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USW Captures Images of Harvest in Kansas

The landscape in southwestern Kansas is vast and relatively flat. You can see the local grain elevators from 10 kilometers away, tall testimony to the crop for which this country is known. Hard red winter (HRW) and hard white (HW) wheat is ripening everywhere here this week and that is why U.S. Wheat Associates (USW) is also here.

Admist the busy start of wheat harvest, Gary Millershaski and his family welcomed USW and a video production crew to the farm for interviews and gathering footage.

Our organization is producing a video that focuses on the people who contribute to the wholesome quality of U.S. wheat for dozens of different food products around the world. With help from our friends at Kansas Wheat, we are capturing the images and words of one farm family; it is only our first of many visits for a project that will be completed in 2020.

Kyler Millershaski does an interview in front of a barn bearing his grandpa’s name.

In what is now the kitchen of the farm house he lives in now, Earl Kleeman was born in 1930, the same year his parents bought their farm north of Lakin, Kan. Earl’s daughter Jana is married to Gary Millershaski who serves as a Kansas Wheat Commissioner and USW Director. Earl and Gary started farming together in 1992 and Gary and Jana’s sons Jeremy and Kyler joined the operation three years ago. Even though this has been a very wet season, their wheat weathered the storms and has excellent potential. Shortly after we arrived at the farm, Earl proudly showed us a head of wheat he had clipped from one of their best fields. It was full of kernels and ready for the harvest we will proudly show in our video production.

The video production crew films Gary Millershaski working on his combine.

Thanks to Kansas Wheat Director of Communications Marsha Boswell and Program Manager Jordan Hildebrand for their help arranging our visit. And many thanks to the Kleeman/Millershaski family for graciously taking so much time to share their love of producing U.S. wheat for the world.

Gary Millershaski and his son Kyler, talk with Kansas Wheat Commission staff Jordan Hildebrand and Marsha Boswell.

 

 

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Keep Up with the Combines by Subscribing to USW Harvest Reports

As it did last year, a cool, wet spring has delayed the start of the 2019/20 U.S. winter wheat harvest. Progress may be slow, but the new crop harvest is coming. USDA’s National Agricultural Statistics Service reported on May 5 that wheat was maturing in South Texas while farmers in the state’s Coastal Bend area were waiting for drier conditions to start harvest.

You can monitor progress by subscribing now to the U.S. Wheat Associates (USW) Harvest Report, a key component of USW’s international technical and marketing programs. It is a resource that helps customers understand how the crop situation may affect basis values and export prices.

Harvest Report is published every Friday afternoon, Eastern Daylight Time, throughout the season with updates and comments on harvest progress, crop conditions and current crop quality for hard red winter (HRW), hard red spring (HRS), soft white (SW), durum and soft red winter (SRW) wheat classes.

USW also includes links in the email to additional wheat condition and grading information, including the U.S. Drought Monitor, USDA/NASS Crop Progress and National Wheat Statistics, the official FGIS wheat grade standards and USDA’s World Agricultural Supply and Demand Estimates report.

To subscribe to the Report as well as USW’s weekly (export) Price Reports and the “Wheat Letter” e-newsletter, click here, or visit the www.uswheat.org home page and click on the green “Subscribe” button near the top right of the page (see below).

USW also publishes the report in Spanish which is posted here at www.uswheat.org/es. Harvest Reports, Price Reports, Wheat Letter, Commercial Sales and World Wheat Supply & Demand Report are also all posted online at www.uswheat.org/market-and-crop-information/.

Follow along on social media with the hashtag #wheatharvest19.

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Wet, Cold HRW Wheat Tour Predicts Good Yield Potential

By Claire Hutchins, USW Market Analyst

This week, two U.S. Wheat Associates (USW) colleagues and I joined the Wheat Quality Council (WQC) on its 62nd annual “Hard Winter Wheat” Tour for an early survey of the 2019/20 hard red winter (HRW) crop in Kansas and parts of surrounding states. Just a few hours before USW published this issue of “Wheat Letter,” the tour estimated a final average yield potential of 47.2 bushels per acre (bu/ac) or about 3.18 metric tons (MT) per hectare for the 2019/20 Kansas HRW crop. This year, tour participants made 469 stops to scout fields. Combining seeded area with per-acre yield potential, the total production potential estimate for Kansas was 307 million bushels or about 8.36 million metric tons (MMT). Last year’s total production estimate was 243 million bushels (6.61 MMT).

