Wheat Letter Blog Archive - Page 23 of 101

Quiet WASDE Includes Falling World Wheat Stocks

USDA released its December World Agricultural Supply and Demand Estimates (WASDE) report Dec. 9, 2022, that included no substantial changes for global and domestic wheat markets. Given the overall volatility in 2022, a somewhat calming report was probably a blessing in disguise for wheat buyers who should, however, keep an eye on declining global stocks and exportable supplies.

Each month, U.S. Wheat Associates (USW) updates a graphic summary the WASDE report that includes global wheat market factors, major country and regional export history, and U.S. wheat supply and demand summaries by class. Readers can review the report online here. Some highlights from the December report follow.

Stocks to Fall

Based on USDA’s latest global wheat production estimate of 781 million metric tons (MMT) and total use of 790 MMT, marketing year 2022/23 will be the third in a row and the fourth in the last five years in which use has exceeded production.

The WASDE report included a 500,000 metric ton drop in estimated global ending wheat stocks to 267.3 MMT. If realized, those supplies will be the lowest since 2013/14. Of that total, an estimated 54.5 MMT will be found in “Exporter” countries, 68.4 MMT will be in “Importer” countries and 144 MMT will be in China. That means 54% of global ending stocks are locked out of world trade, an amount that is up from USDA’s estimate of about 51% in December 2021.

Bar chart showing the global wheat Ending Stocks to Use ratios since 13/14.

Locked in China. Global wheat stocks-to-use ratios are much lower when China’s 144 MMT of wheat stocks are removed from the equation. The down-trend is clear and has accelerated since 2019/20. The current stocks-to-use ratio of 19% without China, which does not export wheat, is the lowest level in more than 10 years. Source: USDA, U.S. Wheat Associates.

Given the poor condition of the Argentina wheat crop, USDA lowered ending stocks there by 500,000 metric tons, but increased European and Australian ending stocks. Analysts were somewhat surprised USDA did not change its 91 MMT estimate of Russian wheat production.

While USDA did not change its U.S. ending stocks estimate of 15.54 MMT in the latest WASDE report, it is the lowest U.S. ending stocks since marketing year 2007/08. Buyers that were in the market that year will remember the stunning run up in wheat prices fueled by extremely low global stocks. At one point that year, only a few weeks of world wheat supplies were available.

Low Exportable Supplies

In a video presentation on World Wheat Supply and Demand recorded for 2022 USW Crop Quality Seminars, USW Vice President and West Coast Office Director Steve Wirsching showed that ending stocks among exporting countries have declined significantly over the past five years.

“When exporters hold so few stocks, this increases market volatility and leads to higher wheat prices,” Wirsching said. A condition made even more uncertain by Russia’s on-going incursion into Ukraine.

Data from USDA's December WASDE report show wheat stocks are down, trade is up and use is up in 2022.

Wheat’s Balance Sheet. Data from USDA reflects the trend behind higher global wheat prices: falling supplies, increased trade and record demand year-over-year.

Trade Volume to Increase

The world wheat trade estimate increased in December by 2.2 MMT to 210.9 MMT. December’s report suggests higher exports from Ukraine, Russia and the EU. While expecting Australia’s exports to reach 27.5 MMT, almost a record volume, USDA also noted that a significant portion of Australia’s exports will be for animal feed following harvest rain and lower quality in New South Wales. The world total estimated exports and imports for the year now stands at 211 MMT

USDA did not change its U.S. wheat export volume estimate of 21.1 MMT, with slightly lower soft red winter (SRW) offsetting slightly higher hard red spring (HRW) and soft white (SW) exports.

December 13, 2022/by Steve Mercer

Legislation Supports Barge Transportation and Lower Snake River Dams

A coalition of U.S. farm and food industry groups recently expressed support for a bipartisan Congressional agreement that, in part, maintains navigational access to the Lower Snake River Dams.

The Agricultural Transportation Working Group noted that the Water Resources Development Act* (WRDA) of 2022 helps protect U.S. agriculture’s dependence on comprehensive transportation system including inland waterways and ports.

