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Why does the US buy wheat from Europe?

Защо САЩ купува пшеница от Европа?

In recent weeks, markets have witnessed unusual wheat purchases by the US. The news that American flour companies had imported European wheat caused concern and frustration among interested parties overseas.

This prompted representatives of the US Wheat Associates (USW) to issue a statement to defuse the tension.

"While importing European wheat to make domestic flour is an extremely unusual situation, it is important to say that there is more than enough high-quality wheat in the US available to produce all the flour we need."

Dynamic market factors have created a large price gap between similar grades of European and American wheat. In May 2023, according to AgriCensus data, the published FOB export price for Polish wheat was more than $107 per ton lower than the FOB export price for US hard red winter wheat (HRW) in the Persian Gulf.

German May export wheat prices show a similar discount to HRW FOB Gulf.

Looking at this difference between the bargain purchase price in Europe versus the current recovery values ​​in the US domestic market, USW President Vince Peterson commented that “this may be the biggest trade margin I've ever heard of in all my years of trading with grain'.

According to him, this remarkable price difference occurs mainly because the relative volume of export wheat supplies to Eastern Europe has increased this year.

The war drastically limited Ukraine's ability to export grain by ship from its Black Sea ports, and quantities began to pour across their land borders to Eastern European countries.

"This move has severely depressed local wheat prices, harmed EU farmers and prompted five EU countries to impose bans on imported Ukrainian grain remaining in their countries. Russia's record wheat crop in 2023 and unrestricted exports (now forecast at 45 million tonnes) have created more regional price pressure."

Although the EU-27 is the world's second largest wheat producer after China and the second largest exporter after Russia, EU wheat imports increased by 6 million tonnes in the 2022/23 marketing year.

Combined with the unprecedented disruption to regional grain movements, USDA estimates that EU wheat ending stocks will rise from 10.1 million tonnes in 2020/21 to 16.2 million tonnes in 2022/23. USDA expects more European wheat production to increase this year compared to 2022, despite drought in Western Europe.

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