Wheat Letter Blog Archive - Page 15 of 104

durum, Hard Red Spring, Trade Delegation

USW Hosts Delegation of European Flour Millers

Flour milling companies from nine European countries made up a delegation that visited Washington, D.C. Sept. 24-28 to learn about the 2023 U.S. wheat crop and developments involving global markets, trade policy and emerging technologies.

U.S. Wheat Associates (USW) hosted the team, providing a series of presentations by USW staff and representatives of partner organizations.

Ian Flagg, USW Regional Vice President for European, Middle Eastern and North African Regions, right, greets a member of the delegation of European flour millers during meetings in Washington, D.C.

USW’s Ian Flagg, right, greets members of the European flour millers delegation and USW partner organizations during meetings in Washington, D.C.

Sharing Information

“Our efforts to increase U.S. wheat market share in Europe includes sharing information to major and larger mid-size mills and traders, many who are interested in hard red spring (HRS) and durum wheat,” said Ian Flagg, USW Regional Vice President for European, Middle Eastern and North African Regions. “Strategically, it’s important to work with agencies, milling associations and traders and discuss issues that are limiting European market access. At the same time, it’s a chance to talk about U.S. wheat and remind them about the advantages it offers milling companies and end-users.”

Italy, France, Germany, Poland, Slovenia, Lithuania, the United Kingdom, Ireland, and Belgium were represented on the delegation. The visit is an initiative of the European Flour Millers Association that involves exploring different markets each year.

U.S. Durum, HRS Customers

Flagg welcomed its members to Washington and gave a broad overview of the U.S. wheat industry. About 70% of U.S. durum exports go to the EU, with Italy taking a large portion of that for pasta production, Flagg noted, adding that European countries import HRS from the U.S. mostly to blend with other wheat.

USW’s data shows that U.S. market share in the EU tends to vary from year to year, and in the past few years has swung from 17% to 33% for high protein milling wheat (mostly HRS) and from 18% to 28% for durum.

Crop Quality, Trade Policy Updates

Jim Peterson, Policy and Marketing Director for the North Dakota Wheat Commission, gave the delegation a U.S. wheat crop quality update. Other presenters included Ryan Caffery of CHS, who offered insights into both the opportunities and constraints involving the European market.

USW Vice President of Trade Policy Dalton Henry spoke about technology and government actions that affect wheat trade.

“It was great to talk with this group because, from a policy standpoint, there are many areas where we work together – namely on food safety and production technologies,” said Henry. “Having dialogue on those topics is critical, especially as new technologies come to market or regulations are being drafted as it gives us the best chance to prevent trade disruptions in the future.”

The team of flour millers representing nine European countries poses for a group photo during its visit to Washington, D.C.

Representatives of flour millers from nine European countries pose for a group photo during its visit to Washington, D.C.

Team Effort

USDA, the North American Export Grain Association (NAEGA), the National Grain and Feed Association (NGFA) and the North American Millers’ Association (NAMA) each participated by in sharing related information about opportunities and issues they face.

USW Vice President of Trade Policy Dalton Henry spoke about technology and government actions that affect wheat trade.

Along with Canada, competitors for U.S. HRS are high-protein Russian and Kazakh spring wheat, though export volumes are relatively small. Ukraine is another large supplier of wheat to the EU but is not considered a competitor for HRS due to its low and medium quality. Competitors for U.S. durum wheat are Canada, Russian, Kazakh, Australian and Mexico.

Tour of Facilities

Aside from meetings and presentations, USW offered the EU team a look at some U.S. milling facilities and a wholesale bakery. It toured Miller Milling in Westchester, Virginia, which produces a variety of durum and hard wheat products. It also services an adjacent pasta manufacturing facility. The visit to Uptown Bakers featured a look at its 40,000 square foot facility just outside of D.C. Uptown has more than 500 restaurants, hotels, and caterers as clients.

The team was also able to explore Chesapeake Farms, which is owned by Corteva Agriscience. The 3,300 acres of Chesapeake Farms are devoted to the development, evaluation, and demonstration of advanced agricultural practices.

September 28, 2023/by Ralph Loos

Hard Red Spring, Hard Red Winter, Marketing and Trade Conferences, SaborUSA, Soft Red Winter, Soft White, South America, USDA

Images from USW Santiago Team’s Participation in USDA Trade Mission to Chile

During the week of Sept. 25-29, U.S. Department of Agriculture Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor is leading an agribusiness trade mission to Chile. U.S. agribusinesses, including U.S. Wheat Associates (USW), are participating in business-to-business meetings with importers from both Chile and Peru.

