After a drought threw the US crop market into chaos, and local prices soared, they are now buying European wheat.
According to sources familiar with the situation, the grain is expected to arrive in Florida over the next several months. The people did not want to be named because the transactions are confidential. The people claimed that Ardent mills received the wheat from Andersons Inc..
The US has suffered a major blow with the rare imports. It is losing ground to Russia as the top wheat shipper in the world. The drought last year has made it difficult to ship crops across the Mississippi River. This makes rail transportation more expensive. Due to the bad weather, American farmers will abandon their wheat crops in greater numbers than ever before. This makes these deals more profitable.
Miroslaw Marciniak is a market analyst with InfoGrain, in Warsaw. He said that the unusual route makes sense, because US wheat can be expensive. It’s cheaper for US grain processors to ship from Europe rather than hauling them from Kansas. The price of American hard red wheat, the variety that is used to make all-purpose bread, has increased significantly compared with other global major suppliers. Some eastern European countries are also suffering from surpluses of hard red winter wheat, which has led to recent restrictions on the importation of goods from the war-torn Ukraine.
One person said that the wide price difference has enabled deals to be made for the supply of wheat to be shipped from Europe to the US until at least October. One person said that the deals allow grain to be delivered also to an Ardent Mills facility located in Albany, New York.
Pat Bowe, Andersons’ Chief Executive Officer, said that imports from Europe are a good idea due to the price differences. However, he declined to say whether or not the company has made any deals of this nature. Ardent did not respond to our request for comment.
Farmers to abandon US wheat crops at highest rate since 1917
According to trade data from the European Union, Poland has already shipped 79,000 tons wheat to the US in the season 2022-23. Marciniak believes that given the price differential, more such cargoes will likely be shipped from the Baltic region to the US.
The US Plains’ famed wheat fields have suffered from years of drought. Lack of moisture this year stunted some plants to the point that they didn’t produce heads of grain. This made it difficult to harvest these plants.
US Department of Agriculture estimates that US farmers will only harvest 67% of the winter wheat planted acres in this year. This is the lowest ratio recorded since 1917.