Markets have always changed, and will continue to change. Since the 1960s, U.S. wheat production and exports have grown less than those for other major producing countries.
During the last 10 years, Russia, Kazakhstan, and the Ukraine have taken some of the U.S.’s wheat export market. Still, the U.S. wheat industry is, and will remain, a major player in the world market.
I read an article that said, “Canadian wheat exports surpass U.S. wheat exports.” That’s true for the 2014/15 wheat marketing year (June 2014 through May 2015). Canadian exports were 886 million bushels compared to U.S. exports of 854 million bushels — which is the first time on record that Canadian exports have exceeded U.S. exports.
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World wheat exports have increased from 1.61 billion bushels in 1960 to 5.94 billion in 2015. Record world exports were set in 2013 at 6.1 billion bushels.
As a percentage of world exports, U.S. exports went from 40.6 percent in 1960 to 13.5 percent in 2015. The five-year average export percentage is 17. The 10-year average percentage is 19. And the 56 year (1960 to 2015) percentage is 32 percent. U.S. wheat exports, as a percentage, peaked in 1981 at 44.7 percent.
A 207 PERCENT INCREASE
World wheat production increased from 8.8 billion bushels in 1960 to a record 27 billion bushels for 2015. That is a 207 percent increase in production.
During the same period, U.S. wheat production increased from 1.35 billion bushels to a record 2.78 billion bushels in 1981, then decreased to 2.1 billion in 2015. The five year average U.S. wheat production is 2.12 billion bushels. Compared to 1960, that is a 56 percent increase.
Since 1960, foreign wheat production has increased 238 percent. Canadian production has increased 94 percent, Argentine production has increased 169 percent, and Australian production increased 256 percent between 1960 and 2015.
World wheat use (consumption) has increased from 8.67 billion bushels in 1960 to a record 26.3 billion bushels in 2015, a 203 percent increase. Foreign use increased 211 percent. U.S. use increased from 1.24 billion bushels in 1960 to 1.99 billion in 2015, a 60 percent increase. U.S. wheat use peaked at 2.68 billion bushels in 1987.
Record U.S wheat production was 2.79 billion bushels in 1981. Record U.S. wheat exports of 1.77 billion bushels occurred in 1981. Production and use in the U.S. wheat industry have been declining since the late 1980’s.
Since the 1980s, Canadian and Argentine wheat production have remained about the same to slightly higher. Production increases have been observed in Australia, the EU-27, Kazakhstan, and the Ukraine.
Another change in the wheat market is price. U.S. prices can be organized in three time periods. For 1960 through 1971, the average annual wheat price ranged between $1.24 and $2.04, and averaged $1.55. Between 1972 and 2006, the U.S. average annual price ranged between $2.33 and $4.55, and averaged $3.33.
Corn ethanol and market funds caused a relatively large shift in prices. Since 2007, the average annual U.S. wheat price has ranged between $5.70 and $7.77. The average annual price was $6.30.
Market change has occurred, but the general principles guiding profit have not changed. Producers who have below average costs of production and above average yields, produce a quality marketable product, and manage their money will prosper and grow. Producers who do not — well, the odds are against them.