ARLINGTON, VIRGINIA, US — Reports that US flour mills are importing wheat from Europe as prices make it cheaper to bring it across the Atlantic instead of the US plains has raised concerns and frustrations for US wheat stakeholders, US Wheat Associates (USW) said.

USW said in its June 8 Wheat Letter Blog that importing European wheat to produce domestic flour was “highly unusual” and is “disappointing” to an organization that promotes exports on behalf of US wheat farmers.

“It is important to state that there is more than enough high-quality US wheat available to produce all the flour we need in this country, and the 2023 harvest is already underway,” USW said.

According to news reports, trade data from the EU showed Poland has shipped 79,000 tonnes of wheat to the United States so far in the 2022-23 season. There were also reports of sales of German wheat.

Total US wheat imports are expected to increase 10 million bushels to 135 million in 2023-24, a six-year high, according to the US Department of Agriculture (USDA).

A perfect storm of events — drought that has reduced US crops for three years, a significant increase in exportable volume from Eastern Europe, increasing US rail tariffs and fuel costs — have made some European wheat more than $100 cheaper per tonne than US hard red winter (HRW) Gulf FOB export price.

USW said the relative volume of exportable wheat supplies in Eastern Europe has exploded this year. With Russia’s invasion of Ukraine in February 2022, exports from the Black Sea were limited, which sent wheat and other commodities into Eastern European nations.

That in turn depressed local wheat prices in those nations and caused five EU countries to ban imported Ukrainian grain from staying within their countries. Russia’s record 2023 wheat crop, estimated at 45 million tonnes, has created more regional price pressure, USW said.

At the same time, US wheat supplies, particularly hard red winter (HRW) wheat, have gone in the opposite direction. Drought cut production in 2021-22 and 2022-23. The USDA estimates HRW production at 514 million bushels in the new marketing year, the lowest output since 1957-58.

Additionally, USW said US rail tariffs and fuel charges to transport wheat are close to twice the ocean freight cost on a per tonne basis.

USW and others in the industry believe the imported European wheat likely will move to coastal US flour mills, partly because of the high rail rates to move it to interior facilities.

Supply challenges are likely to continue at least through the 2023 harvest, USW said.

“USW sincerely believes that absent the illegal and highly disruptive invasion of Ukraine, the price spread incentivizing US imports would be much closer,” USW said. “Sadly, the conflict rages on.”