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An Inside Look at IGP’s Flour Milling Short Course for Commissioners

The IGP Institute serves Kansas and U.S. agriculture through its global education center housed in the Grain Science Complex on the Kansas State University campus in Manhattan. Its mission is to provide technical, research-based training benefiting industry professionals globally and enhancing the market preference for U.S. grains and oilseeds. The emphasis is on educational and technical programs supporting promotion and export market development efforts.

From Feb. 25 to 27, 2020, four colleagues from U.S. Wheat Associates (USW) participated in an IGP short course on flour milling for wheat commissioners (farmers and grain trade representatives who serve on the boards of state wheat commissions) and staff.  IGP tries to hold this course annually to educate members of the U.S. wheat industry in the basic principles of flour milling through classroom lecture and hands-on practical training in the Kansas State University milling and baking laboratories and the Hal Ross Flour Mill.

Here is an inside look at this fun and very enlightening course that has built, and will continue to build, greater empathy for and connections with overseas flour milling and wheat food processors among U.S. wheat farmers and grain traders.

Participants in the 2020 milling short course were (left to right around the table): Mark Fowler, Vice President of Global Technical Services, USW , and co-instructor; Amanda Hoey, Chief Executive Officer, Oregon Wheat Commission, Portland, Ore.; Nathan Larson, a wheat farmer and Kansas Wheat Commissioner, Manhattan, Kan., ; Lance Adams, Merchandising Manager, Team Marketing Alliance, Moundridge, Kan.; Steve Mercer, Vice President of Communications, USW; Jason Middleton, Oregon Wheat Commissioner and PNW Regional Manager, United Grain Corp., Umatilla, Ore.; Dana Tuckness, a wheat farmer and Oregon Wheat Commissioner, Ontario, Ore.; Shelby Knisley, Director of Policy, USW; Scott Yates, Director of Communications and Membership, Washington Grain Commission, Spokane, Wash.; Claire Hutchins, Market Analyst, USW; Brian Cochrane, a wheat farmer and Washington Grain Commissioner, Kahlotus, Wash.; Aaron Harries, Vice President of Research and Operations, Kansas Wheat, Manhattan, Kan.; Shawn Thiele, Interim Associate Director/Flour Milling and Grain Processing Curriculum Manager, IGP Institute, and co-instructor.

 

 

Mark Fowler counsels his colleagues Shelbi Knisley and Claire Hutchins on adjusting laboratory mills in K-State’s Shellenberger Hall in a section of the course demonstrating basic milling processes. Hutchins is adjusting the break roll gap on the lab mill.

 

Measuring and adjusting “Break Release” to balance the milling system is a basic skill for flour millers. Here in the Hal Ross Flour Mill, Shawn Thiele explains how weighing stock from 1st break rolls, sifting and comparing the weight of the resulting flour (“through material”) measures the percentage of break stock released.

 

Comparing particle size and color of “through” material from the break, purification and reduction systems clearly show the fine-tuned effort at each step in the milling process to extract as much usable flour as possible from cleaned and tempered wheat stock.

 

Participants in the short course learned about the wide range of flour qualities and byproducts produced in the milling process. This sample table was prepared for course participants by students at K-State working toward bachelor’s degrees in milling science and management.

 

One wheat does not fit all. Preparing and baking sugar snap cookies (biscuits), yellow cakes and pan breads using different flour products helped the course participants better understand flour functionality and the crucial wheat quality component for end-product processors around the world. Aaron Clanton, left, Bakers National Education Foundation (BNEF) Instructor at K-State, and several Bakery Science students led the participants through an enjoyable morning in the K-State bakery lab.

 

 

 

 

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The Story Behind Dependable People, Reliable Wheat

Over the years, U.S. Wheat Associates (USW) has described the value of U.S. wheat to overseas buyers, millers and wheat food processors in many ways. We have called it “the world’s most reliable choice.” We have suggested it is “the wheat you want from producers you can depend on.” And we have offered it as “high quality wheat for every need with unmatched service and value.”

What we have said about U.S. wheat is not an empty promise. Through seasons of surplus and scarcity, and wide variability in prices, USW continues to make this case because U.S. wheat farmers have consistently produced abundant supplies of excellent quality wheat that has earned an enduring reputation for reliability and value over many years.

Every year, productive U.S. wheat farm families produce enough wheat to fill dinner tables at home, and still have more than half their crops to share with milling and food industries around the world.