USW Market Analyst Claire Hutchins on her first Wheat Quality Council Hard Winter Wheat Tour.

Each year, industry participants from across the United States and several countries gather in Manhattan, Kan., and spend the next two and a half days in small scout teams, randomly stopping at 9 to 17 fields in a full day. Each team follows a colored route established decades ago by WQC to ensure most of Kansas and parts of southern Nebraska and Northern Oklahoma are scouted by tour participants. Teams measure yield potential, determine an average for the route and estimate a cumulative, daily tour average when all scouts come together again in the evening.

Muddy Boots. Another purpose of the tour is to help educate a broad range of stakeholders about wheat production challenges. Scouts are asked to look for disease, week and insect pressure, as well as soil conditions. Last year, tour participants enjoyed dryer, warmer weather. This year, rain and colder temperatures gave first-time scouts, like me, a true look at variable spring weather in Kansas. Our muddy boots proved that last year’s severe drought, which covered most of the state as of late April, is a distant memory. The April 23, 2019, Drought Monitor shows zero drought or abnormal dryness across the state of Kansas.

Muddy boots were common on the wet 2019 tour.

On the first day, the tour traveled from Manhattan along several routes covering most northern Kansas counties. The cumulative Day 1 average yield potential was 46.9 bu/ac, the equivalent of 3.15 MT per hectare, compared to 38.2 bu/ac (2.57 MT/hectare) in 2018. To reach that average, participants surveyed 240 fields recording a range from a low of 16 bu/ ac to a high of 96 bu/ac. We saw very short and sparse wheat that was two to four weeks behind developmentally. Fields were adequately moist to slightly dry with no standing water. Temperatures were in the mid-40s Fahrenheit (a little more than 4 degrees Celsius) which prevents disease establishment and helps yield potential. Below-average temperatures in the next few weeks could help yield potential for winter wheat, a cool-season grass.

Participants also received a report on the Nebraska and Colorado wheat crops. Nebraska estimated an average 44.0 bu/ac (2.95MT/hectare), up slightly from last year’s tour estimate. Nebraska’s 2019 production forecast is currently 47.4 million bushels (1.29 MMT), up 8% from the 2018 estimate. Colorado predicted an average of 46.5 bu/ac (3.12 MT/hectare) with total production predicted to reach 97.2 million bushels (2.64 MMT), up 39% year-over-year, if realized.

Late Planting Impact. On the second day, the tour scouts traveled on routes from Colby in northwest Kansas to south-central Wichita, making 200 stops. The number of observations was down significantly from last year due to cold, rainy weather. Scouts reported most wheat was two to four weeks behind normal development due to late planting in the fall but continued to see nearly no disease pressure due to April and early May’s cooler than average temperatures. That could push the region’s peak harvest well into June, especially if the cool temperatures persist. This year, the tour estimated Day 2 average yield at 47.6 bu/ac (3.20 MT/hectare), for a combined two-day average yield of 47.2 bu/ac (3.17 MT/hectare) across 440 stops. Last year, the combined two-day average was 36.8 bu/ac (2.47 MT/hectare) on 601 stops.

Each scout calculates their observed yield potential, then the scout car’s average is determined.

Participants also received a crop report from Oklahoma, where adequate rainfall through the growing season helped increase the 2019 average yield projection compared projections in last year’s drought. The estimated average yield in Oklahoma is 37.4 bu/ac (2.51 MT/hectare), for a total production estimate of 119 million bushels (3.24 MMT). If realized, this would be up 50% over last year’s estimate on cool, moist weather and minimal disease pressure. However, marketing conditions are difficult for farmers. Low cash prices for winter wheat are causing many Oklahoma farmers to turn their fields to pasture or replace acres planted to HRW with cotton. Abandoned HRW acres are expected to reach 8% to 10% in 2019.

