Vince Peterson knows as well as anyone that many, even most, U.S. wheat farmers are discouraged this winter, in part because of a multi-year run of disappointing exports.
But Peterson, president of Washington, D.C.-based U.S. Wheat Associates, the marketing arm of the U.S. wheat industry, is optimistic that better days are ahead. Asked by Agweek what he'd tell wheat farmers if he were one-on-one with them, Peterson replied, "The stars are startling to line up a little differently. Maybe we can get the sun and planets to line up differently, too"
About half of the annual U.S. wheat crop is exported, which makes sales to foreign customers especially important to the American wheat industry. But strong harvests in recent years by other major wheat producing and exporting countries have ramped up competition, and, coupled with President Donald Trump's trade policies, have worked against U.S. wheat exports and the prices that American farmers receive for their wheat.
Peterson said he understands why American wheat farmers are feeling "browbeaten," especially after many endured particularly difficult harvest conditions in 2019. But several developments, both at home and abroad, bode well for 2020, he said.
Among the reasons for optimism that he cites:
• Severe drought in Australia, a major competitor for wheat sales in many markets, has reduced its harvest outlook this year by 35% below the 10-year average. In other words, Australia will harvest only about two-thirds of a normal crop and consequently will have less wheat to export.
• The newly elected government in Argentina, another competitor for wheat exports, has increased export taxes on wheat from 7% to 12%. That makes Argentine wheat more expensive and less attractive to foreign customers.
• Russia, the world's top wheat exporter, is expected to sell less to foreign buyers this year. Russian wheat, which had sold in foreign markets for substantially less than U.S. wheat, now is priced roughly the same.
• The U.S. has completed trade deals with Mexico (through the United States-Mexico-Canada Agreement) and Japan (through an initial bilateral agreement on agriculture).
• Under the new so-called phase one agreement between the U.S and China, the latter has agreed to buy significantly more American ag products, including wheat.
It's premature to predict how much U.S. wheat, and American farmers who grow the crop, ultimately will benefit from these developments, Peterson said.
"But we do see some positive influences," he said.
One encouraging sign: roughly halfway through the 2019-2020 marketing year, the U.S. Department of Agriculture is estimating that wheat exports in the year will be 4% higher than in 2018-2019 and 7% more than the five-year average, U.S. Wheat Associates notes.