Black Sea exporters are becoming increasingly more aggressive in the world market at the expense of the EU.  Government policies, public/private investments in port and rail infrastructure, and currency advantages have enhanced Black Sea exporters’ competitiveness vis-à-vis the EU.  The EU, on the other hand, is limited by its internal market price mechanism and is having more difficulty competing with the Black Sea because EU intervention support prices make EU wheat exports less competitive.  Furthermore, Black Sea countries face the added incentive to export due to limited storage facilities and the financial need to quickly sell crops.   The EU has alternative marketing options and ample storage facilities.

Russia has become the price leader in export markets with abundant supplies of its low-priced bread wheat and is investing in its export infrastructure, (i.e., railroads and port facilities) expanding export capacity and efficiency.  The country still has 7.5 million tons of intervention stocks from last year’s crop and the government has announced that only 2 million tons of this year’s crop will be purchased for intervention.  Although Russia generally ships 65 percent of its exportable surplus in the first half of the year, with abundant supplies, Russia is likely to remain price competitive throughout the year.  Ukraine’s competitive advantage is a weak currency and reduced port fees that should stimulate exports.  The Government of Kazakhstan recently announced that it will assist exporters by subsidizing transportation to the Black Sea and Baltic ports. Whereas exports out of the Black Sea are expanding, primarily with government assistance and incentives, the EU is presently less competitive and losing market share.   

Domestic: During the month of October, prices for wheat remained volatile, fluctuating with currency values and inflows of money into futures markets.  At one point, Soft Red Winter (SRW) was quoted $8/ton higher than Soft White (SWW).  For the month,   Hard Red Spring (HRS) fell $5 to $264/ton, with price quotes unavailable for 2 weeks in October. Hard Red Winter (HRW) jumped $15 to $209/ton, SRW gained $25 to $187/ton, and SWW rose $11 to $191/ton.   

• Australia is up 1.0 million tons to 15.5 million due to a stronger-than-expected early season pace of exports. 

• Canada is lowered 500,000 tons to 18.0 million on reduced exportable supplies.

• EU is down 1.0 million tons to 19.0 million on a lack of price competitiveness vis-à-vis Russia and Ukraine, as reflected in the slow pace of export licenses.

• Kazakhstan is raised 500,000 tons to 7.5 million based on larger production and government plans to subsidize the transport of wheat exports. 

• Russia is raised 1.5 million tons to 18.0 million based on greater exportable supplies and a strong early-season export pace.

• Ukraine is up 500,000 tons to 9.0 million due to the continued strong pace of early-season feed-quality wheat shipments. 

• United States is cut 1.0 million tons to 24.0 million on stronger competition from other major exporters, as demonstrated by the continued slow pace of exports.

·        Chile is lowered 300,000 tons to 950,000 due to sharply higher domestic production. 

·        EU is up 500,000 tons to 7.0 million on greater import licenses for durum. 

·        Israel and South Korea are each raised 300,000 tons to 2.1 and 3.7 million, respectively, on expected greater demand for feed-quality wheat. 

·        Syria is raised 300,000 tons to 1.8 million based on the strong pace of early-season imports and expected stock rebuilding. 

• Turkey jumps 300,000 tons to 2.0 million on strong early-season imports and expected greater use of high-quality wheat for blending purposes.