The North America wheat market is projected to grow at a CAGR of 2.5% during the forecast period (2020-2025). It is expected to produce 77.4 million metric tons of wheat in 2018. About 70-80% of the wheat produced in the United States belongs to the category of winter wheat used in making bread. Canada is the second-largest wheat exporter, globally, it exported around 16% of the total wheat in 2016, worth USD 4.5 million, whereas, the export of wheat from the United States was worth USD 5.4 million.
Key Market Trends
Growing Demand for Biofuels and Animal Feed
The massive increase in the production of biofuel is majorly driven by the very large government subsidies provided in many western countries, which have been simultaneously increasing the subsidization of biofuel, with a subsequent reduction in subsidies for food cultivation. In contrast to fossil fuels, which are exhaustible resources, biofuels are produced from renewable feedstocks. Also, much of the increase in cereals demand, such as wheat, will be for animal feed to support the growing consumption of livestock products. Both the factors will, in turn, drive the market for wheat seed over the forecasted period. In countries like Canada, high-yielding wheat-based bioenergy crops are developed in order to reduce the dependence on petroleum for transportation and reduce greenhouse gas (GHG) emissions. Although wheat represents a larger part of the production of biofuels in Canada, only 2.9% of the total wheat harvest in Canada was used for bioethanol production. The production of biodiesel increased from 7474.68 litres in 2017 to 7831.14 litres in 2019. Moreover, the federal government is providing subsidies to increase the consumption of biofuels such as wheat ethanol. Some biofuels are cost-competitive with traditional fuels and make a useful addition to gasoline. This in turn has driven the demand for wheat production in North America.
United States Dominates the Market
The acreage under wheat increased from 15,198,130 hectares in 2017 to 16,027,750 hectares in 2018 which was much higher than the acreage reported in Canada, according to the FAO database. Uneven weather conditions in Kansas and Ontario, one of the major regions for wheat production are the major areas of trouble because of increased weather uncertainties. For instance, in Ontario, the winter wheat has been under the snow which also makes it difficult to determine the quality of wheat. The region dominates production and, to a large extent helps set prices at which wheat is traded around the globe. North America is also the supplier that the world depends on during wheat supply issues.
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