The trade mission coincides with the USDA-endorsed Espacio Food and Service trade show, a major food show held in Santiago, Chile. USW joined several other U.S agricultural export promotional organizations in a USDA-SaborUSA Chile exhibit at the show. Under Secretary Taylor visited and offered remarks at the USW exhibit on Sept. 26. USW staff from the Santiago office shared these photos.

In the photo at the top of this page, USW Santiago Assistant Regional Director Osvaldo Seco and Program Coordinator Maria Fernanda Martinez show their pride in the USW exhibit with USW Baking Consultant Miguel Seguel.

Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor (right) is welcomed to the USW section of the SaborUSA Chile exhibit by USW Santiago Regional Director Miguel Galdos.

Greetings from USDA

Under Secretary Taylor making remarks at the SaborUSA Chile exhibit on Sept. 26. Of her visit and the trade delegation she is leading, Taylor said, “As we celebrate the 200^th anniversary of U.S.-Chile relations, I am honored to lead such an incredible group as we work with Chilean importers on expanding our bilateral trade even further.”

Quality Wheat, Exquisite Bread

Artisan bread baked by USW consultant Miguel Seguel to demonstrate the quality and versatility of flour milled from U.S. wheat classes had a prominent place in the SaborUSA Chile exhibit at the Espacio Food and Service trade show.

Chile is a well-developed wheat food market with a variety of products available. In 2022, U.S. wheat imports were valued at more than $100 million. Chile is currently ranked among the top 10 U.S. wheat importing countries in marketing year 2023/24 (June to May). Chilean flour millers import U.S. hard red winter (HRW) and hard red spring (HRS) wheat classes to produce flour for bread consumption. The bread is produced mainly by small artisan bakeries, as well as commercial and supermarket bakeries. To serve a growing cookie and cracker demand, U.S. soft red winter (SRW) and soft white (SW) wheat is imported.

Read more about the Chilean market for U.S. agricultural products here.

September 27, 2023/by Steve Mercer

Educational Partnerships, Trade Service Activities, Tyllor Ledford

Education Plays Pivotal Role in Grain Procurement

Earlier this month, flour mill executives, grain procurement managers, and representatives of state trading companies from 19 countries (photo above) traveled to Fargo, N.D., sponsored by U.S. Wheat Associates (USW) to participate in the Grain Procurement Short Course for Importers at the Northern Crops Institute (NCI).

USW and NCI believe customer engagement, supply chain transparency, and accessible global market information are the building blocks for mutually profitable relationships with U.S. wheat customers. To promote engagement and transparency, USW partners with NCI at North Dakota State University (NDSU) annually to offer the Grain Procurement Short Course for Importers. The course’s primary focus is customer education on wheat procurement strategies, risk management, and navigating the U.S. supply chain.

An Emphasis on Information and Data

The ten-day session began in the classroom led by industry-leading experts at NDSU including Dr. Bill Wilson, Dr. Frayne Olson, and Dr. David Bullock. The lectures provided a durable foundation of traditional agricultural fundamentals, cash and futures markets, technical analysis, and risk management tools such as hedging and options.

From there, other coursework built upon the foundational knowledge with advanced sessions on risk management, U.S. wheat quality and value, rail logistics, and experiential learning in the NDSU Commodity Trading Lab.

Moreover, a common theme throughout the course was the importance of data analytics and information in the marketplace. Drs. Wilson and Olson highlighted various sources of information that are useful and relevant for customers, including the U.S. Wheat Associates Price Report, the USDA World Agricultural Supply and Demand Estimates, and the USDA AMS Market Reports, among others. They stressed that as the industry continues to evolve, customers need a range of information sources and improved data analysis methods to understand market movements and trends.

Grain Procurement Course participants at NDSU wheat variety trial plot

NDSU Hard Red Spring Wheat Breeder, Dr. Andrew Green, provides an overview of the NDSU variety trial test plots and the wheat breeding process.

Firsthand Experience Facilitates Transparency

The latter half of the course included tours providing an in-depth look into U.S. supply chain infrastructure and grain marketing system.