USW Director of Programs Erica Oakley was among nearly 100 scouts on the 2019 tour.

The final day of the tour was shorter, with each car making 3 to 4 field stops from Wichita to Manhattan where all the data were compiled in the final report. The Day 3 estimated average yield was 46.2 bu/ac (3.11 MT/ hectare), across 29 stops.

USW Director of Programs Erica Oakley and Assistant Director of Policy Elizabeth Westendorf and I will use what we learned on the tour to help educate overseas customers about the new crop and how development delays may affect their purchase decisions. I was raised on an irrigated farm in western Colorado, so this experience helps me understand the volatility of growing conditions with dryland wheat. I want to learn more to work with traders, and I look forward to participating in WQC’s Spring Wheat Tour in July. For more information, visit the Council’s website at https://www.wheatqualitycouncil.org.

Highlights and photos from the tour are posted on Facebook and Twitter using #wheattour19.

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USDA Confirms Delay in Spring Wheat Planting and Good Potential for Winter Wheat

This week, the USDA’s National Agricultural Statistics Service (NASS) reported that as of April 28, U.S. spring wheat planting progress is significantly behind average as farmers wait for their fields to dry out.  Over the past 5 years, an average of 33% of spring wheat was in the ground by now but this year only 13% has been seeded.

What effect will that have on the 2019/20 U.S. hard red spring (HRS) crop? Experts say late planting typically hurts yield potential. Jonathan Kleinjan, an Extension agronomist with South Dakota State University, recently explained that HRS should be planted as early as possible since cooler weather from emergence to the early reproductive stages generally benefits tiller formation and the development of larger heads. Increased growth during the early season typically results in higher yields.

He noted a study in North Dakota that showed spring wheat planted May 1 had 6 fewer days of growth from emergence to 6-leaf stage when compared to wheat planted on April 15. He said the number of days was further reduced to 11 when planting was delayed until May 15. Yield data related to this research, he said, suggests that wheat loses 1.5% of its yield potential every day after the optimum planting date. His conclusion: the extended weather forecast shows unfavorable planting conditions extending well into May, so farmers may switch from small grains to later-planted row crops such as soybeans.

Progress is less than 10% in the major production area of the Northern Plains. The Pacific Northwest is a bit farther along, although Idaho’s Nez Perce County Extension agent Doug Finkelnburg said that “we’re a little delayed with spring planting this season — sort of like last spring.” He said the last date farmers there can purchase spring wheat crop insurance is in mid-May and suggested that planted area will be reduced if they delay goes beyond that time.

NASS also reported that U.S. winter wheat heading progress at 19% is 10 points less than the 5-year average, but crop condition is improving. NASS estimated 64% of total winter wheat was in good-to-excellent condition as of April 28, up 2 percentage points from the previous week. We will learn more about conditions and yield potential of the hard red winter (HRW) crop in Kansas, southern Nebraska, eastern Colorado and northern Oklahoma this week from the Wheat Quality Council Hard Winter Wheat tour. U.S. Wheat Associates (USW) colleagues will join more than 70 other participants and will report during the tour on Twitter using #wheattour19.

* Photo Credit: Aaron Harries, Kansas Wheat V.P. of Research and Operations, on the 2019 Winter Wheat Quality Tour in Kansas

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Here Are 5 Things to Know About SRW Supply and Demand

By Steve Mercer, USW Vice President of Communications

Grown in the eastern United States, soft red winter (SRW) wheat is a profitable choice for producing confectionary products like cookies (biscuits), crackers and cakes, and to blend its flour for baguettes and other bread products. U.S. Wheat Associates (USW) wants to share some key points about SRW exportable supply in marketing year 2018/19 and look ahead to its potential for 2019/20.

1. Good Quality. While excessive rain on the 2018/19 SRW crop did slightly lower average test weight and falling number, protein (9.9% on 12% moisture basis, composite) is above average and DON level (0.7 ppm composite) is slightly below average. Processors should find good qualities for crackers and segments of the crop with good cookie and cake qualities. The higher protein and good extensibility in the crop should add value in blending for baking applications. See more information at https://www.uswheat.org/market-and-crop-information/crop-quality/.