U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) join the working group in its strong support for the sustainability and reliability of wheat transportation by barge.

Barges Move U.S. Wheat and Other Grains

The “WRDA can impact trade because barges move about half of all grains to export elevators …,” the ATWG said in a letter to Congressional committee leadership that negotiated the 2022 WRDA. “Critical farm inputs … are transported via the inland waterways system. From the Pacific Northwest to the Mississippi River and the Gulf Coast, the importance of inland waterways and ports to the ATWG and American agriculture is definitive.”

Grain barge navigation on the Columbia Snake River System is an essential part of a logistical web that moves over half of all U.S. wheat exports to more than 20 Pacific Rim countries including some of the largest U.S. wheat buyers in the world. The Snake River moves more than 10% of all wheat that is exported from the United States. U.S. Wheat Associates (USW) and its state wheat commission members strongly support the sustainability and reliability of wheat transportation by barge.

Map of the Columbia Snake River System from Pacific Northwest Waterways Association

Eight Steps Down. Lock and dam systems on the Columbia Snake River System allow barges to efficiently and safely navigate the 222-meter elevation change from Lewiston, Idaho, to export elevators as far west as Longview, Wash. Illustration from the Pacific Northwest Waterways Association.

Protect Most Fuel-Efficient Shipping

The working group also noted that the removal of barge access through the Lower Snake River dams would require 39,000 rail cars or 152,000 semi-trucks to replace the cargo volume shipped on the Snake River in 2019, according to the Pacific Northwest Waterways Association. The group added that barging is the most fuel-efficient way to ship goods and failure to maintain access to this system would dramatically increase carbon emissions.

The Columbia Snake River System and other major U.S. river systems truly connect the United States to its trading partners. The river system keeps U.S. wheat competitive by moving higher volumes more efficiently. USW, its state wheat commission members, wheat associations and supply chain stakeholders in the tri-state region of Idaho, Oregon and Washington all support the Columbia Snake River System and will work to see that it continues working for wheat buyers around the world.

*The Water Resources Development Act is biennial legislation that authorizes flood control, navigation, and ecosystem restoration projects for the U.S. Army Corps of Engineers. The final version comes after months of negotiations to reconcile Senate- and House-passed versions of the legislation.

December 9, 2022/by Steve Mercer

Dalton Henry, Trade Policy

USW Trade Policy Team Addresses India’s Subsidies, Turkish Flour at WTO

During World Trade Organization (WTO) meetings in Geneva last week, USW’s Trade Policy team was able to dig deeper into programs in India and Turkey that have potential to affect global wheat trade and ultimately the bottom lines of U.S. farmers.

It was also able to touch base with U.S. wheat allies on trade issues with those countries.

USW Vice President of Trade Policy Dalton Henry and Director of Trade Policy Peter Laudeman had several consultations with delegations from other countries about the situation in India involving subsidies and wheat stocks.

India’s wheat and rice public stock holdings have been an ongoing concern, as the country’s subsidies programs have resulted in an oversupply of domestic wheat and rice. When India’s government releases those grain stocks into the export market, it often does so at prices below what it initially paid to purchase the wheat. Studies show the distortion of international wheat and rice trade from these policies cost U.S. wheat farmers anywhere from $500 million to $800 million per year in lost potential income.

“We had some very good conversations and although we did not receive all the answers we are looking for on India, it was encouraging to learn there is international support,” Laudeman said.

“We had support at home, too, from U.S.A. Rice, which was very helpful. It is also very important for U.S. agriculture when separate groups come together to work on issues.”

Turkey’s “flour dumping” was also a topic addressed during USW’s visit to Geneva. Turkey maintains substantial domestic support programs that encourage overproduction of flour, which the government then sells into overseas markets at less than global price levels. USW estimates the dumped flour hurts domestic milling industries around the world and subtracts anywhere from $100 million to $500 million from U.S. wheat export demand each year.

“We were previously able to submit a question to Turkey regarding the Turkish flour program through the U.S. delegation,” Laudeman explained. “Both Brazil and Australia joined us on that question, so at the WTO meeting we met with delegations from those countries and thanked them for their support. We also made it clear to other groups we met with that we would love to have more allies join us, if it makes sense for them to do so.”