Course participants toured the NDSU variety trial plots, up-country shuttle train loading facilities, and a domestic flour mill, contributing to a better understanding of the U.S. domestic market. The team then went to Duluth, Minn., to observe the U.S. export infrastructure in the Port of Duluth-Superior, including assets owned by CHS and Hansen-Mueller, to complete the U.S. supply chain overview.

Touring U.S. supply chain infrastructure provides a unique opportunity for customers to see first-hand how grain moves from farm fields to the elevator in Duluth, demonstrating the reliability, effectiveness, and transparency of the U.S. supply chain.

Building Lasting Relationships

Finally, the course concluded with meetings at grain exporting companies in Minneapolis, Minn., including major exporters such as CHS, Cargill, and ADM. These meetings with traders provided the opportunity to build relationships and gain additional familiarity with the U.S. grain marketing system.

Grain Procurement Course participants at CHS in Superior, Wis.

NCI program manager Brian Sorenson (third from right) and course participants at the CHS export elevator in Superior, Wis., a member of the Port of Duluth-Superior.

Upon conclusion of the course, participants left with a greater understanding of the U.S. marketing system and supply chain management strategies. One participant from sub-Saharan Africa commented, “This course not only deepened our understanding of grain procurement and guided us on how to make more effective wheat purchases with minimum risk, but also provided an invaluable platform for sharing of experience with the experts and among participants, especially those already importing U.S. wheat.”

Most importantly, the program provided the participants with a network of experts and professionals in the grain procurement and flour milling industry from around the world, fostering a spirit of collaboration and information sharing. And that is crucial to encouraging transparency and forming long-term partnerships between customers, sellers, and USW.

By USW Market Analyst Tyllor Ledford

September 27, 2023/by Steve Mercer

South Asia, Supply and Demand, Sustainability, Trade Service Activities, Vietnam

Collaborative U.S. Trade Service Conference Supports Regional Wheat Demand

U.S. Wheat Associates (USW) continued a tradition of promoting the value of U.S. agricultural products together with other USDA Foreign Agricultural Service cooperator organizations by co-hosting the annual U.S. Agricultural Cooperators Conference Sept. 12 to 14, 2023, in Da Nang, Vietnam. This conference is designed as a value-added service for Southeast Asian buyers served by USW, and co-hosts U.S. Grains Council (USGC) and U.S. Soybean Export Council (USSEC).

USW Regional Vice President Joe Sowers on a panel at the 2023 U.S. Agricultural Cooperators Conference

USW Regional Vice President Joe Sowers participated in a panel discussion of U.S. cooperator leaders at the 2023 U.S. Agricultural Cooperators Conference.

“Our collaboration with these organizations on conferences in South and Southeast Asia not only increases opportunities to connect with our milling customers in the region, but also with grain trade and other industry representatives,” said Regional Vice President Joe Sowers who represented USW and the conference. “Many flour millers in the region also have feed milling operations, so this conference leverages the investments of all three host organizations to educate and increase positive contact with regional stakeholders.”

Building Bridges, Sharing Knowledge

Titled “Globalization 2.0: Building Bridges for Food Security, Sustainability, and Innovation,” the conference in Da Nang covered the global challenges identified in its name and, according to USGC, emphasized “the need to build bridges that facilitate collaboration, sharing knowledge, and acting on common issues.”

“It is very important that customers hear the message that U.S. farmers are producing safe, reliable and abundant supplies of wheat, feed grains and oilseeds,” Sowers said. “Vietnam, for example, is a quickly growing market with an exploding middle class eager to consume more and better-quality wheat-based foods.”

Vietnam’s annual milling wheat imports are more than 2 million metric tons and growing at a similar rate in the South and Southeast region.

Visit the USGC website for more information about the 2023 Southeast Asia U.S. Agricultural Cooperators Conference.

September 25, 2023/by Steve Mercer

Desert Durum, durum

Consistently High Quality of Desert Durum® is Ideal for 2023 Market Conditions

Ron Rubin grows Desert Durum^® under irrigation near Brawley, Cal., in the Imperial Valley. He reports that while production is down slightly with a lower planted area, the crop remains consistent and a very reliable source of high-quality durum to end-use customers.

“The 2023 crop produced above average yields with ideal growing conditions throughout the season,” Rubin said. “We estimate that 99 percent of the Imperial Valley crop graded Number One HAD. Harvesting in May and June, the Desert Durum^® can help fill a quality or quantity gap in the market when adverse conditions develop in other production regions.”

