Hard Times for Hard Wheat

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Different needs call for different wheat varieties. There are myriad species of wheat, crops of the genus Triticum, that are grown across the world, and each one is better suited to some growing conditions than others. The protein concentration in each type of wheat is the primary factor in its use. Texture and taste are secondary.

Gluten, the protein found in wheat, varies in concentration from about 8 percent to 15 percent. Higher gluten content wheat varieties—typically above 12 percent—are referred to as “hard”, while those with lower gluten content are called “soft.” Hard wheat is used to make bread because the gluten gives the dough its strength and elasticity. During the kneading process, air bubbles form causing the dough to rise. Softer wheat varieties are used to make pastries, cakes, and cookies, all of which don’t require the same elasticity in the dough that bread does. Durum wheat (Triticum durum), the hardest of all wheat varieties, is the only variety used to make pasta, pizza dough, and some traditional flatbreads.

In general, harder wheat varieties come at a cost premium, since they are uniquely suited to make specific food products. They are also generally more difficult to grow, as the plant’s added protein creation demands more resources.

Hard and durum wheat regions suffer drought

Hard wheat production mostly occurs in North America and Australia, while durum wheat primarily grows in North America and the Mediterranean region. In 2017, all three regions have suffered severe droughts, which has significantly decreased the expected output of each of these crops.

Planting and Harvesting Periods for Wheat in North America
North America Spring and Durum Wheat Production (2016)
Vegetation Levels Below Average in the Wheat Belt (July 2017)


In North America, the vast majority of spring wheat is grown in the wheat belt that runs across the Canada-US border—stretching up north and west from Minnesota and South Dakota in the US to Saskatchewan and Alberta in Canada. Together, Canada and the US account for over 20 percent of global durum wheat production and nearly 80 percent of durum wheat exports. This wheat belt has been hit especially hard by the drought during 2017. Durum production in 2017 is expected to fall 26.6 percent in Canada and 44.8 percent in the US.

Hard wheat, used for making bread, has also fared poorly in the US and Canada. Combined production of hard red winter wheat and hard red spring wheat in the US is forecast to fall 27.4 percent in 2017. Total wheat production excluding durum in Canada is expected to fall 7.0 percent. Consequently, prices of most high-protein varieties shot up by more than 20 percent.

Turkey, Greece, Italy, France, and Spain produce more than 90 percent of Europe’s wheat. During the crucial planting months in spring, evapotranspiration anomalies showed values more than 50 percent below normal through much of the region, indicating a severe lack of water in the plants and soil.

Wheat Production in Europe (2000-2016)
Planting and Harvesting Periods for Wheat in Europe
Evapotranspiration Anomalies in Southern Europe (March 2017)


In some areas, the drought has been particularly devastating. Estimates from the largest grain-producing region in Spain, Castile y Leon, show crop loss totals at 60 to 70 percent. Wheat futures prices in Europe have spiked.

In Australia, the situation is just as dire. Although Australia is not one of the largest producers of wheat, the country’s wheat industry is almost entirely export-focused, making it a major player in terms of global wheat supply. The country consistently clocks in as one of the top three or four largest wheat exporters in the world.

Top 5 Wheat Exporters


Just like Europe and North America, Australia has had a tough time with wheat production in 2017. Drought has plagued wheat production in the country, hitting especially hard during the critical May-June planting period.

Planting and Harvesting Periods for Wheat in Australia


Australia’s wheat output was on track to miss official government forecasts by 20 percent as of mid-July. The current crop will fall below last year’s by 33.1 percent, according to USDA PS&D data.

Australia Wheat Production and Stocks

Global Impacts

The expected production shortfall in hard wheat and durum wheat from North America, Australia, and Europe has pushed up prices significantly for these premium varieties. The harvest period is just starting in Europe, and will soon follow in North America and Australia. However, poor conditions have already caused export prices of last year’s crop to skyrocket. Export prices of premium varieties out of Australia and North America climbed more than 20 percent from April to July. Canadian Western Red Spring wheat had the most drastic move. The export price of this variety at the port of Vancouver climbed 44.2 percent during the same period.

Export Prices of Select Hard Wheat Varieties


The poor crop in 2017 will certainly have implications for global wheat stocks. But it’s worth noting that China skews this outlook. Aside from the European Union, China is the world’s largest producer of wheat. However, the country exports only a nominal amount of wheat and is instead a net importer, continuing to amass greater stockpiles. China therefore effectively does not participate in the global wheat marketplace. While total global wheat stocks are climbing, if we exclude China’s filling warehouses, the rest of the world together will consume a net 9.3 percent of their reserves in 2017.

Global Wheat Stocks Including and Excluding China


The wheat market is struggling this year. Premium hard varieties are suffering a production shortfall as major production regions in North America, Southern Europe and Australia have all experienced significant droughts in the most recent growing season. Nevertheless, producers of soft wheat varieties—used to make all-purpose flour and pastries, and sometimes used for animal feed—have fared well, with no expected production shortfalls from major countries including Eastern and Northern Europe and India.

Hard varieties are mostly used to make breads and pastas, and consequently these products may see a price hike in the upcoming year. Hard wheat export prices from Australia and North America have already increased more than 20 percent since April. As the harvests ensue in Europe, North America, and finally Australia, food manufacturers will slowly get a better sense of how much hard wheat will be produced. Based on those impressions, they will bid more or less aggressively for their supplies. Their level of urgency will determine the final prices for the year. Then we’ll see how much of their raw material cost increase the manufacturers can pass on to consumers of their finished products as food price inflation.

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