As part of our celebration of 40 years operating as USW, we remain true to the differential value of U.S. wheat in this simple expression: “Dependable People. Reliable Wheat.”

Ultimately, USW believes customers from around the world continue to turn to the United States for wheat because buying it carries less risk. U.S. wheat quality is predictable and the Federal Grain Inspection Service (FGIS), as an objective third party, certifies that all exported wheat meets import specifications. Their inspectors create a shipping log that is available to the buyer as an additional risk management tool.

The Federal Grain Inspection Service (FGIS), as an objective third party, certifies that all exported wheat meets import specifications.

The U.S. wheat store also offers six distinct classes that are proven specific, high-quality ingredients for any end-product need. Hard red winter, hard red spring, soft white, hard white, soft red winter wheat and durum each offer inherent quality and functional value.

That is reliable wheat.

Moreover, no other wheat seller does more than the United States to add value to its wheat through customer support. At its very base, this support comes from the farm families who take great care in producing the highest quality wheat in the most sustainable ways possible. They work hard each year to grow their farms, honor their family legacies and to ensure greater value for their customers at home and abroad.

In good years and bad, U.S. wheat farmers have supported USW’s effort to work directly with buyers to answer questions and resolve issues in purchasing, shipping or using their six classes of wheat. Their contributions to state wheat commissions who in turn contribute a portion of those funds to USW, which in turn qualifies USW to apply for export market development funds managed by USDA’s Foreign Agricultural Service.

With USW, buyers also get professional technical assistance, education, information and personalized consulting that help strengthen overseas milling, storage and handling, and end product industries.

The highest quality food for the world demands the highest quality wheat. For 40 years dependable people have made the difference.

Today, we remain fixed on the mission of the farmers who created an enduring legacy of commitment and partnership to provide the highest quality wheat for almost every customer need, backed by transparent pricing, trusted third-party certification and unmatched service before and after the sale.

Those are dependable people.

We invite our customers to join us in celebrating our 40th year as USW. We will continue to share the many ways in which the reliability of U.S. wheat and the dependability of U.S. farmers, USW, and our government and educational partners make a positive difference for our customers all over the world.

 

View video on Vimeo.

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Cereal Chemistry Training in Emerging Wheat Markets Features SRC Analysis

U.S. Wheat Associates (USW) is applying Agricultural Trade Promotion (ATP) program funding to hold “Cereal Chemistry Seminars” in 2020 for the milling industries across several countries that are growing in sophistication to meet expanding demand for wheat foods. USW believes that with a more complete understanding of the functional value of wheat proteins, carbohydrates and other properties, flour milling quality control managers will have additional information with which to evaluate the high-quality characteristics of U.S. wheat compared to competing supplies.

To provide the knowledge that will help these managers fully understand the end-use value of U.S. wheat supplies, USW has developed a comprehensive seminar that will be conducted over the next two years in several markets. One of the topics to be covered in the seminars is Solvent Retention Capacity (SRC) analysis of flour (photo above Copyright © Chopin Technologies).

USW believes that the evidence is strong supporting SRC as the most effective method for evaluating the true performance characteristics in flour for biscuits (cookies), crackers and cakes, as well as many hard wheat flour applications, is testing for. The SRC Method was created by scientists to identity the important components of wheat flour that affect end-product cost and productivity for cookie and cracker manufacturing. SRC testing reveals that U.S. wheat has strong “character.” In other words, it functions effectively and produces desirable end-products without heavy additive manipulation.

In a brief video, Bongil (Bon) Lee, operations manager with the Wheat Marketing Center in Portland, Ore., describes the basic functions of SRC flour analysis. Click here to view the video.

USW anticipates that after the seminars, participants will have enhanced skills, like being able to use SRC analysis, to assist co-workers, suppliers and customers in developing new formulations requiring more specific flours and increased volumes of U.S. wheat classes. Participants will gain expertise in flour analysis and the importance of specifications required in large production bakeries. And quality control staff will have enough technical capabilities to defend the functional value of high-quality flour from U.S. wheat.

By funding opportunities like Cereal Chemistry Seminars, ATP, an export market development program administered by USDA’s Foreign Agricultural Service, is helping USW continue to give flour milling and baking managers the information they need to meet demanding consumer needs in their local markets while building a preference for U.S. wheat supplies.