Desert Durum^® is a registered certification mark of the Arizona Grain Research and Promotion Council and the California Wheat Commission, which authorize its use only to designate durum grown under irrigation in the desert valleys and lowlands of Arizona and California.

Desert Durum^® exhibits consistently large kernels and low moisture, traits that contribute to efficient transportation costs and high extraction rates. Like previous crops, the 2023 crop will deliver the valuable milling, semolina, and pasta quality traits that customers have learned to expect and appreciate. U.S. Wheat Associates (USW) will soon share a complete report on 2023 crop quality.

2023 Crop Highlights

Desert Durum^® production acreage in 2023 was lower than 2022. According to USDA, yields were 3.10 metric tons per acre, and quality was uniformly good.
The overall grade sample average for the 2023 Desert Durum^® harvest survey is U.S. No. 1 Hard Amber Durum (HAD).
Test weight indicates sound wheat and a uniform crop with an average of 63.0 lb/bu (82.0 kg/hl).
The average vitreous kernel (HVAC) content is 98%, a high average typical of Desert Durum®.
Average damaged kernels are 0.1% and total defects are 0.5%.
Kernel moisture content is characteristically low at 7.3%.
Wheat protein content average is 13.9% (12% mb).
The semolina color B* value is 32.9, slightly higher compared to 2022.
The wet gluten average is 33.4% and gluten index average is 62%.
Spaghetti cooked firmness average is 7.4 g cm, higher than last year’s 6.8.

Desert Durum^® can be produced and delivered “identity preserved” to domestic and export markets, which allows customers to purchase grain with quality traits specific to their processing needs. Annual requirements can be pre-contracted with grain merchandisers ahead of the fall-winter planting season for harvest in late May through early July. Varietal identity is maintained by experienced growers planting certified seed and merchandisers who store and ship according to customers’ preferred delivery schedules.

More U.S. HAD Coming

In the Northern Durum production region as of Sept. 22, about 60% of samples have been collected and tested. Protein content is holding steady at 13.7% (12% mb). The low moisture content (10.8%) and high falling Number (424 sec) reflect dry conditions across the growing region and the overall grade remains U.S. No. 1 Hard Amber Durum (HAD). USW will share more information after harvest ends.

September 21, 2023/by Steve Mercer

durum, Market and Crop Analysis, Northern Durum, Wheat Industry News

Wheat Industry News

News and Information from Around the Wheat Industry

Speaking of Wheat

“Amidst the backdrop of diverse perspectives and conflicts of our times, farmers continue planting seeds of sustenance and resilience, stewarding the land for generations, and producing a safe and reliable food supply. The values of integrity, honesty, and care we see in agriculture offer a model for achieving sustainable progress in society and industries, ensuring that resources are managed in ways that benefit present and future generations. Farmers are at the heart of this truth.” – Jim Britt, Director of Communications, Maine Department of Agriculture, Conservation and Forestry. Read more here.

World Wheat Production Ends Record Run

USDA reported this week that following 3 years of record production 2023/24 global wheat production is now forecast down as year-over-year reductions are forecast in the EU, Russia, Canada, Australia, Kazakhstan, and Brazil. Total wheat use has now exceeded production for 4 years running and tightening supplies in these major exporters puts exportable supplies at their lowest level in 11 years. Analysts suspect this bullish note will not spark a rally in part because USDA also reduced global wheat use estimates. Read more here.

WASDE Turns 50

USDA on Sept. 12 celebrated the 50^th anniversary of its “World Agricultural Supply & Demand Estimates” or WASDE report. The report was established in September 1973 to “give the public the timeliest analytical information available officially from the Department.” Commenting on the report, USDA Secretary Tom Vilsack said: “This work behind the scenes gets attention in this moment, but then gets analyzed and utilized for weeks on end and helps to establish the market prices …” It is important for trade and global competition, he added. The U.S. Wheat Associates (USW) Supply and Demand report is based and expands on the monthly WASDE report. Listen to Vilsack’s comments here.

