The demand for American wheat has hit an eight-year low, according to recent data released by the U.S. Department of Agriculture (USDA).
“The decrease to Mexico, our biggest wheat importer last year, was 22 percent, which equals the largest year-to-year reduction in exports that we’ve seen over the past seven years,” said Anton Bekkerman, professor of economics at Montana State University (MSU).
The future for wheat looks particularly uncertain.
On Wednesday, Farm Futures’ “Overnight Trends,” a daily bulletin issued by the leading U.S. online agriculture information group, said wheat will fall “1-to-5” points.
“Wheat prices are lower, pressured by scant export business and the strong dollar, that forces U.S. prices lower to stay competitive on world markets,” Farm Futures reported.
Vincent Smith, an agro-economist at MSU, said that it is possible that lower year-to-date exports of wheat from the United States are tied to trade conflicts with China and other countries.
Bekkerman told Xinhua that the loss of a commodity market means the relationship with Chinese wheat buyers may have been permanently destroyed, as other countries scramble to fill the void with the world’s most populous nation.
The agricultural sector is known for its volatility — consistent market fluctuations due to weather and global economic conditions.
Economists so far generally agree that it is premature to accurately gauge the impact of the U.S. trade frictions with China, especially when winter is coming.
“It doesn’t look like there’s much here for drawing any concrete conclusions,” Bekkerman said of the USDA data.
Weather conditions seem favorable so far for a bumper wheat harvest in 2019 despite price declines.
“Drier weather on the Plains is also boosting progress seeding the 2019 crop, which is off to a decent start thanks to plenty of moisture,” Farm Futures said in its October edition released on Wednesday.
“I’m sure some of the decreases are due to the trade restrictions, but it’s difficult to tear apart the counterfactual,” Bekkerman said.
“How much of a change in exports would we have seen if the tariffs were not in place?” Bekkerman asked.
Montana farmers told Xinhua they are considering switching crop production in light of uncertainties in wheat demand, especially the involvement of other global players.
“Russian exports still show no signs of running out of wheat, despite the sale of a cargo of soft red winter wheat to Egypt last week,” Farm Futures said.
The news may force wheat farmers across America’s vast Midwest to consider alternative crop planting in the spring, experts told Xinhua.
“There may also be a shift of exports into January and February of the next year,” Smith said.