Face-to-Face in Brussels

From Geneva, Henry and Laudeman traveled to Brussels for the annual meeting of the International Grain Trade Coalition (IGTC), an international organization that advocates for better trade policies and global food security.

“Many of the trade barriers that U.S. wheat producers face today aren’t tariffs, but stem from restrictions on technologies used in agriculture, which is where IGTC really shines,” Henry said. “It gives us the opportunity to work hand-in-hand with countries that would normally be our export competitors to make sure markets remain open. IGTC has working groups ranging from pesticide MRLs (maximum residue limits) to plant breeding innovations, all of which are critical to U.S. growers.”

USW’s Dalton Henry and Peter Laudeman attended the annual meeting of the International Grain Trade Coalition (IGTC), an international organization that advocates for better trade policies and global food security. The meeting, held in Brussels, was the first in-person annual meeting in a few years due to the COVID pandemic.

The USW team was also able to meet new staff from global trade groups and get updated on several roles that transitioned during the pandemic.

“We were able to jump in and reengage with a lot of our grower and grain trade partners from all over the world,” Laudeman said. “If there is one key takeaway it’s that the global grain trade relies heavily on face-to-face interaction when it comes to supply chain relationships. This IGTC meeting was a good way to restart the interactions.”

December 9, 2022/by Ralph Loos

Exports, Foreign Agricultural Service, Hard Red Spring, Hard Red Winter, Korea, Mexico, Soft Red Winter, Soft White, South Africa, Taiwan, Technical Service Activities, Wheat Foods, Wheat Quality

Promoting U.S. Wheat Around the World in 2022

As U.S. Wheat Associates (USW) President Vince Peterson often says, at any given hour of the day someone, somewhere, is talking about the quality, reliability and value of U.S. wheat. Wheat Letter wants to share just some of the ways USW has been working recently to build a preference for U.S. wheat in an ever more complex world wheat market.

Lauding Nutritious, Delicious U.S. Baking Ingredients in China

USW Beijing participated in the USDA Foreign Agricultural Service (FAS) “Discover U.S. Baking Ingredients and Trends” hybrid virtual promotion in August 2022 (activity banner in the photo above). The purpose of this activity was to raise Chinese bakers’ awareness of the nutrition, health benefits, taste, and versatility of U.S. baking ingredients. The FAS Agricultural Trade Office (ATO) in Beijing and 10 USDA Cooperators with products ranging from wheat, dried fruit and nuts to dairy sponsored the activity partnering with the China Association of Bakery and Confectionery Industry.

In-store promotion product 2 using U.S. dried blueberry and California almond slices and U.S. wheat flour

In-store promotion products using U.S. dried blueberry and California almond slices and U.S. wheat flour.

ATO Beijing reported the activity reached an audience of over 2.5 million netizens in China through social media platforms and

over 200,000 real-time viewers through livestreaming. There was also in-store promotions at leading bakery houses in Beijing where “consumers warmly welcomed the new products featuring U.S. baking ingredients,” ATO Beijing reported. Additionally, ATO Beijing strengthened connections with baking associations and businesses and generated trade leads with this activity. Read more here.

USW Beijing Technical Specialist Ting Liu and Marketing Specialist Kaiwen Wu played direct roles representing the essential quality of flour from U.S. wheat in the events. In the three full marketing years since the trade war ended, China has imported a total of more than 168 million bushels (4.58 million metric tons) of U.S. hard red winter (HRW), hard red spring (HRS), soft white (SW) and soft red winter (SRW) wheat, and have already imported almost 23 million bushels of U.S. wheat in the current marketing year that ends May 31, 2023.

Helping a Mexican Baker Expand Sales

In a technical support activity demonstrating to Mexican bakers how to extend their product lines using U.S. wheat flour, USW Mexico City enlisted Baking

Didier Rosada

Consultant Didier Rosada to conduct an in-depth, multi-day workshop for one of the top three baking groups in Mexico. The commercial baker selected their best 25 master bakers to learn how to produce internationally recognized sourdough, functional breads, and savory breads for retail bakery sales. Rosada also demonstrated how to standardize pre-fermentation and natural sourdough processes to optimize production efficiency, products consistency, and quality in every store.

