Wheat Letter Blog Archive - Page 23 of 104

Wheat Export and Production Issues in Focus, as Black Sea Grain Deal Discussions Continue

By Keith Good, Farm Policy News, Reprinted with Permission

Late last week, Bloomberg writers Aine Quinn and Megan Durisin reported that, “After a slow start to the season, Russia’s grain exports are booming as buyers load up on its attractive bumper supplies.

“The country’s shipments of wheat — its main crop — almost doubled in January and February from a year earlier, Logistic OS data show. Buyers shunned cargoes earlier in the season when prices weren’t as appealing, but are now returning as last year’s massive harvest helps Russian grain to rank among the cheapest globally.

Chart of Russian wheat prices over time demonstrating reduction in cost based on huge annual production.

Chart Source: “Russia Wheat Exports Nearly Double What They Were Before War,” by Aine Quinn and Megan Durisin. Bloomberg News (March 3, 2023).

“The recent boom shows shippers have overcome some of the financing and insurance problems fueled by sanctions on Russia. The outlook for exports from the Black Sea is also coming into sharper focus as a deal allowing Ukrainian cargoes to sail through a safe corridor comes up for renewal in about two weeks. Supplies from both nations are helping to stop global food inflation worsening.”

The Bloomberg article also noted that, “While Ukraine’s volumes remain significant, they’re below peaks set late last year. The amount carried out of the Black Sea in February totaled 3.35 million tons and the number of vessels cleared for inspection — a part of the deal — fell for a fourth month.

chart from the Black Sea Grain Initiative showing a slow down in the number of Ukrainian grain ships being inspected under the agreement.

Chart Source: “Russia Wheat Exports Nearly Double What They Were Before War,” by Aine Quinn and Megan Durisin. Bloomberg News (March 3, 2023).

Sluggish Inspectors

“Kyiv has blamed a slowdown in its exports since late last year on sluggish work by Russian ship inspectors, who are one of the parties tasked with checking all vessels sailing under the deal.”

On Monday, Bloomberg writer Keira Wright reported that, “Australia, the world’s second-largest wheat exporting country, is likely to see shipments slump 20% from record levels in the coming financial year as production tumbles because of a shift to a drier climate pattern.

“Exports will probably fall to 22.5 million tons in 2023-24 from an all-time high of 28 million tons a year earlier, while output is set to decrease to 28.2 million tons from 39.2 million tons, government forecaster Abares said. The figure for the harvest just completed is up from 36.6 million tons estimated in December. Planting for the coming crop only gets under way in April.

U.S. SRW wheat futures price chart since March 2022 showing the decline in prices since the Russian invasion of Ukraine.

Chart Source: “Australia Sees Wheat Exports Plunging 20% on Drier Climate,” by Keira Wright. Bloomberg News (March 6, 2023).

Aussie Production Price Cap

“Supplies of the food staple from Australia have helped to cap global prices in the past year after Russia’s invasion of Ukraine choked shipments and sent the grain to a record.”

More broadly on global wheat production, Bloomberg writer Aine Quinn reported late last week that, “Global wheat output is expected to drop slightly next season from a record high as the war in Ukraine and dry weather in Russia takes a toll on crops, the United Nations said.

UN Food and Agriculture Organization chart of global wheat production indicating possible decline in production for 2023/24.

Chart Source: “UN Sees Global Wheat Output Falling for First Time in Five Years,” by Aine Quinn. Bloomberg News (March 3, 2023).

“Production should fall roughly 1% to 784 million tons in the 2023-24 season, the UN’s Food and Agriculture Organization said Friday. That would be the first decline in five years and highlights the risk that global grain supplies still face from Moscow’s invasion of Ukraine.”

Black Sea Corridor Negotiations

In more detailed reporting on the renewal of the Black Sea Grain Deal, Reuters writer Michelle Nichols indicated yesterday that, “United Nations Secretary-General Antonio Guterres will meet Ukrainian President Volodymyr Zelenskiy in Kyiv on Wednesday to discuss extending a deal with Moscow that allows the Black Sea export of Ukraine grains amid Russia’s war in the country.

“‘The Secretary-General has just arrived in Poland on his way to Ukraine,’ U.N. spokesman Stephane Dujarric said on Tuesday, adding that Guterres will discuss the continuation of the deal ‘in all its aspects and other pertinent issues.’”

