The value of the U.S. dollar is critical to what will happen with wheat exports in 2012, according to Frayne Olson, North Dakota State University crops economist and marketing specialist.Olson said several issues will determine the success of exports this year, and topping that list is the value of the U.S. dollar.

“The lower the value of the dollar, the easier it is to sell overseas,” he said, explaining that the European debt issue is a “big deal,” and if more people decide to invest in U.S. dollars instead of in Europe, and the dollar’s value goes up, it will be harder to sell U.S. wheat.“As long as the European debt issue doesn’t get any worse, we should be okay,” he said.Political unrest in North Africa is another issue that affects wheat exports, he said. With the overthrow of the ruling party in Egypt, exports to that country are a concern.Another issue that affects exports is the price of corn. If corn prices go up, feeders will substitute with cheaper feeds like wheat.“Feed demand and corn prices are pretty much a floor under wheat prices,” he said.The fourth issue affecting 2012 exports is the cold weather situation and its impact on the winter wheat crop in Ukraine and Russia.“If it gets too cold and they don’t get a lot of snow, they may not have a winter wheat crop, but they could compensate by planting more spring wheat,” Olson said.“Russia may increase taxes to slow up exports,” he ad-ded.There have also been rumors of increases in export duties, especially in Russia, that would slow the export pace.Yet another issue is how the hard red winter wheat crop will come out of dormancy in the U.S. Will there be enough rain during the growing season to produce a good crop?On March 30, the National Agricultural Statistics Service will release the prospective planting report, which will give the first clue on what is being planted in the U.S. this year. Everybody will be watching the corn number, Olson said.“If the corn acreage is more like 93 million acres, prices may go up. And if it is more like 95 million acres, prices will probably go down,” he said. “Wheat (prices) will be pulled with corn.”Lastly, the issue with the Canadian Wheat Board will be important for exports. After losing its monopoly status the CWB will no longer have central selling authority beginning in August 2012, and it will now be a voluntary group for Canadian wheat farmers.“We can no longer think of it as the U.S. versus Canada with the CWB going voluntary,” Olson said. “In a couple of years there will be an invisible border with a lot of grain going both ways.”Every month the USDA comes out with the Wheat Supply and Demand Report and what has the market concerned at this point is how fast the crops being produced are being used up, Olson said.This year’s wheat crop is not as big as last year’s. Both acres and bushels are down with about 9 percent fewer bushels than last year. At the same time, usage is down 12 percent.Olson explained that food use for domestic purposes is very stable year to year, and whether prices are high or low, the same amount of flour is used each year domestically. Other fairly stable uses are feed and seed use.Exports are seldom stable year to year, but about 50 percent of U.S. wheat is exported each year, he said.“Wheat exports bounce around significantly,” Olson said. “If we have a big export year, prices tend to go up. If we have trouble selling overseas, prices tend to soften and that is what is happening right now.”The biggest buyer of U.S. wheat (all classes) is Japan at about 120 million bushels a year. In the last several years, Nigeria has been slowly increasing its purchases of U.S. wheat, Olson said. Other top buyers of U.S. wheat are Mexico, Philippines, and South Korea, in that order.The one buyer of U.S. wheat who is “bouncing around all over the place” is Egypt, Olson said. “Egypt either comes in and buys a whole bunch from us, or they buy nothing from us,” he said, adding the country is the largest wheat buyer in the world. For example, on Feb. 14 Egypt purchased 55,000 tons of wheat from the U.S. instead of Russia because the bid was cheaper, but they had been buying from Russia over the past six months.“Russia out-produces the U.S. in wheat,” Olson said, adding they do use a lot of it domestically.Last year, Egypt bought a lot of wheat from the U.S. due to the crop export ban in Russia, he said. Egypt also buys from Australia, but that country had damage to its wheat crop, so for quality wheat, Egypt had to come to the U.S.Total use of wheat is going up in the world, but U.S. ending stocks are more than adequate, Olson said. Last year, a lot of U.S. ending stocks were feed wheat. but this year a lot of it is milling quality wheat. Ending stocks last year were 862 million bushels, but this year, there are 870 million bushels available.Historically, the U.S. has a higher stocks-to-use ratio (41 percent) this year than was available over the past 10 years which averaged 28 percent.“Why is it higher this year? Because exports are down so much,” Olson said. “We’ve had a hard time selling our product overseas.”Broken down by wheat class, spring wheat has a 29 percent stocks-to-use ratio which is about where it should be while durum is at 24 percent and HRWW is at a very high 41 percent stocks-to-use ratio.“There’s a lot of winter wheat hanging around right now,” he said. “Winter wheat is pulling down the wheat market. Why? Because that is primarily the wheat we ship into Egypt and North African countries.”Olson had expected winter wheat plantings to be down significantly, but that didn’t happen. He expected a lot of acres to be shifted to other crops, but they weren’t.HRWW is planted mostly in Montana, Texas, Oklahoma, western Kansas, Nebraska, and parts of Colorado. SRWW is planted in Wisconsin, Michigan, and down through the Great Lakes Valley region.U.S. hard red spring wheat is high quality wheat. “Fortunately, we sell spring wheat in a few different countries than winter wheat,” Olson said. “That is helping the wheat market right now.”The number one HRSW buyer is Japan, followed by Philippines, Taiwan, Canada and South Korea. Some of them are all Pacific Rim countries that want high quality wheat, Olson said.Logistically, it is harder for the Black Sea region to send its wheat to Japan than it is to ship wheat from the U.S. to those countries. Also, Russia and the Black Sea region typically has a lower quality wheat than the U.S., so the U.S. spring wheat exports to the Pacific Rim countries are important to the U.S. wheat export market.

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