The US is resorting to purchases of European wheat after a drought upended crop markets, pushing local prices higher.
At least two cargoes of Polish grain have arrived in Florida this year, with more expected over the next few months, according to people familiar with the matter, who asked not to be identified because the deals are private. Crop handler Andersons Inc. supplied the wheat to Ardent Mills’s flour factory in Tampa, the people said.
The rare imports are a blow for the US, which has been losing its relevance in the global wheat market to top shipper Russia. Last year’s drought has hampered shipping through the Mississippi River, making it more expensive to haul crops by rail. The dismal weather also means American farmers are poised to abandon wheat crops at the highest rate in more than a century, making hte deals profitable.
‘It’s an unusual trade route, but it makes sense because US wheat is expensive,’ said Miroslaw Marciniak, a market analyst at InfoGrain in Warsaw. ‘It’s cheaper for US processors on the East coast to ship grains from Europe than to haul them from Kansas.’
American hard red winter wheat — the variety used in all-purpose bread — has been trading at a wide premium to crops from other major global suppliers. Meanwhile, some eastern European nations are saddled with surpluses, which recently sparked restrictions on imports from war-torn Ukraine.
The wide price gap has allowed for deals to be struck for supplies of wheat from some European countries to be shipped to the US through at least October, one of the people said. The deals also allow for the grain to be delivered to another Ardent Mills facility in Albany, New York, the person said.
Andersons Chief Executive Officer Pat Bowe said imports from Europe make sense given the price difference, but declined to comment on whether the company had done any such deals. Ardent didn’t respond to a request for comment.
Trade data from the European Union shows Poland has shipped about 79,000 tons of wheat to the US so far in the 2022-23 season. More such cargoes from the Baltic to the US are likely given the price spread, Marciniak said.
Years of dry conditions on the US Plains have taken their toll on America’s famed wheat fields. Some plants this season were so stunted by a lack of moisture that they won’t produce so-called heads of grain, leaving little reason to harvest them.
US farmers may only harvest 67% of their winter wheat planted acres this year, the lowest ratio since 1917, the US Department of Agriculture estimates.
This article has been republished from The Economic Times