“Baking is changing in a good way,” Rosada said. “At my bakery, my process is as natural as possible, with long fermentation time, like it used to be done, to bring back the flavor profile of a good bread, its shelf life and texture, etc. And U.S. wheat classes are perfect for that. I am using a flour that is almost 100 percent hard red winter or sometimes combined with hard red spring wheat.”

Mexico is the leading importer of U.S. wheat in the world.

Healthier Wheat Foods for Older Taiwanese Consumers

Well-known Taiwanese chefs demonstrated healthy Chinese wheat food products .

USW Taipei collaborated with the Department of Food and Beverage Management of Shih Chien University (USC) to conduct workshops on Chinese Wheat Food for the Elderly in October 2022. Chinese wheat foods are popular but a survey by the university indicated that more than 60% of elderly Taiwanese are not satisfied with the healthiness of the products.

USW Taipei Country Director Boyuan Chen and Technologist Wei-lin Chou invited well-known Taiwanese chefs to teach methods for making healthy handmade noodles, pan-fried stuffed buns, silk thread rolls, and pan-fried sweet potato pastry as well as steamed breads using U.S. wheat white flour and whole wheat flour. The 40 participants included teachers, students, and long-term elderly care community volunteers who made pan-fried stuffed buns for the elderly just after the workshop.

U.S. wheat imports by Taiwan have averaged 43.2 million bushels (1.18 million metric tons) of HRS, HRW and SW per year since 2017/18.

Continuing Milling Education Interrupted by COVID in Korea

USW Seoul had started to educate Food Technology undergraduate students at Won Kwang University about the fundamentals of U.S. wheat and flour milling technology in 2018. USW Seoul Food/Bakery Technologist Shin Hak (David) Oh resumed that effort this year. The goal is to give these future industry professionals a better understanding of why flour products from U.S. wheat make superior quality ingredients for Korean wheat foods. The early exposure to U.S. wheat and the value-added technical support from USW also builds future productive relationships.

On average the past five marketing years, South Korean millers have imported about 56.7 million bushels (1.54 million metric tons) of U.S. HRW, HRS, SW and SRW wheat per year.

USW Baking Technogist Shin Hak Oh lecturing to Korean food industry students on U.S. wheat and milling technology

U.S. Soft Wheat Best for Cookies, Cakes

USW Cape Town sent six participants from a large South African food company to a specialty soft wheat flour course at the Wheat Marketing Center in Portland, Ore., earlier in 2022. The course focused on cookies, crackers, and cakes made with flour from SRW and SW compared to flour from local and imported hard wheat that is used in South Africa. The participants also visited local grocery stores to gain insight into the many, varied U.S. products made from soft wheat flours.

USW Cape Town Regional Director Chad Weigand accompanied the food industry professionals to the course. He said participants were very impressed with the course results and comparative product quality, and he expected the company to begin testing products made with U.S. soft wheat flour.

Read more here about the South African wheat market.

December 6, 2022/by Steve Mercer

Wheat Industry News

Recent news and highlights from around the U.S. wheat industry.

Speaking of Wheat

“A major escalation of the war, as Russia fired over 70 cruise missiles across the country, caused major damage to infrastructure. This left over half [of Ukraine] without power, which resulted in ports becoming inoperable, including those on the Danube River. Continuous attacks on infrastructure are impacting the viability of grain exports and could result in increased shortages and food prices.” – COCERAL, the European association of trade in cereals, oilseeds, rice, pulses, olive oil, oils and fats, animal feed and agro-supply.

Welcoming New State Commission Executive

The Montana Wheat and Barley Committee (MWBC) recently introduced Mr. Kent Kupfner as the commission’s new Executive Vice President. “I’m excited to continue promoting Montana’s top commodities to the rest of the world,” said Kupfner. “Working on behalf of Montana’s wheat and barley growers has always been and will continue to be a top priority.” Before joining the MWBC, Kupfner merchandised wheat and managed grain assets for multiple U.S. companies. Read more here.