2. Least Cost. SRW is the lowest cost milling wheat in the world today, offered at an average FOB export price of US$202 per metric ton* for June delivery from U.S. Gulf ports. The International Grains Commission in its March Grain Market Report estimated SRW FOB price at $211, which is $6 less than French soft wheat. SRW exportable supplies are also available from Lakes ports (Toledo, Ohio), and Atlantic ports (Norfolk, Virginia, and Wilmington, North Carolina). See more information at https://www.uswheat.org/market-and-crop-information/price-reports/.

3. Supply is Down. Ending stocks of SRW have declined from 5.9 MMT in 2016/17 to USDA’s latest estimate of 4.6 MMT for 2018/19 (by comparison, SRW ending stocks in 2013/14 were 3.1 MMT after China imported 3.6 MMT that marketing year). Reduced supply relates to a near 50% decline in total production from 15.4 MMT in 2013/14 to USDA’s current estimate of 7.8 MMT in 2018/19, as well as an upturn in exports (see below). See more information at https://www.uswheat.org/market-and-crop-information/supply-and-demand/.

SRW ending stocks have declined steadily since 2016/17 on less production and more exports. Source: USDA

4. Demand is Up. As of April 4, SRW exports of 3.3 million metric tons (MMT) are 36% more than at the same time in marketing year 2017/18. This represents the most volume SRW sales year to date since 2014/15. Commercial SRW sales to Mexico, Colombia, Peru, Ecuador and Brazil are up significantly, as are imports by Central American and Caribbean countries and Nigeria. See more information at https://www.uswheat.org/market-and-crop-information/commercial-sales/.

U.S. SRW wheat supplies are down; export demand takes an upturn. Source: USDA

5. Planted Area is Down. In February 2018, USDA reported that SRW seeded area for 2019/20 is 5.7 million acres (2.4 million hectares), or down 7% from last marketing year. Most of the states that typically produce the most exportable SRW supplies planted less. This decline is not more significant only because some farmers can harvest SRW and then quickly plant soybeans to get a double crop from the same acre. In general, U.S. crop farmers, who are driven by economic circumstances to minimize their net losses at best this year, are turning away from winter wheat to other crops that offer better returns. Total U.S. winter wheat seeded area for 2019/20 is at its second lowest level on record. See more information at https://www.nass.usda.gov/Publications/Todays_Reports/reports/wtrc0219.pdf.

*Source: USW Price Report, April 12, 2019

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Upcoming Tour Offers First Look at U.S. HRW Yield Potential

More than 90 U.S. wheat industry stakeholders will soon get a close-up view of the new wheat crop in Kansas, southern Nebraska, eastern Colorado and northern Oklahoma on the annual Wheat Quality Council (WQC) Hard Winter Wheat Tour April 29 to May 2. This tour and a second one in July focused on U.S. spring wheat are educational for the participants and news worthy as a first snapshot of each year’s new crops.

Tour participants come from as far away as Australia and represent all facets of the wheat industry, including millers, traders, media, farmers, researchers and government officials. By traveling across the region in scout teams that stop at random fields to evaluate crop progress and yield potential, they learn more what it takes for farmers to grow, manage, harvest and market the crop. U.S. Wheat Associates (USW) is sending two colleagues on the tour this year: Director of Programs Erica Oakley and Market Analyst Claire Hutchins.

Domestic and overseas buyers and end-produce processors pay close attention to personal observations and photos during the tour by following #wheattour19 on Twitter and Facebook, through summarized daily reports on Tuesday and Wednesday evenings and in the final report with an estimate of average yield per acre across the region.

The tour provides a statistically significant, early idea of what buyers can expect in new crop yields from the surveyed area. In 2018, for example, 24 WQC scout teams made evaluations at 644 fields and estimated average regional yield at 37 bushels per acre (49.2 kilograms per hectoliter). Official data from USDA’s National Agricultural Statistics Service estimated the average Kansas wheat yield in 2018 at 38 bushels per acre (50.5 kilograms per hectoliter). High Plains Journal posted more about the 2018 Hard Winter Wheat Tour by WQC Executive Vice President Dave Green at https://bit.ly/2XbAmu5.

