According to USDA's first forecast of the year, the European Union is set to overtake the United States as the world's top exporter of wheat next marketing year; the States' exports are set to contract as a result of drought whilst the EU crop continues to grow ahead of schedule.

The bloc is already the world's top producer of wheat (and china and India also produce more wheat than the States annually), though the US has led on exports since the middle of the last century. Even so, as production and stocks have contracted, the EU has caught up with the US in recent years.

According to estimates from 2013/14 the 28 Member States exported 30 million metric tonnes of wheat, compared to the US's 32.25

USDA forecast in its WASDE report on Friday that the States would ship 25.86 MMT of wheat (of all types), while the EU total would be 27.5 MMT. US supplies are set to fall 10 percent as a result of lower stocks, production and imports compared to 2013 levels.

Drought in the US's major hard wheat growing areas accounts for the majority of the country's drop in production; meanwhile the EU's rise is being led by a recovery in the UK from severe weather-related losses. After two challenging years, the UK if forecast to become a net exporter of wheat in 2014-15, and improved production is set to make up for small reductions in the EU's first and second ranked producers, France and Germany.

Paris-based Strategie Grains last month suggested the EU may find itself in a preferable condition as a result of ongoing crisis in the Ukraine, which has made buyers reluctant to purchase from the country, though production and marketing activity appear to have remained unaffected by recent turmoil. An easing of tension in the region in recent days has not yet eradicated this possibility.

Crop conditions in Europe remain positive this week, with most crops two weeks ahead of their average development. All over, and for most crop types, plantings and development are well ahead of last year's progress.   

In line with forecasts released last week by the UN Food and Agriculture Organisation, WASDE figures put world wheat production marginally lower than last year's record harvest. World wheat production is set to drop 2 percent to 632.3 million metric tonnes, though supplies are set to fall by less than one percent.