New Nebraska Shuttle Loading System

Scoular has installed a new high-speed shuttle loading system at its Grainton country elevator in southwest Nebraska that will feature significantly faster grain unloading speeds. At the new facility, the Nebraska, Kansas & Colorado Railway (NKCR) provides access to the BNSF mainline, opening farmers to Mexico and other markets.

U.S. House Approves Emergency Resolution to Avoid Rail Strike

The U.S. House of Representatives took a first step on Nov. 30 toward preventing a strike by U.S. rail workers. A rail strike would have a significantly negative effect on wheat export basis and add even more uncertainty to an already volatile market. Nicole Berg, National Association of Wheat Growers president and Washington state wheat farmer, said “We are thankful to see the House of Representative’s vote to avoid a rail shutdown and applaud leadership for bringing this to the floor quick enough to avoid any disruptions. Wheat growers are uniquely reliant on an efficient, reliable and affordable rail transportation network, so we urge the Senate to pass this resolution quickly.”

USW Reception at ALIM Conference

U.S. Wheat Associates (USW) is proud to be a founding member of ALIM, the Latin American Industrial Millers Association, and sponsored a reception for members participating in the 40^th ALIM annual meeting in Lima, Peru, on Nov. 27. The organization quickly produced a video record of the reception to kick off the conference program Nov. 28. Click below to see the video and look for more information about this special event soon.

U.S. Holiday Office Schedule

In recognition of Christmas and New Year’s, the USW Headquarters and West Coast Offices will be closed Friday afternoon, Dec. 23, Monday, Dec. 26, Friday afternoon Dec. 30, and Jan. 2, 2023. Contact your local USW office for information about holiday hours.

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 more on LinkedIn.

December 1, 2022/by Steve Mercer

Crop Quality Report, Market and Crop Analysis, Wheat Quality

USW’s Crop Quality Seminars Successful in Highlighting 2022 Wheat Crop for Global Customers

USW Vice President for Overseas Operations Mike Spier (far right) and Regional Vice President for South Asia Joe Sowers greet attendees at the 2022 USW Crop Quality Seminar in Manila.

USW Vice President for Overseas Operations Mike Spier (far right) and Regional Vice President for South Asia Joe Sowers (center) greet attendees at the 2022 USW Crop Quality Seminar in Manila.

Crop Quality Seminars presented by U.S. Wheat Associates (USW) concluded this week with a universal response by customers in every corner of the world: They are impressed by the high quality of the 2022 crop across all six wheat classes but concerned about the sustained higher prices.

One other common opinion: Those attending in-person seminars were happy to meet USW staff and U.S. wheat producers face-to-face.

“It was great to have a number of U.S. producers sharing their stories and interacting with customers,” reported Tyllor Ledford, Assistant Director in USW’s Portland office, who was part of the U.S. wheat team that presented in South Asia. “There was some great dialogue between the farmers and customers about production practices and risk management topics. And obviously, there was a lot of interaction and feedback on this year’s wheat crop.”

A big part of USW’s effort to communicate supply, demand and crop quality information to wheat buying and milling groups, the annual seminars took place throughout November. Separate in-person or hybrid (in-person and virtual) seminars were conducted in South Asia, Central America, South America, the Middle East and North Africa (MENA) and the European Union (EU). Virtual seminars were conducted in China, South Korea, Japan and Taiwan with support from videotaped crop quality presentations.

“We had a good turnout in the EU, with a lot of questions about this year’s crop and a lot of interest in future crops,” said USW Vice President of Programs Erica Oakley, who partnered with the USW EU Regional Office in Rotterdam and Erica Olson of the North Dakota Wheat Commission to lead seminars in Italy, Spain, the United Kingdom and Portugal. “Everyone was very pleased with the wheat crop and what we presented, but higher prices remain a concern.”

USW Secretary Treasurer Clark Hamilton (at podium) and Dave Green, Executive Vice President, Wheat Quality Council, present at the USW 2022 Crop Quality Seminar in Bangkok, Thailand.