“The 120-day deal, initially brokered by the United Nations and Turkey in July and extended in November, will be renewed on March 18 if no party objects. Russia has signalled that obstacles to its own agricultural exports need to be removed before it lets the Ukraine’s Black Sea grain deal continue.”

The Reuters article pointed out that, “Turkish Foreign Minister Mevlut Cavusoglu said on Sunday that Ankara was ‘working hard for the smooth implementation and further extension of the Black Sea grain deal.’”

And Reuters writer Pavel Polityuk reported yesterday that, “Ukraine has started online talks with partners on extending the Black Sea Grain Initiative aimed at ensuring Kyiv can keep shipping grain to global markets, a senior Ukrainian government source said on Tuesday.

“The source said Ukraine had not held discussions with Russia, which blockaded Ukrainian Black Sea ports after its invasion last year, but that it was Kyiv’s understanding that its partners were talking to Moscow.

“‘The situation with negotiations is rather complicated. Now a lot depends not on us but on the partners,’ said the source, who spoke to Reuters on condition of anonymity.”

March 10, 2023/by Steve Mercer

Russia, Vince Peterson

Russian Intervention Has Fueled Every Wheat Price Spike Since 2007

Editor’s Note: On March 11, 2022, U.S. Wheat Associates (USW) President Vince Peterson commented on the Russian government’s role as a source of great uncertainty for the world’s wheat producers, sellers and buyers. One year later, the price disruption of Russia’s unprovoked invasion of Ukraine continues. While prices have settled since the invasion started, the market still moves on every scrap of news from the Black Sea region. Reprinted here are Mr. Peterson’s views then, providing perspective today.

Once again, and tragically this time, Russian intervention is the underlying source of dramatic global wheat price volatility.

“…We are closely monitoring prices for the most essential social goods such as food, including bread,” said Russian Prime Minister Mikhail Mishustin this week about its domestic wheat supply. “Russian grain is in good demand from abroad, and its price is increasing. That said, it is necessary to provide the necessary raw materials, first of all, to the domestic baking industry.”

This Al Jazeera English report provides important insight into the situation in Ukraine one year after the invasion ordered by President Putin.

Consistent Protectionism

The Prime Minister made this comment with specific reference to the hyper reaction of global wheat prices to Russia’s invasion of Ukraine and the immediate impacts of the widespread economic sanctions levied on Russia in response. Yet it spotlights the core tenants of Russia’s protectionist and heavy-handed wheat supply and price control policies. Russian intervention has been front and center since the country first entered the global wheat export trade.

Anyone who does not take the Prime Minister at his word on this sets themselves up for a very disappointing and expensive lesson. Defending Russian domestic supplies and keeping domestic prices low by withholding supplies from the world will always be their primary wheat policy weapon. And they deploy it without regard for the harm and expense it creates for anyone.

Underscoring this point, the Russian Ministry of Economy confirmed on Mar. 11, 2022, that they are banning wheat exports through Aug. 31, 2022, to their fellow Eurasian Economic Union member states, including its Ukraine invasion staging partner Belarus, along with Armenia, Kazakhstan and Kyrgyzstan.

Every Spike Reveals Russian Intervention

In six documented situations since 2007, when the global wheat market showed any sign of stress, the government of Russia stepped in to impose an export ban, export tax or export quota to isolate their home market. These actions intentionally limited world wheat importers’ access to Russian wheat supplies. This Russian intervention further magnified any supply shortage and accelerated the rise in wheat prices.

Twice in this time frame, Russian military aggression against Ukraine directly caused world wheat prices to spike sharply. The world is reeling viscerally and economically from the shock of that situation right now.

Chart shows correlation between HRW futures price spikes and Russian intervention.

Correlations. Russian intervention is associated with the upward spike in hard red winter wheat futures prices. Factors include export restrictions, taxes, and, sadly, two invasions of its sovereign nation neighbor Ukraine. Copyright 2022 U.S. Wheat Associates.

Rampant Uncertainty

The COVID-19 pandemic lifted the tide of global inflation by disrupting global supply chains. Now, Russia’s war on Ukraine has blocked nearly 30% of the expected wheat export supply from governments and people that depend on it the most. Uncertainty runs rampant. And it is almost impossible to know how this war will be prosecuted. How long it will persist? What will the physical and economic situation of Ukraine and Russia be at the end?

