Saudi Buys U.S., E.U. Wheat for Late 2011 Delivery

Featured

Criticism of the U.S. economy often focuses on America’s inability to be export-led as consumerism still reigns supreme for the nation still strained by economic woes. However, a recent report of a large Saudi Arabian wheat purchase indicates that the U.S. still has a lot to offer as an agricultural producer, especially to nations that need it – like Saudi Arabia.

Saudi Arabia, of course, is a place where farming successfully is difficult, especially for water-intensive crops like wheat. Saudi Arabia is mostly desert and extremely dry, with an ongoing challenge to conserve precious water resources. Given these facts, the Saudi government has effectively outsourced wheat production in favor of imports, which allows the Kingdom to preserve valuable water for human use.

Saudi Arabia has purchased 660,000 metric tons of hard wheat from the U.S., Europe, Australia and Canada for delivery from November to February, according to Glen Carey of Bloomberg, citing data from the Grain Silos and Flour Mills Organization.

In purchasing from the U.S., the E.U. and Australia, Saudi Arabia apparently passed up on Russian and Eastern European wheat over “quality concerns,” according to the IHT round-up on commodities.

The choice of U.S. and Western European Wheat over Russian and Eastern European wheat is a signal that “positive export demand news is coming back to the US,” according to the IHT.

The news is encouraging for wheat producers in the United States, as well as opponents of corn production.  It also is a reminder that the United States still has the capability to be a competitive exporter.