Wheat Disease Impact Much Lower in 2022

According to an analysis by the Crop Protection Network, disease in 2022 reduced wheat production by 3.6% in surveyed U.S. states and by 1.9% in Ontario. Overall reduction in 2022 was less than half that of any other year of data collection (2018-2021), and percentage losses were also much lower than previous years. Total estimated yield loss in 2022 from wheat disease in the U.S. and Ontario was 55.7 million bushels, valued at nearly $500 million. This does not include the economic costs of disease management practices such as fungicide seed treatment or foliar application, crop scouting, and development of disease-resistant varieties. Read more here.

This grid pattern represents the percentage of wheat production in 2022 by U.S. state and the Canadian province of Ontario among the states and Ontario surveyed by the Crop Protection Network for an analysis of disease yield impact.

Brabender Introduces New Farinograph

According to a company statement, Brabender has introduced a new “FarinoGraph” that offers new features, the latest technology, optimized user friendliness and more. Farinograph is used to determine water absorption capacity of flour and the rheological properties of dough. “Measurements with the new “FarinoGraph” are now even more automated and timesaving,” said Viktor Schäfer, Brabender business development manager software solutions. “For instance, we have implemented an artificial intelligence based on previous measurements to predict the measurement curve and added a function to save measurement time.” Read more here.

Pellman Makes Rounds with USW Policy Team

The National Association of Wheat Growers (NAWG) brought more than 20 wheat farmers to Washington, D.C. Sept. 12-13 for its annual fall “Fly-In.” The effort included two days of meeting members of Congress. Led by the U.S. Wheat Associates (USW) Trade Policy team, USW Secretary/Treasurer Jim Pellman joined his fellow wheat farmers at the Capitol to voice support USDA’s Market Access Program (MAP) and Foreign Market Development (FMD) program, as well as the American Farmers Feed the World Act of 2023.

Pictured with Jim Pellman (far right) are Oklahoma farmer and NAWG Vice President Keeff Felty (left) and North Dakota Congressman Kevin Cramer (center) .

Subscribe to USW Reports

USW publishes various reports and content available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts and wheat industry news, the weekly Price Report, and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online

Visit our Facebook page for the latest updates, photos, and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter, video stories on Vimeo and YouTube, and more on LinkedIn.

September 14, 2023/by Ralph Loos

durum, Hard Red Winter, Mexico, Soft Red Winter, South America

USW Board Team Trip Helped Producers Explore Opportunities for U.S. Wheat in Colombia, Ecuador and Mexico

Exploring opportunities for hard red winter (HRW), soft red winter (SRW) and durum wheat in both established and emerging markets, U.S. Wheat Associates (USW) led a team of wheat producers and industry representatives to meet with customers and learn about milling and baking processes in Mexico, Ecuador, and Colombia.

USW’s Latin America Board Team included Chet Creel of Texas, Michael Edgar of Arizona, and Keith Kennedy of Wyoming.

“We had a really good group with diverse interests that visited some very important markets to see how millers and bakers use the quality wheat produced back home – and why the quality is important to them,” said USW Director of Trade Policy Peter Laudeman, who led the team on the 10-day mission. “The goal of these Board Teams is to provide a broad canvas of a region, on-the-ground, face-to-face experiences in the mills, in the bakeries, and at the transportation facilities that support movement of U.S. wheat into the countries.”

USW's Latin America Board Team poses for a photo in front of a Grupo Trimex Facility in Mexico following a tour and discussions about U.S. wheat

USW’s Latin America Board Team poses for a photo with USW staff and milling staff in front of a Grupo Trimex facility in Mexico following a tour and discussions about U.S. wheat.

Mexico: U.S. Wheat’s Top Customer

Stops in Mexico included Guadalajara and Mexico City. Outside of Guadalajara, the team visited the Grupo Kasto mill, shuttle train and elevator facility that receives direct rail shipments of U.S. wheat. shuttle train and elevator facility that receives direct rail shipments of U.S. wheat. From there, the team traveled to the Guadalupe Flour Mill to meet with owners of the mill. The Guadalajara portion of the trip also included a tour of the OhLaLa! baking facilities.

In Mexico City, team members visited the USW office, where they learned more about Mexico’s milling industry and efforts to promote wheat foods in the country. Visits to Grupo Trimex and Harinera Anahuac flour mills followed, helping the team explore opportunities for U.S. wheat.

“It was clear U.S. Wheat’s staff has a great relationship in Mexico and there is a lot of trust,” said Creel, Vice Chairman of the Texas Wheat Producers Board and a HRW wheat producer. “We were able to see how activities like technical servicing and educational courses have helped the Mexican milling businesses. We also saw the value of the relationships the representatives in Mexico been built and maintained over the years.”