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U.S. Wheat Associates Activities Focus on Valuable Japanese Market

By Erica Oakley, USW Director of Programs

It has been a busy couple of weeks for the U.S. wheat industry in Japan. On Nov. 14, 2019, the Governor of Oregon, Kate Brown, held a “Friends of Oregon” reception where our friend and recently retired colleague, Mr. Wataru “Charlie” Utsunomiya was recognized for his long-term contribution to wheat trade between Oregon and Japan. Charlie’s relationship with Oregon began 40 years ago and included living in the state for more than a decade. The Governor thanked Charlie for “his extraordinary service to wheat growers and to Oregonians” and acknowledged the ties “between the U.S. and Japan around wheat that he [Charlie] has built and maintained.” With more than 100 in attendance at the reception, the strong relationship between Japan and Oregon and Charlie’s contribution to that relationship was palpable and heartwarming.

 

Wataru “Charlie” Utsunomiya accepts the “Friends of Oregon” award from Governor Kate Brown.

Charlie with Governor Kate Brown, friends and staff from USW, the Governor’s office, Oregon Department of Agriculture and the Japanese milling industry.

The reception was fortuitously timed as days later the USW Tokyo Office, now led by Mr. Kazunori “Rick” Nakano, held their annual Crop Quality (CQ) seminar on Nov. 18 and the Japan Buyers Conference on Nov. 19. This year’s CQ seminar had more than 140 in attendance – a record for the annual seminar held in Tokyo.

As the Japan Buyers Conference took place on Tuesday, the Lower House of Japan’s legislative body was passing the U.S.-Japan Trade Agreement, which moves U.S. wheat growers one step closer to the same preferential advantage as Canada and Australia. The flour millers that attended the conference in Tokyo represented more than 80% of the 2.78 million metric tons (MMT) of total 2018/19 commercial wheat sales to Japan reported by USDA as of May 31, 2019. There were 22 U.S. representatives, including 11 farmers and state wheat commission representatives from five states.

The conference focus differed slightly between the morning and afternoon sessions, with the morning audience largely comprised of milling personnel. Mike Spier, USW Vice President of Overseas Operations, kicked off the morning with welcome remarks. Drs. Michael Pumphrey of Washington State University and Senay Simsek of North Dakota State University both emphasized the focus on quality. Pumphrey discussed quality-first breeding techniques in the Pacific Northwest (PNW) and Simsek focused on the growing trend for clean labels and how can traits in most desirable varieties can provide the quality characteristics needed to forego additives. Bon Lee of the Wheat Marketing Center (WMC) rounded out the morning by highlighting WMC’s programmatic efforts and services for Asian customers.

Bill Flory, Idaho wheat farmer and commissioner, and Bon Lee, Wheat Marketing Center, at the 2019 USW Japan Buyers Conference. Photo courtesy of Idaho Wheat Commission.

The afternoon session shifted to a broader audience with Zeke Spears, Agricultural Attaché USDA Foreign Agricultural Service, providing opening remarks. Doug Goyings, USW Chairman and a wheat farmer from Paulding, Ohio, thanked the attendees for their long-standing relationship and shared the history and pictures of his family operation. Dr. Bill Wilson, North Dakota State University, discussed dynamic changes in the wheat marketing system, including changing consumer demands, logistics and technology, as well as increased risk and overall industrial changes. Greg Guthrie, BNSF Railway, provided an overview of BNSF’s efforts to meet demand and how technological advancement will benefit the Japanese wheat supply chain. Steve Wirsching, USW Vice President and West Coast Office Director, brought the conference full circle highlighting the superior value of U.S. wheat and efforts to ensure our Japanese customers receive the quality wheat they deserve.

2019 USW Japan Buyers Conference. Photo courtesy of Idaho Wheat Commission.

The day ended with a reception at the Palace Hotel with remarks from Goyings; Mr. Makoto Osawa, Ministry of Agriculture, Forestry and Fisheries, Vice-Minister for International Affairs; Mr. Gary Meyer, U.S. Embassy Minister-Counselor for Agricultural Affairs; and Mr. Yoshihisa Fujita, Japan Flour Millers Association. The reception rounded out a very welcome and successful conference.

Header Photo Caption: Doug Goyings, USW Chairman, welcomes the Japan Buyers Conference attendees.

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Learning Along with Customers on a Ten-Day Crop Quality Tour

By Michael Anderson, USW Assistant Director, West Coast Office

From Nov. 1 to 10, 2019, a team of eight U.S. Wheat Associates (USW) representatives crisscrossed the South Pacific covering almost 20,000 miles in ten days to report on the quality of the 2019 U.S. wheat crop. Touching down in three countries, the team met with more than 300 wheat buyers, flour millers and wheat food executives representing a major portion of wheat importers in their markets.

