Black Sea Area, EU to 'Dominate' Major Wheat Markets, Leaving US Behind

MOSCOW (Sputnik), Anastasia Levchenko — Due to the strong dollar, the United States, which is traditionally the top global wheat exporter, is now losing its grain export market share to CIS countries. The US Department of Agriculture (USDA) projects that Russian wheat exports will lead in terms of global sales in 2016, with 23.5 million metric tons.

"While much will depend on currency movements and levels of production in individual seasons, the EU and Black Sea region have the potential to continue to dominate sales to the important markets in North Africa and Near East Asia. The US will remain an important supplier, but it will probably not have the dominance in global wheat markets that it had in the past," Reynolds said.

According to the economist, shipments from the Black Sea region over the past year amounted to 29 percent of global trade, which is the largest level ever.

Reynolds predicts that the US share of the global wheat market will slip to around 14 percent by mid-2016, or the equivalent of halving in the space of just five years. However, in 2017 the United States’ export can start to grow again, reaching 17 percent, compared to 15 percent last year, according to the economist.

"Based on crop prospects for the 2016/17 season, our initial expectation is that the combined share of wheat trade taken by Kazakhstan (5%), Russia (13%) and Ukraine (7%) will slip to 25%. The EU share will likely stay steady (20%), but those of the US (17%) and Argentina (5%) will increase," Reynolds said.

Analysts cite the strength of the US dollar and the weakness of the Russian ruble as the primary reasons for the trend, since a strong dollar makes US products more expensive for global buyers and Russian exports cheaper.

On Monday, Russian Agriculture Minister Alexander Tkachev said Russian wheat exports could reach 22 million metric tons this agricultural year.