Watch for observations from Anderson and Hutchins during this year’s tour on USW’s Facebook and Twitter pages and a full report of the 2019 tour May 2 in USW’s Wheat Letter blog.

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Revenue Potential, Weather Conditions to Cut U.S. Spring Wheat Area

By Claire Hutchins, USW Market Analyst

(Revised April 5, 2019)

According to the March 29 USDA Prospective Plantings report, U.S. total spring-planted wheat area will fall to an estimated 14.2 million acres (5.75 million hectares), 7% below 2018/19, if realized. The estimate includes 12.4 million acres of hard red spring (HRS), down 2% from last year, if realized. USDA expects U.S. durum planted area to total 1.42 million acres (575,000 hectares), 25% below 2018/19 and 30% below the 5-year average. Farmers in the top four spring wheat producing states of North Dakota, Montana, South Dakota, and Minnesota are expected to decrease total spring wheat planted area year over year on price and weather concerns.

USDA expects a 150,000 acre (61,000 hectare) increase in North Dakota HRS area from 2018 to 6.7 million acres (2.71 million hectares), a 7% increase over the 5-year average, if realized. At the same time, USDA expects the state to decrease its planted durum area by 32% from last year. Currently, HRS commands a premium over durum at local elevators, prompting the decline in North Dakota’s durum planted area from 1.10 million acres (445,000 hectares) in 2018 to 750,000 acres (304,000 hectares) in 2019. Farmer frustration is evident in recent planting trends. In 2019, 11% of North Dakota spring wheat acres will go to durum compared to 23% in 2017.

Dr. Frayne Olson, crop economist and marketing specialist at North Dakota State University, told U.S. Wheat Associates (USW) the increase in HRS over durum planted area in the past few years is driven by the inversion in cash premiums for both classes.

“Four years ago, in 2015, farmers received $1.90 per bushel more for durum than HRS. And three years ago, in 2016, the durum premium over HRS was $1.20 per bushel,” Dr. Olson said. “Now, HRS commands a premium of between $0.12 per bushel to $0.41 per bushel premium over the top durum grade.”

USDA forecast Montana spring wheat planted area at 2.60 million acres (1.05 million hectares), down 10% from 2018/19. According to Cassidy Marn, marketing program manager with the Montana Wheat & Barley Committee, farmers are on track to begin planting by the third week in April, barring an unforeseen weather event, but are seeking more profitable alternatives to spring wheat. However, Marn added, more profitable choices are difficult to find because “the pulse market isn’t strong, and neither is the market for durum.” Mike Krueger, an independent market analyst based in North Dakota, suggests Montana farmers are more likely to leave would-be spring wheat acres fallow than to plant alternative crops like dry peas or barley.

Minnesota HRS planted area is expected to decrease 5% from 2018/19 levels to 1.53 million acres (62,000 hectares). Krueger believes the state’s final area planted to HRS in 2019 will fall below the USDA’s estimate due to price and weather concerns.

“In the fall, there was a lot of enthusiasm for HRS because the initial 2019 CRC insurance price for spring wheat is $5.77.  That compares to $6.31 a year ago,” Krueger said.

He believes Minnesota farmers will convert more 2019 spring wheat acres to soybeans because, despite trade disputes with China, the domestic soybean market is firmer on average than the markets for corn and wheat. Soybeans may be the most viable alternative if record precipitation keeps Minnesota farmers out of the fields for the next 20 to 30 days, forcing them out of the ideal spring wheat planting window.

Competitive Soybeans. Comparing average and recent cash prices, relative stability can offer an incentive for farmers in North Dakota and Minnesota to plant more soybeans than spring wheat. This year, wet conditions could also favor more soybean planting. 