I had the good fortune to participate in my first series of Crop Quality Seminars with USW colleagues, wheat farmers and U.S. wheat industry experts in Indonesia, Thailand and the Philippines. Working as Assistant Director in USW’s West Coast Office in Portland, Ore., I get to meet with many overseas trade delegations in the United States and it was interesting to see so many familiar faces in their own countries. My colleagues agreed that it was also valuable to see and taste some of the beautiful pastries, breads, noodles and more end products these customers produce with flour milled from U.S. wheat.

To have this first experience in Southeast Asia was exciting because the region is of tremendous importance to our farmers, accounting for 30 percent of global wheat trade. The Philippines and Thailand are among the top 10 customers for U.S. wheat, with the Philippines ranking second among U.S. wheat importers year-to-date. The entire South Asia region makes up the second largest destination for wheat imports from the United States, totaling 3.28 million metric tons (MMT) so far in marketing year 2019/20.

Reporting on crop quality is USW’s largest trade service activity each year. It starts as soon as harvest starts in the United States. USW partner organizations collect and analyze hundreds of samples from country elevators and USW compiles the data in an annual Crop Quality Report. Seminars like the ones in which I participated are held in dozens of countries where growers, traders, consultants and customers have the unique opportunity to learn about and discuss the functional qualities that year of all six U.S. wheat classes.

Michael Anderson during one of his USW Crop Quality seminar presentations.

For example, participants heard from and were able to ask questions directly of experts like Art Bettge who has participated in several USW seminars since 2014. He is a respected cereal chemistry expert who worked at the USDA Agricultural Research Service Western Wheat Quality Lab in Pullman, Wash., for many years. At the South Asian seminars, Bettge reviewed the value of solvent retention capacity (SRC) analysis to determine end use and baking quality and interpreted SRC data about the 2019 U.S. crop and how growing conditions affected soft white (SW) quality factors.

It was a privilege to be part of the entire team who also covered global and U.S. wheat supply and demand during the seminars. My presentation was focused on helping customers make the most profitable use possible from the weekly USW Price Report, Harvest Reports in season, the weekly Commercial Sales Reports as well as the complete Crop Quality Report and individual quality reports by class that USW and its partners publish.

I also learned quite a bit from my participation. Our industry’s commitment to transparency is demonstrated in the data and seminars on U.S. wheat quality, an activity that has been shared with customers for more than 40 years. I also saw how the opportunity to interact directly with members of the wheat trade, technical specialists, USW staff and growers adds unique value to and separates U.S. wheat from competing supplies.

Now I am looking forward to the next opportunity to share this information with our customers around the world!

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USW Market Analyst Attends Crop Quality Seminars and Annual IAOM Conference

By Claire Hutchins, USW Market Analyst

Every year, U.S. Wheat Associates (USW) hosts educational seminars around the world to engage with overseas customers and share information on the unique quality and marketing characteristics of that’s year’s U.S. wheat harvest. In early November, I had the opportunity to join my USW colleagues for the first time in Dubai, U.A.E. and Cairo, Egypt for two crop quality seminars and the 30th anniversary celebration of the International Association of Operative Millers (IAOM). These events were substantially different, but equally important opportunities to engage with U.S. wheat customers around the world.

Crop quality seminars give customers an in-depth look at the quality of each class of U.S. wheat following that year’s harvest and an overview of broad supply and demand conditions affecting global wheat markets. Led by USW milling, baking and marketing specialists, as well as outside consultants, these seminars feature presentations not only detailing the growing conditions for each U.S. wheat class, but each class’s grading characteristics, flour testing results and baking data. Topics also range from competitor production highlights to foreign policy issues affecting international trade.

At the seminars that I attended, USW’s Ian Flagg, Regional Vice President, European, Middle Eastern and North African Regions’ Chad Weigand, Assistant Regional Director, Sub-Sahara African Region; and Tarik Gahi, Milling and Baking Technologist, Middle Eastern, East and Northern African Region; lead the crop quality, global supply and demand and marketing presentations. I had the opportunity to present “Understanding the USW Price Report and Basis,” an intuitive, how-to-read exploration of the USW Price Report we publish each week. Navigating U.S. export markets and making purchasing decisions is a complicated, risk-involved process and USW wants its customers to have as much information as possible for all wheat buying decisions.