Ecuador and Colombia: Markets With Great Potential

After Mexico, the team moved on to Ecuador, where it met up with USW representatives serving South America from an office in Santiago, Chile. In Quito, Ecuador, the team visited flour mills and a cookie factory before moving on to Cali, Colombia, for a mill visit. The next day, in Bogota, the team toured a bakery and a pasta plant that uses U.S. durum wheat.

The USW Board Team during a tour of Grupo Superior in Ecuador.

“We had some very good interactions at each stop and had some chances to discuss opportunities for U.S. wheat as a whole,” said Edgar, a USW Board Member and member of the Arizona Grain Research and Promotion Council. “For me, a durum grower, it was valuable to specifically see where my class of wheat stands and the places where it could carve out a bigger share.”

While Mexico is the top customer of U.S. wheat, both Ecuador and Colombia have great potential to increase imports.

“We were able to meet with some companies that really prefer the quality that they’ve seen in U.S. wheat and want to continue to buy,” said Kennedy, Executive Director of the Wyoming Wheat Marketing Commission. “They have definitely seen some pricing pressures, and the competition is there, but customers in both Ecuador and Colombia were very clear that the quality of the U.S. crop is second to none.”

Developing Customers

Laudeman noted that Colombia and Ecuador have a huge amount of room for per capita wheat consumption growth.

“We are looking toward the mid- to long-term opportunities to be able to sell more wheat and boost wheat foods as part of the diets in each country,” said Laudeman, who added that the team noticed interest in soft red winter (SRW) wheat in Ecuador. “As we see bigger crops and healthier crops in the future, it is going to be an easy decision for them to continue to buy U.S. wheat. Meanwhile, we will continue to work on any policy challenges that might be barriers to our market access in these countries. We will certainly keep monitoring and make sure that we can keep the policy landscape healthy. We will also continue to explore opportunities for U.S. wheat.”

September 13, 2023/by Ralph Loos

Taiwan, USW Announcements

Video: Meet Yi-I Huang, USW’s New Country Director for Taiwan

The first event as U.S. Wheat Associates (USW) Country Director for Taiwan Yi-I Huang was to lead his staff and 10 Taiwanese customers of U.S. wheat to the USW North Asia Marketing Conference in Bali, Indonesia. He handled it with ease.

In this short video, we hear from Huang (his first name is pronounced “E-E”) and learn a little about his background. He came to USW after a 14-year career in grain merchandizing, working in both Taipei, Taiwan, and Tokyo, Japan. We also learn that he is fluent in Mandarin, Taiwanese, Japanese, and English. He holds bachelor’s and master’s degrees in agriculture from National Taiwan University in Taipei, and he participated in an international exchange program at Keio University of Tokyo, Japan.

September 13, 2023/by Ralph Loos

Barge, Export Basis, Freight Rail Service, Market and Crop Analysis, Rail Transportation, Supply and Demand

Most Exportable Supplies Moved by Rail with Significant Effect on Basis

As we continue a series of articles on U.S. supply chain logistics, rail is arguably the most important mode of transporting wheat for export.

According to a recent USDA Modal Share Analysis Study, rail accounted for an average of 59% of inland transportation for wheat exports between 2016 and 2020, or an average annual total of 17.0 million metric tons. This article will focus on the importance of rail freight in wheat exports and address current trends in rail performance.

Two vertical bar charts showing the volume of U.S. wheat shipped domestically and to export locations by truck, rail and barge between 2004 and 2020.

Rail and barging are the main modes of transportation for wheat exports, as they can handle large volumes of grain over long distances. Together, they transport 89% of the total wheat export shipments. Source: USDA Modal Share Analysis Study.

An Interesting Year

In 2022, increased demand for railcars and performance issues sent U.S. rail rates soaring, with Secondary Railcar Auction Market Bids hitting their highest since 2014. Since then, rail rates have eased drastically. From March 2023 to July 2023 secondary bids for railcars have been negative, indicating that the current supply of railcars is sufficient for meeting the needs of shippers.

Decreased volumes and the subsequent decrease in rail tariff rates and Secondary Railcar Market Auction Bids have added additional pressure to already low basis levels, helping boost the competitiveness of U.S. wheat to importers. However, as the 2023 soy and corn harvest progresses, we can expect rail rates to rise due to increased demand and a higher volume of grain moving via rail.