Market analysts everywhere are trying to assess the many implications of this latest Russian intervention. Who will be most severely impacted? What will be the magnitude of the shortage created in the global wheat supply chain? And how will the world’s remaining supplies be apportioned, priced and relocated to the most severely affected countries?

Extreme Volatility

The extreme wheat price volatility seen in the past two weeks sits witness to this uncertainty.

Such high prices and volatility create challenges for the world’s wheat buyers and farmers and grain traders, who must also use the futures market to manage price risk. It is important to note that the U.S. wheat market remains fully open to importers and users everywhere. Dependable U.S. wheat producers and our reliable export system stand in the gap. They are ready and able to supply wheat as broadly to the world as our own supplies, and logistical capacity can accommodate.

Supplies Available

In addition to the wheat price inflation attributed to Russian intervention, U.S. wheat prices reflect that last year’s drought in the Northern Plains and Pacific Northwest limited current U.S. supplies. However, this year’s original export expectations and calculations do not include all U.S. supplies available. And wheat farmers will harvest a new crop starting in June.

U.S. Wheat Associates (USW) also creates additional value for U.S. wheat through the services it offers its customers. As they navigate this extreme market situation to secure the wheat necessary to feed people worldwide, USW remains ready to provide any information, tools and assistance within our means that may be helpful.

By USW President Vince Peterson

March 9, 2023/by Steve Mercer

Exports, Japan, Korea, Marketing and Trade Conferences, Philippines, Trade Delegation

USW’s North Asia Board Team Wrapping Up Visit to Three Vital Markets

Taeyoung Grain Terminal’s CEO took time from his busy schedule March 8, 2023, to meet with U.S. farmers from Idaho, Montana and Nebraska and explain what happens when a shipment of imported U.S. wheat arrives in South Korea (photo above).

It was a fitting way for the U.S. Wheat Associates’ (USW) 2023 North Asia Board Team to wrap up its 10-day exploration of top Asian markets.

“We’ve been able to see every step, where demand for our wheat is created at the consumer level, to the baking process where flour is used as the ingredient, to the milling process where flour is made with our wheat, and now to the import process, which is how our wheat gets to the market in the first place,” explained Bob Delsing, a Nebraska wheat producer and Nebraska Wheat Board member.

Delsing took note of another important detail, too.

“The other farmers and I on the trip really noticed the respect people have shown us,” Delsing added. “The end of the Korea visit was a perfect example. Tae Hyun Yeo, who leads grain terminal as CEO, seemed happy to spend time with us and get to know us. We saw that over and over on this trip.”

Along with Delsing, team members are Bill Flory, of the Idaho Wheat Commission (IWC); Keven Bradley, of the Montana Wheat and Barley Committee (MWBC); Kent Kupfner, Executive Vice President of MWBC; and USW Director of Communications Ralph Loos.

USW Country Director Rick Nakano discusses Japan's milling and baking industry to members of the 2023 USW North Asia Board Team.

USW Country Director Rick Nakano discusses Japan’s milling and baking industry with 2023 USW North Asia Board Team members (l to r) Bob Delsing, Keven Bradley, Bill Flory and Kent Kupfner.

Representing the USW Board of Directors, the team arrived in the Philippines on Feb. 28, then made stops in Japan and South Korea to meet customers of U.S. wheat. A return to the U.S. is scheduled for March 10.

“It was exciting to have the Board Team in Tokyo, and in fact it is the first team we’ve hosted since before the pandemic,” said USW Japan Director Rick Nakano. “The goal was to give the farmers a look at the market and how USW works to create demand for U.S. wheat. Our customers were eager to meet face-to-face with this team and get a perspective from wheat growers. Our customers also wanted to share what they need to help their businesses. We had some exceptionally good discussions.”

Compliments on Quality, Questions About Supply

Two overlying themes dominated each meeting between the USW team and flour millers in each of the three Asian markets: quality and supply.

“Our members are always very satisfied with U.S. wheat’s quality – never a question,” Jeong-seop Park, director of the Korea Flour Mills Industrial Association (KOFMIA), offered during a meeting between the team and his organization. “We have come to rely on that quality and we wish to show appreciation for the work U.S. farmers do to assure it in every crop.”