 

South Dakota 2019/20 HRS planted area is forecast at 1.02 million acres (41,000 hectares), down 3% from last year. Reid Christopherson, executive director of the South Dakota Wheat Commission, said the USDA’s estimate may be a little optimistic given current weather and price conditions in the state. In the fall, producers were enthusiastic about converting harvested soybean acres to winter wheat, before extremely wet conditions delayed harvest and winter planting. Then, he said, hope for strong wheat markets persisted into the spring until the “bomb cyclone” hit the state, leaving many would be HRS acres buried under 30 to 43 cm. of snow. Now, he expects, spring wheat planting in South Dakota to be delayed until the third or fourth week in April. Christopherson said, “Late planting and low market prices will prompt producers to plant more row crops in 2019 than spring wheat, despite earlier intentions.”

On April 1, USDA also updated the country’s winter wheat planted area from the February forecast. Total U.S. winter wheat area is now expected to hit 31.5 million acres (12.8 million hectares), up 200,000 acres (81,000 hectares) from the February forecast, but still 3% below the planted area for 2018/19 harvest. USDA now forecasts HRW planted area at 22.4 million acres (9.07 million hectares), up slightly from the previous projection, but still 3% below the year prior and 10% below the 5-year average on delayed planting. Soft red winter (SRW) planted area for 2019 harvest decreased from the previous estimate to 5.55 million acres (2.25 million hectares), 5% below 2018/19 planted area. The first USDA Crop Progress report of 2019, released April 1, indicated 56% of the country’s winter wheat to be in good to excellent condition.

USDA expects white wheat acres, planted in both winter and spring, to fall to 3.9 million acres (1.57 million hectares) for 2019/20, down 5% from 2018/19 and the 5-year average of 4.1 million acres (1.66 million hectares). The U.S. Drought Monitor shows adequate moisture for wheat-growing regions clustered in northeastern Oregon, southeastern Washington and north-central Idaho. However, central Washington and Oregon are experiencing abnormally dry to moderate drought conditions. Still, USDA reported that the majority of the white wheat crop in those three states is in good to excellent condition.

Planted area reductions for all classes bring the total wheat planted area for 2019 harvest down to 45.8 million acres (18.5 million hectares), 4% below 2018 and 7% below the 5-year average, making this year’s total wheat planted area the lowest since USDA records began in 1919.

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All of Us Share in Farm and Ranch Losses

Last week, an unusual combination of weather conditions created historic flooding in Eastern Nebraska, Western Iowa and parts of Northeast Missouri that literally wiped out many farms and ranches. In Western Nebraska, where most of the winter wheat in the state is grown, farmers suffered through a very bad blizzard at a time when wheat is normally coming out of dormancy.

 

Nebraska Gov. Pete Ricketts detailed more than $1.3 billion in damage to the state’s infrastructure, agriculture, businesses and homes on March 20. That estimate includes $400 million in projected livestock losses and $440 million in crop losses, including large volumes of stored grain. Tragically, a farmer in Eastern Nebraska, James Wilke, lost his life trying to help others during the flood.

 

This is happening at a very challenging time for many farmers facing low commodity prices and rising levels of debt.

 

“There’s not many farms left like this, and it’s probably over for us too, now,” Anthony Ruzicka, a farmer and rancher near Verdigre, Neb., said to the New York Times. “Financially, how do you recover from something like this?”

 

Royce Schaneman, Executive Director of the Nebraska Wheat Board, told U.S. Wheat Associates (USW) that wheat farmers did not suffer the worst of the storm, although some had livestock losses in the blizzard. Looking ahead, the long-lasting winter of 2019 increases the chance of flooding along the Red River that borders Minnesota and North Dakota and flows into Canada’s Manitoba province — and that is spring wheat country.

 

The federal government is developing a response to last week’s disaster. USDA Secretary Sonny Perdue sent this Tweet recently: “We are on the job helping folks in the Midwest get back on their feet and recover from these devastating floods. Farmers can expect assistance from a variety of programs we offer in the wake of disasters. More here: https://www.farmers.gov/recover.”

 

Other ways to help those affected by the storm include the Nebraska Farm Bureau’s Disaster Assistance Exchange that accepts donations and helps match donors with those in need.