USW Market Analyst, Claire Hutchins, presents on USW’s weekly Price Report at a 2019 crop quality seminar in Cairo, Egypt.

USW believes in complete supply chain transparency and hosts these crop quality seminars to educate buyers on the quality, end use versatility, and value of U.S. wheat. The USW Price Report adds to the philosophy of supply chain transparency because it gives the world’s buyers an independently derived baseline of export prices for U.S. wheat by class, protein level, export region and delivery month.

From these crop quality seminars, I learned how to better explain the distinct challenges and opportunities for buyers contracting for wheat value following this year’s harvest. USW tries to make the vast array of quality and pricing information accessible and intuitive to buyers and I am proud to be involved in these efforts.

The IAOM conference for the Middle East and Africa region in Dubai gave me the unique opportunity to interact with a global array of millers, bakers, technology specialists and grain traders. USW was instrumental in helping found IAOM in the Middle East in 1989 when the organization, a handful of millers and several industry specialists came together to create a professional and educational space to interact every year. Today, IAOM boasts over 1,000 members from all over the world and from all corners of the grain trading, storing, shipping, milling, processing and baking industries.

The conference gives members the opportunity to network, build relationships and learn about new topics critical to the wheat milling industry. USW is also an educational sponsor, providing funding and staff speakers at most IAOM conferences. This year, Ian Flagg presented on U.S. supply and marketing conditions while Tarik Gahi moderated a panel of topics varying from grain storage to technologies for flour and whole flour production to general innovations in flour milling. USW also sponsored a booth at the event which allowed customers and colleagues to ask USW staff about technical trends in milling and lab studies, global marketing conditions, how to communicate with U.S. grain traders and U.S. wheat supply and quality characteristics.

USW’s Europe and MENA Regional Vice President, Ian Flagg, presents on U.S. supply and demand conditions affecting global markets at the 30th annual IAOM Middle East and Africa conference in Dubai, U.A.E.

The IAOM conference, like the crop quality seminars, gave me an excellent look into USW’s role as a trade servicing organization for overseas customers. USW believes in supply chain transparency and creates every opportunity it can to educate buyers about the quality, versatility and value of U.S. wheat.

Staff from USW’s Rotterdam, Cape Town, and Casablanca offices ready to engage with customers and industry specialists at the 2019 IAOM Middle East and Africa conference in Dubai, U.A.E.

View the latest USW Price Report here and subscribe here to receive the USW Price Report via email every Friday.

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USW Publishes Annual Crop Quality Report and Hosts Seminars to Help Customers Make Purchasing and Milling Decisions

As a key part of its commitment to transparency and trade service, U.S. Wheat Associates (USW) produces an annual Crop Quality Report that includes grade, flour and baking data for all six U.S. wheat classes. The report compiles comprehensive data from analysis of hundreds of samples conducted during and after harvest by our partner organizations and laboratories. The report provides essential, objective information to help buyers get the wheat they need at the best value possible.

The 2019 USW Crop Quality Report is now available for download in English, Spanish, French and Italian, and will be available in Chinese and Arabic soon. USW also shares more detailed, regional reports for all six U.S. wheat classes on its website, as well as additional information on its sample and collection methods, solvent retention capacity (SRC) recommendations, standard deviation tables and more. Download these reports and resources from the website here.

USW’s annual Crop Quality Seminars are already underway and will continue over the next month around the world. USW invites its overseas customers, including buyers, millers and processors, to these seminars led by USW staff, U.S. wheat farmers, state wheat commission staff and educational partner organizations. The seminars dive into grade factors, protein levels, flour extraction rates, dough stability, baking loaf volume, noodle color and texture and more for all six U.S. wheat classes and are tailored to focus on the needs and trends in each regional market.

In 2019, USW is projected to host 43 seminars in 41 countries, including official seminars in the South America region for the first time in several years.

Customers have previously shared that they use the report throughout the year as a reference manual and to guide them through purchases and future planning. The seminars allow U.S. and USW experts to interpret the data and how to use it. Customers will often use the seminars and report as educational training for new employees.

The reports and seminars have been a traditional part of USW’s strategy since 1959, growing to become its single largest marketing activity.

Look for updates from the 2019 USW Crop Quality Seminars on Facebook and Twitter.