In the MENA region, seminars were held in Egypt, the United Arab Emirates and Morocco. USW Regional Technical Manager Peter Lloyd said the uncertainty of the Ukraine-Russia conflict and the future of the Black Sea Grain Initiative weighed heavily in the discussion.

“Overall, participants were impressed by the high quality of this year’s U.S. wheat harvest, but the strong U.S. dollar and high freight rates are not helping the prices affecting the region,” Lloyd said. “We will likely be helping our customers deal with a reduced availability of high-protein wheat in the next marketing year.”

In South America, seminars in Colombia, Ecuador, Peru and Chile also attracted buyers and millers eager to learn about the 2022 crop. There were curiosities about potential U.S. transportation problems and how it may affect U.S. wheat exports in the future.

USW staff and partners pose for a photo with a group of U.S. wheat customers during a 2022 Crop Quality Seminar in Quito, Ecuador on Nov. 10.

USW staff and representatives of partner organizations pose for a photo with a group of U.S. wheat customers in South America during a Crop Quality Seminar held Nov. 10 in Quito, Ecuador.

“There were questions about ongoing drought and transportation issues, such as the Mississippi River barge situation and the potential railroad strike in the U.S.,” explained Miguel Galdos, USW Regional Director in Southern America. “That, of course, is based on the concerns about pricing. As far as the crop quality, attendees were pleased with the U.S. crop this year, especially the baking quality of hard red winter wheat.”

The South Asia seminars conducted in Thailand, Indonesia and the Philippines featured USW staff and a seven-member USW board team that shared information about their farm operations.

“Millers meeting with U.S. wheat producers is vital to promoting our product,” said Joe Sowers, USW Regional Vice Present for South Asia. “Discussions about challenges and opportunities on each side of the wheat industry provide great insight into the value of U.S. wheat, which is a primary goal of the seminars each year.”

The 2022 USW Crop Quality Report and by-class reports can be found here.

November 30, 2022/by Ralph Loos

Joe Sowers, Philippines, South Asia, USW Announcements

USW Celebrates 60th Anniversary in the Philippines

Appropriately, the celebration of the 60th anniversary of USW’s office in the Philippines included the U.S. Ambassador to the country, representatives from USDA’s Foreign Agricultural Service (FAS) and the Executive Director of the Philippine Association of Flour Miller’s (PAFMIL).

It also featured a cake contest starring U.S. soft white wheat.

The Nov. 18 event, which marked another milestone in an important relationship between U.S. wheat and one of its biggest and most dependable customers, came at the conclusion of the 2022 USW Crop Quality (CQ) Seminar in Manila – the first in-person CQ seminar since 2019.

The USW team poses with one of the photos gifted by Past President Darren Padget to Filipino flour millers during the 60th anniversary celebration of the USW office in the Philippines.

The USW team poses with one of the U.S. wheat harvest photos gifted by Past Chairman Darren Padget to Filipino flour millers during the 60th anniversary celebration of the USW office in the Philippines.

“It is fortunate and very fitting that we were able to get together with some familiar faces to celebrate the anniversary of our presence in the Philippines while also sharing information about the U.S. wheat crop,” said USW President Vince Peterson, who joined a large team of USW officers and staff at the Manila Marriott Hotel. “U.S. Wheat Associates and our legacy organizations have maintained an office here for six decades now for a very good reason. The flour millers in the Philippines rely on U.S. wheat to meet growing demand by consumers. And wheat farmers in the U.S. rely on Filipino flour millers who appreciate the high-quality wheat they grow.”

MaryKay Carlson, U.S. Ambassador to the Philippines, spoke about the significance of U.S. wheat in the region.

“Nothing symbolizes U.S. agriculture better than amber waves of grain,” Carlson told an audience. “We are pleased to make this important essential commodity available to our friends, partners and allies here in the Philippines.”

MaryKay Carlson, U.S. Ambassador to the Philippines, speaks during USW’s 60th anniversary celebration. Carlson emphasized the importance of the relationship between U.S. wheat and consumers in the country.