 

Farmers and ranchers gladly accept the inherent risk of their work and suffer with those who experience these storms. Everyone else, including our colleagues from USW and the National Association of Wheat Growers, and our customers around the world cannot forget how much we all depend on the people who produce our food.

 

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Positioned to Return More Value to Wheat Buyers and Producers

By Vince Peterson, USW President

Recently, I was searching online for some wheat market information to share at an upcoming meeting. I saw a headline that asked: “What country exports the most wheat?” Great, I thought, here we go again with more propaganda about Russia beating the United States in the global wheat export market contest.

Instead, I was quite pleased to scroll down to find that the United States was still the world’s largest wheat exporter in 2017 in terms of “value” according to the “World’s Top Exporters.” Russia produced almost twice the volume of wheat than the United States and more than matched U.S. export volume that year; but at an estimated $6.1 billion, U.S. wheat exports generated $300 million more value than Russian wheat exports.

The reason is clear: there are many private and public wheat buyers, millers and processors around the world that prefer the quality, variety and value of U.S. wheat; and that remains a primary asset to our farmers.

U.S. Wheat Associates (USW) has adjusted its allocation of wheat farmer dollars and program funds from USDA’s Foreign Agricultural Service to activities in markets that have a growing need for a variety of flour products with high quality functional characteristics. There our differential advantages shine through and where the investment offers the most return. On the other hand, USW continues to provide the trade servicing needed in the more cost-sensitive markets that are buying Russian wheat. There is value there, too, with a market environment like today’s in which the price spread between U.S. wheat classes and Black Sea supplies has narrowed. We continue to provide technical support to those buyers to demonstrate and build more knowledge about the true functional value of U.S. wheat. In addition, we are strong advocates for continuous improvement in wheat quality.

Looking ahead, I believe this is the right position for U.S. wheat in a global market with growing income levels, increasing urbanization and record setting consumption every year. It also reflects our mission: to enhance wheat’s profitability for U.S. producers and its value for their customers.

 

USW President Vince Peterson

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USW Reports on World Wheat Production and Exports

By Claire Hutchins, USW Market Analyst

U.S. Wheat Associates (USW) reports on global wheat supply and demand to its farmer directors at each of their board meetings. The directors meet in Washington, D.C., the week of Feb. 11 and the report will include the following update on marketing year 2018/19 wheat production, with one exception: the latest U.S. supply and demand data will be added after USDA issues catch-up reports on Feb. 8.

Canada. In its January “Principle Field Crops” report, Agriculture and Agri-Food Canada (AAFC) tallied total 2018/19 Canadian wheat production at 31.8 million metric tons (MMT) (1.20 billion bushels), up 6 percent year over year. AAFC estimated the average yield for all wheat was 3.22 MT/ha (47.9 bu/acre). That is down 4 percent from 2017/18 though significantly offset by a 10 percent increase in harvested area to 9.90 million hectares (24.5 million acres). Production of all wheat excluding durum increased 4 percent from 2017/18 levels to 26.0 MMT due to increased harvested area, despite slightly lower yields in 2018/19.

Increased planted area helped push durum production up by 16 percent to 5.70 MMT, while quality decreased slightly. The Canadian Grains Commission (CGC) reported 85 percent of the Canadian Western Amber Durum (CWAD) samples tested graded No. 1 or No. 2 CWAD, compared to 91 percent in 2017/18. For Canadian Western Red Spring (CWRS), CGC reported 56 percent of samples were No. 1 CWRS, compared to 78 percent in 2017/18. The percentage of samples tested as feed grade increased to 11 percent compared to last year’s 4 percent.

AAFC expects 2018/19 Canadian total wheat exports (including durum) to reach 22.9 MMT, up 5 percent from last year if realized.

European Union. Stratégie Grains (SG) forecasted total European Union (EU) wheat production at 136 MMT, down 11 percent year over year due to adverse weather conditions and decreased harvested area. Total EU harvested wheat area fell 2 percent year over year and total average yields for the region fell 9 percent. Common (non-durum) wheat production fell 10 percent from 2017/18 levels to 127 MMT due to significant weather challenges in Germany, France, and the Baltic countries.