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Bad Weather Interrupts New Crop Northern Durum Harvest and Affects Quality

Durum production in the U.S. Northern Plains is down from 2018 with a reduction in overall quality due to historic late season rain and snow that also interrupted harvest. Due to the unusual conditions, the entire crop is not represented in this year’s data. Buyers should be extra vigilant and evaluate the importance of each factor for their end-use needs. Premium contract specifications will command higher prices, but good value can be obtained with diligent contract specifications. Ample carryover supplies from the excellent quality 2018 crop will be helpful in meeting traditional quality needs of buyers, but some parameters may still prove challenging.

That is a summary of northern durum crop quality from the upcoming U.S. Wheat Associates (USW) 2019 Crop Quality Report. Desert Durum® data is reported separately. The National Agricultural Statistics Service collected 166 samples from North Dakota and Montana and the Durum Quality Lab at North Dakota State University analyzed the samples. Funding for the annual survey come from USW member state wheat commissions and the USDA Foreign Agricultural Service. Complete 2019 crop quality data for all six U.S. wheat classes will soon be available online and at annual USW Crop Quality Seminars.

Weather and Harvest: Planting began in early May and ended the first week of June; crop emergence was slow. Mid-season rain boosted development and yield potential. Harvest began late, in mid-August, but with historic rainfall levels, less than 50% of the crop had been harvested by mid-September. The adverse weather continued into October, including periods of heavy snow, compromising quality on a large portion of the crop.

Regional production is estimated at 52 mil bu (1.4 MMT), down 20% from 2018. Final production will likely be lower than current estimates, as roughly 20% of the crop remained unharvested as of mid-October. With only 77% of expected samples collected and analyzed, and a higher than normal percentage of the crop moving directly into feed channels, this report does not represent the entire crop.

Wheat and Grade Data: The surveyed crop averages a U.S. No. 2 Amber Durum (AD) and 37% grades a U.S. No. 1 or 2 Hard Amber Durum (HAD), down from 86% a year ago. Average test weight of 61.1 lbs/bu (79.6 kg/hl) is similar to 2018 and above the 5-year average. Total kernel defects average of 3% is higher than 2018 and the 5-year average, likely due to elevated disease pressures and damage from the prolonged harvest.

The average vitreous kernel (HVAC) content is 64%, down sharply from 90% in 2018 due to harvest rains and localized lower protein levels. The average protein of 13.9% (12% mb), is equal to the 5-year average, but down from 2018. Distribution data shows that nearly 25% of the crop is above 90% HVAC and 38% is above 75% HVAC.

Excellent conditions during kernel development are reflected in the crop average thousand kernel weight (TKW) of 44 g and the percent of large kernels notably higher than last year and 5-year averages. The average falling number value is 345 sec compared to 425 in 2018 with 75% of the crop above 300 sec. Disease pressures were higher in 2019, with some areas impacted by Fusarium. The crop average DON is 0.6 ppm, up from 0.2 last year, but slightly below the 5-year average.

Semolina and Processing Data: Milling for the 2019 survey was performed on a Quadromat® Junior mill, limiting direct comparisons to the Buhler laboratory mill used previously. Semolina extraction is 57.5%, down sharply from 2018, likely attributed to the notable decline in vitreous kernels and shift in milling equipment. The milled product is showing a marked decline in ash levels, 0.6%, with just a slight increase in speck counts compared to 2018. Gluten index values are higher, at 67%, compared to 57% in 2018.

Semolina and cooked spaghetti evaluations show lower values compared to last year and the 5-year average. Semolina color values are lower for both color and brightness, and cooked pasta scores are also lower. Mixing properties reveal a stronger crop with an average mixogram of 6.4 compared to 5.3 in 2018. Cooked pasta evaluations show higher cooked weight compared to the 5-year average, but also higher cooking loss and less cooked firmness.

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Crop Quality Concerns, Minimal Farmer Selling Drive U.S. Spring Wheat Export Prices

By Claire Hutchins, USW Market Analyst

Despite the potential for reduced U.S. hard red spring (HRS) production year-over-year and crop quality concerns on late-harvested HRS, the United States is still well-stocked to meet overseas customer needs throughout marketing year (MY) 2019/20. As domestic sellers and buyers manage their risk in a dynamic market, however, overseas buyers should expect HRS export basis to increase. U.S. Wheat Associates (USW) wants to provide a closer analysis of this rather unique situation.