The 2023 USW North Asia Board Team meeting with members of the Korean Flour Millers Industrial Association in Seoul, South Korea

The 2023 USW North Asia Board Team met with members of the Korean Flour Millers Industrial Association at the KOFMIA headquarters in Seoul, South Korea.

Like other customers the USW team met in the Philippines, Japan and Korea, KOFMIA asked each farmer about the status of his current wheat crop and projections for 2023 success come harvest time.

Questions in each market were centered on the supply of wheat from the United States.

“Those are difficult questions to answer this time of year because we won’t know about our winter wheat crop until later in the spring, but I feel they were satisfied with our answers and I feel they understand,” said Bradley, who has roughly 5,400 acres of hard red winter wheat (HRW) wheat in the ground on his Montana farm. “This was my first visit to a foreign market, so I learned a lot about our customers in each of the countries we visited. It’s an eye-opening experience and you see the value of the U.S. Wheat Associates offices in each market. The [USW] staff does a great job interacting with our customers.”

In addition to the Taeyoung Grain Terminal in Pyeongtaek , the South Korea leg of the journey included a tour of the Sajodongaone Dangjin Flour Mill. The day prior was packed with productive meetings in Seoul with Agricultural officials from the U.S. Embassy, the KOFMIA members, Samhwa Flour Mills, Daehan Flour Mills and the CJ Cheiljedang Corporation.

Members of the 2023 USW North Asia Board Team toured the Sajodongaone Dangjin flour mill March 7, 2023. Here, USW Seoul Food/Bakery Technologist Shin Hak “David” Oh translates the mill manager’s explanation of this display of flour streams the mill creates for Korean bakeries.

Japanese Stress ‘Trust and Understanding’

In Japan, the farmers met with the Japan Flour Millers Association (JFMA), as well as Agricultural Affairs and Agricultural Trade Offices of the U.S. Embassy and Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF). A tour of the Nippn Corporation’s Chiba Flour Mill provided insight into Japan’s use of U.S. wheat.

JFMA members pointed to the long relationship Japanese millers have had with U.S. producers. Recent high prices for U.S. wheat have been a concern, along with future production. However, officials made it clear they understand how weather affects the wheat crop and that they trust U.S. farmers.

JFMA Executive Director Yasuo Sasaki sought input from the USW Team about their farms and the business challenges they face.

In Tokyo, the 2023 USW North Asia Board Team met with members of the Japan Flour Millers Association.

USW Tokyo Country Director Rick Nakano (far right) introduces the the 2023 USW North Asia Board Team to members of the Japan Flour Millers Association.

“High-quality wheat is what we need in Japan to satisfy our customers and consumers and we also need a reliable supply of that high-quality wheat,” said Sasaki. “We know we can count on U.S. farmers to come through.”

Kupfner, a former wheat trader and grain company manager, went into the Japan part of the trip interested in growth opportunities for U.S. wheat.

“What we saw in Japan was a large urban population with an appetite for all kinds of food, but especially top-quality foods,” he said. “It’s a very consistent market and we want to maintain U.S. wheat’s place in it.”

Bakery Fair Connections

Highlights of the Philippines portion of the trip were a tour of the Gardenia Baking Facility and participation on the Filipino-Chinese Bakery Association’s 2023 Bakery Fair in Manila.

While not a “North Asian” market, the Bakery Fair provided a special opportunity for this Board Team. During the Fair’s opening ceremony, Flory was invited to provide remarks on behalf of the U.S. wheat industry. He shared his appreciation for the long relationship between U.S. wheat and the Philippines.

“From our farms to you” is the salutation Flory used to end his address to bakers and industry partners gathered. He shared his appreciation for the long relationship between U.S. wheat and the Philippines.

“We have had a long connection and we have had a long record of success together,” said Flory, a member of the USW Board of Directors and current Chair of the Wheat Marketing Center board. “We know that you rely on us to supply you with the wheat you need and desire. We want you to know that we take pride in that.”