Durum production fell 7 percent to 8.60 MMT in 2018/19, however this year’s total still sits slightly above the 5-year average of 8.50 MMT. SG noted that Italian durum yields were their lowest since 2010 at 3.09 MT/ ha (46.0 bu/acre), and the situation was exacerbated by a low-protein harvest that failed to match the excellent quality recorded in 2017. French durum yields were also the lowest they have been since 2011, not counting the disastrous harvest recorded in 2016.

SG expects total EU wheat exports to fall to 19.2 MMT, down 18 percent year over year, if realized due to increased animal feed consumption, following poor quality harvest years in Spain and France, and decreased overall supplies.

Australia. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecasted 2018/19 wheat production at 17.0 MMT, its lowest volume since 2007/08 due to extreme drought in New South Wales and Queensland. Wheat exports will decrease sharply year over year due to lower production and increased demand for domestic feed supplies. Domestic demand for feed wheat, due to forage pressure on livestock herds, is expected to increase 20 percent year over year to 5.0 MMT. ABARES estimates total Australian wheat exports will fall 31 percent below 2017/18 levels and 40 percent below the 5-year average, down to 10.6 MMT.

Argentina. Bolsa de Cereales, the Buenos Aires Grain Exchange, reported a record Argentinian harvest of 19.0 MMT, despite concerns in late December 2018 that yield and quality could suffer from hard rains and hail storms. Final average yields are right in line with the 5-year average at 3.10 MT/ha (46.2 bu/acre) but fall below last year’s 3.20 MT/ha (47.7 bu/acre). Total production is up 10 percent from 2017/18 with increased planted and harvested area, which offset lower yields. Planted area increased 9 percent year over year to 6.0 million hectares (14.8 million acres). USDA expects 2018/19 Argentina wheat exports to total 14.2 MMT, 15 percent above last year’s export volume and 40 percent above the 5-year average, if realized.

Black Sea. SG estimated Russian wheat production at 72.0 MMT, down 18 percent from last year’s 85.0 MMT due to decreased harvested area and notably lower yields across the board. Russia’s harvested area dropped by 5 percent year over year to 26.3 million hectares (65.0 million acres) and average yields decreased by 12 percent to 2.73 MT/ha (40.6 bu/acre). Most significant yield losses were reported in Russia’s southeastern Volga region, which fell 33 percent below last year’s figures. Though Russian production fell significantly below 2017/18 levels, this year’s 72.0 MMT still lands 3 percent higher than the 5-year average of 70.0 MMT. The Russian Ministry of Agriculture readjusted its 2018/19 total wheat export estimates to 36.0 MMT, a 12 percent drop from 2017/18 export levels, if realized. As of late January 2019, IKAR reported total Russian exports at 26.2 MMT, or 73 percent of the country’s total expected export volume. SG estimates that the influence of Russia’s decreased production and exports will bolster global wheat prices until the start of MY 2019/20.

The State Statistics Service of Ukraine (SSSU) estimated the 2018/19 wheat harvest at 24.6 MMT, right in line with the 5-year average, but down 8 percent from last year’s record harvest due to decreased yields which offset increased harvested area. SG reports Ukraine’s 2018/19 average yield at 3.72 MT/ha (55.3 bu/acre), 7 percent below last year’s record of 4.16 MT/ ha (61.9 bu/acre). Ukraine’s Ministry of Agriculture tallied total wheat exports, as of late January 2019, at 11.2 MMT. Last year, the Ukrainian government issued a memorandum establishing a 2018/19 export ceiling at 16.0 MMT, its lowest export volume since 2014/15, if realized.

SG estimated Kazakh wheat production at 14.3 MMT, down slightly from last year due to decreased harvested area. However, the Kazakh Agriculture Ministry estimated the country will export a record 9.0 MMT in 2018/19, 1.20 MMT more than left the country last year. If realized, this year’s total Black Sea exports from all three countries will amount to 61.0 MMT, down 12 percent from last year, but still 11 percent above the 5-year average.

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