Unrelenting precipitation in the Northern Plains continued to challenge HRS wheat producers throughout the 2019 harvest season. Excess moisture on unharvested wheat can lead to low falling numbers, reduced test weights, reduced percentage of DHV and increased DON levels. By Sept. 20, only 76 percent of the country’s spring wheat was harvested compared to 96 percent in 2018.

As markets considered potential quality issues on the rest of the harvest, HRS export prices jumped significantly between Sept. 13 and Sept. 20. The average Gulf HRS 14.0 (12% moisture basis) export basis for nearby delivery increased 20 cents/bu from $1.40/bu to $1.60/bu. In the same week, average Pacific Northwest (PNW) HRS 14.0 export basis for nearby delivery jumped 36 percent from $1.05/bu to $1.65/bu. Market uncertainty carried into the week of Sept. 27 when the country’s HRS harvest was only 87 percent complete, well behind the 5-year average of 99 percent. By Sept. 27, the average Gulf HRS 14.0 export basis increased another 30 cents to $1.90/bu and the average PNW HRS 14.0 export basis added 27 percent to $2.10/bu, both driven by crop quality concerns and minimal farmer selling.

Source: U.S. Wheat Associates Price Report, Oct. 4, 2019

In its October World Agricultural Supply and Demand Estimates (WASDE) report, USDA estimated the United States would produce 15.2 million metric tons (MMT) of HRS in 2019. On Oct. 15, USDA reported harvest was 94 percent complete, still well behind the average completion date of around Sept. 30. Many industry sources now believe the HRS harvest is essentially over as farmers struggle to enter their fields due to ongoing precipitation, including heavy snow in parts of North Dakota and Montana. If realized, this would put the total 2019 U.S. HRS harvest closer to 14.3 MMT, 12 percent lower than last year.

As noted, the United States is still well-stocked to meet export throughout MY 2019/20. Industry experts estimate between 60 and 65 percent of this year’s HRS harvest, about 8.94 MMT, is high-quality, milling grade wheat. USDA estimated 2019 HRS beginning stocks at 7.16 MMT. This puts the total supply of U.S. milling wheat in MY 2019/20, including the remainder of last year’s excellent harvest, at 16.1 MMT.

However, customers should be aware that a large portion of these stocks remain in storage as farmers are reluctant to sell wheat at current local prices. HRS export basis levels continue to climb because producers have several incentives to hold their high-quality HRS into the coming months.

First, Minneapolis Grain Exchange (MGEX) forward futures contracts show a significant carry between December 2019 and December 2020. As of the last trade on Oct. 15, the December 2019 MGEX HRS futures contract (MWEZ19) traded at $5.45/bu while the December 2020 MGEX HRS futures contract (MWEZ20) closed at $5.95/bu. Each MGEX HRS futures contract gains about 10 cents per contract period starting in December 2020, a reason for farmers to hold supplies until cash prices increase.

Source: MGEX

Second, average local basis levels are firming across the Northern Plains, which signals to farmers that the discount between futures values and the cash price they receive could shrink over time. For example, according to DTN data, the average HRS local basis value in North Dakota decreased from negative $0.79/bu to negative $0.72/bu between Sept. 30 and Oct. 15. At one elevator in North Dakota, the gap between the December futures price and the local cash price shrank 42 percent from negative $1.05/bu to $0.65/bu. Over the same period, the local average HRS cash price in North Dakota increased from $4.66/bu to $4.74/bu.

Finally, storage space is not under pressure. Typically, HRS moves into the market around harvest and when storage space is needed for row crop harvest, which in 2019 has seriously affected in the Northern Plains. For example, the heavy snow hit North Dakota with only 1 percent of the corn harvest and 16 percent of the soybean harvest completed. With no other crops coming out, farms and country elevators do not yet need to move much HRS wheat out of storage.

Given this situation, USW believes HRS export basis will continue to rise until local cash prices increase enough to encourage producers to liquidate their HRS stocks into the milling and export channels. The United States has plenty of high-quality HRS available to sell into MY 2019/20, but it will take a significant shift in local cash price dynamics across the Northern Plains for these supplies to reach export terminals.

 

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The 2019 Soft White Crop Shines Again

Pacific Northwest (PNW) farmers produced another fine soft white wheat (SW) and white club (WC) crop with good test weight and very acceptable finished product characteristics for 2019. Adequate soil moisture at planting and throughout the growing season did contribute to higher moisture and protein content compared to 2018 but protein remained lower than the 5-year average. In fact, the higher SW protein segment provides opportunities in blends for crackers, Asian noodles, steamed breads, flat breads, and pan breads. Variations in performance data for 2019 compared to 2018 and the 5-year averages are included below for this 6.09 million metric ton (MMT) crop, including 170,000 MT of WC.