PAFMIL Executive Director Ric Pinca was among representatives of the Filipino milling industry on hand to congratulate USW. USW Chairman Rhonda Larson and Past Chairman Darren Padget participated, each sharing background on their farms and production practices. Padget presented local millers with framed photographs of a wheat field overlooking the Lower Monumental dam on the Snake River.

Three flour mills participated in the contest to design, bake and decorate a cake made with flour milled from U.S. soft white wheat and a variety of local fruits.

The Philippines is the second largest importer of U.S. wheat in the world. Over the past five years, Filipino flour millers have imported an average of more than 2.9 million metric tons of U.S. soft white, hard red spring and hard red winter wheat per year.

November 30, 2022/by Ralph Loos

Dalton Henry, Trade Policy

USW Trade Policy Team Keeping Close Eye on U.S. Wheat Opportunities, Distortions for 2023

When clatter around trade policy gets noisy, Dalton Henry likes to quiet things by breaking down issues affecting the exporting of U.S. wheat into two basic categories.

“Everything has potential to be either an opportunity or a distortion,” the Vice President of Policy for U.S. Wheat Associates (USW) explained. “In general, USW’s Policy Team spends every day looking at situations around the world that impact U.S. wheat and sorting out which category they fall under. Then we work on solutions.”

Market access is a centerpiece of trade policy.

As with any agricultural product, tariffs, export barriers and other trade policies can increase the cost of U.S. wheat for the entire supply chain and customers who sit on the buying end of that chain. Ultimately, USW’s Policy Team – Henry and Director of Trade Policy Peter Laudeman – is tasked with helping smooth the process of getting wheat grown by U.S. farmers to customers around the world.

USW Vice President of Policy Dalton Henry presents at the 2022 USW/NAWG Joint Board meeting in early November.

USW Vice President of Policy Dalton Henry details issues and policies facing US. wheat during his presentation at the 2022 USW/NAWG Joint Fall Board meeting in early November.

Where trade agreements do exist, the team monitors them to ensure they are properly implemented and followed. It also keeps an eye on human and environmental health regulations around the world to make sure they don’t disrupt U.S. wheat trade. And the team plays a big role in monitoring the use of wheat in U.S. international food assistance programs.

An example of a trade policy success by USW was realized about a year ago, when it teamed with USDA to show the Vietnamese government why eliminating a 3% tariff on imported U.S. wheat would help ease food inflation while benefiting Vietnamese flour millers.

Australia and Canada, the largest wheat suppliers to Vietnam, had duty-free access to Vietnam under regional trade agreements. The decision at the end of 2021 to remove the tariff on U.S. wheat also helped level the playing field in what is a fast-growing market.

Food Assistance: A Policy Team Focus

Laudeman, who joined USW in August 2022, brought with him diverse experience working for both U.S. growers and the crop protection industry.

In addition to trade policy work alongside Henry and his work on biotech and plant breeding innovation, Laudeman is providing USW with leadership on food assistance and development.

“A lot of people don’t realize our food aid markets, where the U.S. government is purchasing and donating commodities, makes up a Top 10 U.S. wheat export market,” Laudeman said. “The USW Policy Team makes sure that that all regulatory mechanisms are functioning properly when we send U.S. wheat food aid, either as emergency support or on a developmental basis.”

In his role, Laudeman also spends a lot of time working closely with professional economists. As a believer in the notion that trade policy is inherently economics-based, it’s a natural connection for him. He regularly monitors USDA databases and other data sources to assure USW can analyze trade data.

It’s not all numbers and calculators, he emphasized.

“My role is very relationship-based and USW’s relationships with other commodity organizations are vital because many times we need a strong agricultural coalition to work on some of these trade issues that impact us,” he said.

U.S. Wheat Director of Trade Policy Peter Laudeman reviews the effect of Turkey’s flour export scheme on U.S. wheat exports during the the Joint Trade Policy Committee meeting in early November.

U.S. Wheat Director of Trade Policy Peter Laudeman reviews the effect of Turkey’s flour export tactics on U.S. wheat exports at the 2022 USW/NAWG Joint Fall Board meeting.

