat
exporters.
With their favorable climates and large land bases, the
former Soviet Union (FSU) and Central and Eastern Europe are traditional
places for wheat production. Reductions in agricultural subsidies
during the 1990s, however, caused a sharp drop in livestock production,
which, in turn, curtailed domestic demand for wheat as an animal
feed. While wheat output also fell, recent large harvests, caused
largely by favorable weather, have supported wheat exports. FSU
wheat exports surged in 2001/02 and 2002/03 as increasing world
prices generated the investment needed to expand port capacity.
In 2002/03, Russia is expected to be the world’s third largest
wheat exporter, behind the U.S. and the European Union (EU).
India,
Pakistan, and China have also become net exporters of wheat in
recent years. High government production supports during the
1990s boosted production and stocks. When the cost of maintaining
these stocks became burdensome, exports increased, particularly
as prices increased in 2002/03. However, these opportunistic
exports are not expected to persist because these countries are
unable
to produce wheat cheaply enough to sustain increased exports
without large subsidies.
The EU continues to be a large wheat exporter.
Historically, EU wheat production and exports depended on large
subsidies. Despite
lower domestic wheat prices, EU wheat production has grown because
of favorable net returns compared with those for other crops.
Lower prices have increased the domestic feed use of wheat, limiting
exports.
The U.S. is expected to remain the world’s largest
wheat exporter, though its share will likely decline if U.S.
producers
continue to turn to other crops and if other countries find wheat
profitable. As export shares shift, changes in U.S. supply will
not affect prices as much as in the past. For example, when the
U.S., Canada, and Australia suffered from drought in 2002/03, nontraditional
exporters and the EU were able to export enough to keep a lid on
prices.
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