That is a summary of results from the U.S. Wheat Associates (USW) 2019 SW and WC crop quality analysis to be posted soon at https://www.uswheat.org/market-and-crop-information/crop-quality/. To complete the analysis, the Wheat Marketing Center (WMC) received and tested SW and WC samples from Idaho, Oregon, and Washington. The Federal Grain Inspection Service (FGIS) graded and ran wheat protein on each sample. WMC conducted wheat, flour, Solvent Retention Capacity (SRC), dough, and finished product tests on composites based on production zones and protein levels. Funding for the annual survey come from state wheat commission USW members and the USDA Foreign Agricultural Service.

As always, buyers are encouraged to review their quality specifications to ensure that their purchases meet their expectations.

Wheat and Grade Data: The Overall average grade of the 2019 SW and WC crops is U.S. No. 1. The average SW test weight of 61.6 lb/bu (81.0 kg/hl) is slightly lower than last year’s 61.7 lb/bu (81.1 kg/hl); WC test weight of 60.6 lb/bu (79.7 kg/hl) is slightly higher than 2018’s 60.4 lb/bu (79.5 kg/hl). SW has fewer damaged kernels, fewer shrunken and broken kernels, and less foreign material than the 5-year averages. WC shrunken and broken kernel percentages are lower than last year and the 5-year averages. WC foreign material is higher than last year and 5-year averages. WC dockage is slightly higher than last year and the 5-year averages. Other WC grade factors are similar to past averages. Wheat moisture for both SW and WC is above last year and the 5-year averages.

The Overall SW and WC wheat protein content (12% mb) of 10.0 and 9.8%, respectively, are 0.7 and 0.8 percentage points above the respective 2018 values, but below those of 5-year averages. SW and WC wheat ash contents (14% moisture basis) are similar to last year and the 5-year averages. Thousand kernel weight for SW is above 2018 and the 5-year average levels; WC is lower than last year and higher than the 5-year average. SW kernel diameter is the same as last year, but larger than the 5-year average. WC kernel diameter is smaller than last year, but larger than the 5-year average. Falling number values are 317 sec for SW and 355 sec for WC.

Flour, Dough, and Bake Data: The 2019 Buhler Laboratory Mill flour extraction average for SW and WC at 72.1% and 72.8% respectively are lower than last year and the 5-year averages. Flour protein content (14% mb) is 8.9% for both SW and WC. Flour ash content (14% mb) for both SW and WC are higher than last year but the same as 5-year averages. Amylograph peak viscosity value for SW is 485 BU, slightly lower than last year; WC is 523 BU, much higher than last year. Starch damage value is slightly higher for SW than last year but lower than the 5-year averages. WC starch damage is lower than last year and the 5-year averages.

Solvent retention capacity (SRC) water values for SW and WC are less than last year and 5-year averages. SW lactic acid and sodium carbonate values are similar to last year and the 5-year averages. WC lactic acid values are higher than last year, but same as 5-year average. SW and WC gluten performance index (GPI) values are similar to last year and 5-year averages. SW farinograph peak and stability times are shorter than last year and the 5-year averages. WC peak time is slightly longer than last year and 5-year averages. SW and WC water absorptions are similar to last year, but less than the 5-year averages. The SW and WC alveograph L values are considerably longer than last year and 5-year averages. SW and WC extensograph resistance is larger than last year and the 5-year averages. SW and WC extensibility values are longer than last year and the 5-year averages.

Sponge cake volume for SW at 1104 cc is larger than last year, but smaller than the 5-year average, and the total score is slightly lower than last year and the 5-year averages. The sponge cake volume for WC at 1141 cc is slightly larger than last year, but smaller than the 5-year average, and total score the same as last year and much higher than the 5-year averages. SW and WC cookie diameter values are smaller than last year, but similar to the 5-year averages. SW and WC cookie spread factors are more than last year and the 5-year averages.

Chinese Southern-Type Steamed Bread: In southern-type steamed bread compared to a control flour, the 2019 SW and WC specific volumes are slightly less than last year and the 5-year averages. The SW total score is higher than last year and the 5-year averages; WC is the same as last year, but lower than the 5-year average.

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