Preparing for 2023 Issues

While the entire U.S. wheat industry continues to keep an eye on the Russia-Ukraine conflict and its affect on trade, USW’s Policy Team is also focused on a handful of other countries and ongoing situations that could have an impact on wheat trade.

“Where are the big distortions in the global wheat market right now? China continues to be problematic, even though we have seen tremendous progress in how they are running their tariff rate quota system,” Henry notes. “We still have challenges with their domestic subsidies for a system that produces a larger and larger wheat crop year after year. China continues to hold more than 50% of the world wheat stocks domestically, and that weighs heavily on global wheat prices.”

India’s domestic price support programs also stands out as a red flag in the coming year, Henry noted. He listed Turkey is a third “distorter” because of its on-going policies that encourage dumping of wheat flour and under-reporting data to the World Trade Organization.

At the top of Henry’s 2023 “Wish List” is renewal of anti-dumping duties imposed by the Philippines government on Turkish flour. If the duties are not renewed, the Philippines milling industry will be hurt and up to $100 million in U.S. wheat imports could be lost.

And not going away in 2023 are non-tariff barriers to trade, which represent the fastest-growing barrier impacting wheat trade, according to Henry.

Examples of non-tariff barriers are rules like maximum residue limits (MRL) on pesticides and limits on weed seed species or insects. Many sanitary and phytosanitary (SPS) regulations are critically important to protecting plant and human health, but many countries are using them to protect domestic producers – creating obstacles to trade for U.S. wheat.

Breaking down those obstacles is the goal.

“Trade policy work requires us to be in constant contact with a wide range of regulators and non-government organizations,” said Henry. “Ultimately, the goal is the same – to make sure we are doing everything we can to help keep wheat trade flowing between the farmers we represent and our values customers around the world.”

November 29, 2022/by Ralph Loos

USW Announcements

USW, Other U.S. Export Organizations to Collaborate in South America on Nutrition and Food Security Activities

Latin America is facing great challenges, with extreme poverty and hunger being some of the most alarming. According to the United Nations Food and Agriculture Organization (FAO), nearly 60 million people suffer from hunger in the region. This is a continuing opportunity for organizations to collaborate and coordinate approaches and resources to advance food and nutrition security, economic growth, and sustainable development of each country, to reduce gaps amid population and climate change dynamics.

That is why U.S. Wheat Associates (USW), U.S. Soybean Export Council (USSEC), U.S. Grains Council (USGC), and U.S. Rice Federation (USA Rice) recently signed a Memorandum of Understanding (MOU) to collaborate on contributing to the nutrition and food security of the region by promoting U.S. agricultural and food exports across Latin America.

Under this agreement, these four leading U.S. agricultural and food trade associations will undertake joint initiatives in areas of mutual benefit, leveraging the U.S. Department of Agriculture’s Foreign Market Development and Market Access Program by coordinating and/or combining resources. Furthermore, this agreement is expected to make a positive impact in the region amid the latest global economic events such as interruptions to supply chains, the negative impact of Covid-19, and a changing climate.

U.S. and Chilean officials at the dedication of a joint USW-Universidad Mayor wheat quality and baking lab

Spirit of Collaboration. USW Santiago worked with Universidad Mayor to create a wheat flour analysis and baking laboratory dedicated in 2021 with guests including USDA FAS and Chilean officials (above). Such collaboration helped USW reach a memorandum of understanding with three other U.S. agricultural export organizations to work closely on regional nutrition and food security activities.

“We live in a global village. Collaboration and coordination can be instrumental to benefit Latin America families, our food company customers, and countries, as well as the U.S. food and agriculture industry. ” said Carlos Salinas, USSEC Regional Director for the Americas. “Together and equipped with sustainable, high quality and reliable food and agricultural products, we will implement specific, targeted and coordinated marketing initiatives to advance food and nutrition security, climate-forward solutions, and progress for people and communities.”

“In our region we have several customers that purchase two or three agricultural commodities from the United States and we believe that more communication with USDA cooperators will have a positive impact on our mission in South America,” said Miguel Galdos, USW Regional Director, South America.

November 18, 2022/by Steve Mercer

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