This vertical bar and line chart show a comparison of grain carloads average from previous years to the current 4 week period up to 8/25/23.

According to the latest Grain Transportation Report, grain carloads (corn, soybeans, and wheat) moved by Class I railroads were down 3% from the previous week and are sitting 22% below the three-year average. The current decreased volume alleviates pressure on basis as rail companies have a sufficient supply of cars to meet the current demand. Source: September 3, 2023 USDA Grain Transportation Report.

Even so, the outlook for fall logistics appears positive. In a recent interview with “Freightwaves,” transportation export Jay O’Neil indicated that “Weather is always a question mark that makes it [performance] impossible to predict. But overall, I think the railroads… have some excess capacity because of [reduced grain export volumes]. I think [railroads] are very much looking forward to the harvest season … So, I don’t see any particular influences right now that should get in their way and prevent them from providing a decent service for harvest.”

Part of a Reliable System

U.S. Wheat Associates (USW) is committed to sharing transparent and pertinent information to customers about inland logistics issues. It is beneficial for U.S. wheat importers to be aware of transportation trends, as seasonal shifts and potential issues have a direct influence on export basis and the Free-on-Board export price.

Encompassing the largest share of inland logistics, the railroads are a critical component for moving U.S. wheat to export. After last years’ service disruptions, steps have been taken to help address the root issues such as hiring additional crew and investing in infrastructure. U.S. railroads are committed to moving U.S.-grown commodities. With diverse origination options and numerous modes of transportation, regardless of the class or export point, rail helps U.S. wheat remain the most reliable choice for world importers.

This article is part of a series outlining the inland logistics for U.S. wheat, highlighting barge freight, the railroads, infrastructure investments, and maritime transportation trends.

By USW Market Analyst Tyllor Ledford

September 12, 2023/by Steve Mercer

Exports, Food Aid, Foreign Agricultural Service, Trade Policy

Senate Ag Committee Leadership Urges More Support for Trade Promotion and Food Assistance

U.S. Senators Debbie Stabenow (D-Mich), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, and John Boozman (R-Ark), Ranking Member, have urged USDA to use its authorities under the Commodity Credit Corporation (CCC) Charter Act to support opportunities for U.S. farmers.

In a letter to the USDA Secretary Tom Vilsack, Stabenow and Boozman highlighted the need to invest in trade promotion and in-kind international food assistance, both of which support American farmers and producers.

Good for U.S. Farmers

“As Congress works toward reauthorizing critical programs in the Farm Bill, we continue to hear from organizations representing the vast majority of U.S. agriculture about the need to strengthen trade opportunities, increase revenue streams, and help producers grow and thrive in a global economy,” the Senators wrote. “We believe that resources available under the CCC can support similar efforts to open access to markets and promote American-grown products abroad.”

“The letter is intended to convey the strong, bipartisan support for additional market promotion funding but also reflects the challenge of identifying new funding resources for a broader Farm Bill reauthorization,” said Tyson Redpath with The Russell Group, a bipartisan government relations firm that represents the Coalition to Promote U.S. Agricultural Trade, in which U.S. Wheat Associates (USW) is a member.

“There is also bipartisan support for critical U.S. Department of Agriculture international food assistance programs,” the Senators continued. “We urge you to explore using CCC resources to advance food assistance initiatives, which will both address humanitarian needs abroad and support American farmers.”

USW’s work providing technical support to overseas wheat buyers and end product processors like this healthy Chinese wheat food baking seminar in Taiwan is funded by export market development programs administered by USDA-Foreign Agricultural Service. Congress approves program funding through federal “Farm Bill” legislation.

Good for Importers of U.S. Wheat

“We were quite pleased to see the leaders release their letter to Secretary Vilsack,” said USW President Vince Peterson. “Our friends at the National Association of Wheat Growers are strong advocates in Congress for increased export market development program funding. And the use of CCC funds to enhance both export marketing activities and food aid programs would be to the great benefit of U.S. agriculture and the overseas wheat buyers with whom we work.”

This request from the Chairwoman and Ranking Member comes as the Committee continues working to develop a Farm Bill this year. The full text of the letter can be found here.

September 11, 2023/by Steve Mercer