Drought's Devastation Forces US to Import Wheat from Europe

The United States is turning to European wheat imports as a result of a drought that has disrupted crop markets and caused local prices to rise. While the deals remain confidential, individuals familiar with the matter have revealed that at least two shipments of Polish grain have already arrived in Florida this year, and more are expected in the coming months. Andersons Inc., a crop handler, has supplied the wheat to Ardent Mills's flour factory in Tampa.

This unexpected reliance on European wheat imports is a blow to the United States, which has been losing ground in the global wheat market to Russia, the top wheat exporter. The drought experienced last year has made shipping through the Mississippi River more challenging and expensive, leading to an increase in the cost of transporting crops by rail. Additionally, the adverse weather conditions have prompted American farmers to consider abandoning wheat crops at a rate not seen in over a century. Consequently, importing European wheat has become a profitable alternative for US processors on the East coast compared to hauling crops from Kansas.

One of the key reasons for the increased imports is the price disparity between American hard red winter wheat, commonly used for all-purpose bread, and crops from other major global suppliers. The US wheat has been trading at a significant premium. In contrast, some Eastern European countries find themselves burdened with surpluses, which has led to restrictions on imports from conflict-ridden Ukraine.

As a result of this price gap, agreements have been reached for shipments of wheat from various European countries to be delivered to the US until at least October. The grain is destined not only for Ardent Mills's facility in Tampa but also for another facility in Albany, New York. While Andersons Chief Executive Officer Pat Bowe acknowledged the rationale behind importing wheat from Europe due to the price difference, the company declined to comment on any specific deals. Ardent Mills did not respond to requests for comment.

Trade data from the European Union reveals that Poland has already shipped approximately 79,000 tons of wheat to the US during the 2022-23 season. Given the price disparity, more shipments from the Baltic region to the US are anticipated. The US Department of Agriculture predicts that wheat imports will reach a six-year high during the 2023-24 season.

Years of arid conditions in the US Plains have taken a toll on the nation's renowned wheat fields. Some plants have been so stunted by the lack of moisture that they will not produce grain heads, rendering them unworthy of harvest. The USDA estimates that US farmers may only harvest 67% of their winter wheat planted acres this year, marking the lowest ratio since 1917.

The Wheat Quality Council's annual crop tour of Kansas fields is expected to provide final yield and production estimates for the country's primary wheat state. Data collected on the tour's second day already indicates average yields falling below the USDA's forecast.

In Chicago, hard red winter wheat futures have experienced a 2.9% decline this year, while the soft variety has faced a significant 22% decrease. The situation highlights the challenges faced by the US in maintaining its dominance in the global wheat market, as it copes with drought-induced crop failures and seeks alternative sources of supply to meet domestic demand.