By USW Director of Communications Ralph Loos

March 8, 2023/by Steve Mercer

Wheat Industry News

News and Information From Around the U.S. Wheat Industry

Speaking of Wheat

“Mark’s passing is a great personal and professional loss for our organization and the wheat farmers we serve. Mark embraced his work and our mission with enthusiasm; as a result, our technical experts are better equipped and motivated partners for our many customers across the world. Our most sincere sympathy goes out to Mark’s family and to the wheat community he loved.” — U.S. Wheat Associates (USW) President Vince Peterson on the passing of Vice President of Global Technical Services Mark Fowler Feb. 20, 2023.

Viterra’s Acquisition of Gavilon

Gavilon has been officially rebranded as Viterra across its business in the United States and Mexico, following Viterra Ltd.’s purchase of the grains origination and storage and food ingredients business of Gavilon Agriculture Investment Inc. in 2022. Omaha, Neb., will remain the headquarters for Viterra’s U.S. and Mexico business. This change will not impact any open contracts, banking information, or tax identification numbers, the company said. Read more here.

McGovern-Dole Food Aid Applications Open

USDA FAS is accepting fiscal year 2023 applications for the McGovern-Dole International Food for Education and Child Nutrition Program, which helps support education, child development and food security in low-income, food-deficit countries around the globe. Information can be found on Grants.gov and on the Food Aid Information System website at: https://www.fas.usda.gov/food-aid-information-system.

Pacific Rim Trade Barriers

Wheat farmers are well-suited to benefit from bilateral trade agreements that parallel the Comprehensive and Progressive Trans-Pacific Partnership, says Dalton Henry, USW Vice President of Policy. “We don’t need back in CPTPP immediately, because right now we’re back on a level playing field with the Canadians and Australians,” Henry said. “So when you hear other commodity groups pounding that drum a little harder, with a little bit more urgency, it’s probably because they still face barriers we were fortunate enough to get taken care of.” Read the article from Capital Press here.

World Food Prize Nominations

The World Food Prize Foundation said this week it is accepting nominations for its 2024 World Food Prize Laureate until May 1. The foundation published the eligibility criteria and said the prize “is the preeminent award for individuals improving our global food system.” Learn more here.

New Grain Facility Aims Toward PNW

CHS Inc. is calling a new 1.1 million bushel grain facility, to be built this spring in southeastern South Dakota. The main destination for the wheat and corn from the facility is the Pacific Northwest for export, the company said. The facility will feature “fast and efficient receiving and loadout capabilities” according to a press release. Read more here.

No BASF Hybrid Wheat for North American Farmers

Global chemicals and crop seeds company BASF announced this week it is halting development of hybrid wheat in North America after results of seed trials failed to reach development goals. BASF said it will instead focus development of the new type of wheat in European markets, aiming to launch the technology there “toward the end of the decade,” the company said.

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.

March 2, 2023/by Steve Mercer

China, Foreign Agricultural Service, Wheat Foods

Snapshot of Post-COVID Recovery in the Chinese Baking Industry

The People’s Republic of China is the United States’ largest food and agricultural product export market with sales that reached a record $41 billion in calendar 2022. Under suspension of import duties agreed to in the Phase One trade accord, China has imported more than 827,000 metric tons of U.S. wheat with an estimated value of more than $270 million as of early February in marketing year 2022/23. That pace is down from the previous two marketing years, but still significant.

USDA’s Foreign Agricultural Service (FAS) and U.S. Wheat Associates (USW) are reporting that as China pulls back from zero-COVID policies, there is “great optimism about the economy” in general and specifically the dynamic Chinese baking industry.

Return to Personal Contact

After a resumption of normal public activity, USW Beijing colleagues are finally enjoying a return to interactions with milling and baking customers and visiting retail and restaurant venues throughout the country. USW Regional Vice President Jeff Coey said restrictions have been totally lifted, allowing the team to conduct an informal survey of four bakery companies both in north and south China, namely Toly, Fujian Fumao, Guangdong Chuandao, and Dongguan Food.

Three of the four stated that sales volume had recovered to pre-COVID levels, and the same ratio predicted further increases in 2023. Both innovative product development and exploring new sales channels are cited as avenues for growth in China’s baking market. The photo at the top of this page confirms it was busy recently at a Baker & Spice store, a popular chain of over 60 coffee and snack shops in Beijing and other cities in China.

Investing for Growth

The largest of the group, Toly Bread Company Ltd., expected to raise investment and increase staff in 2023. The company hopes for a higher value mix of offerings allowing them to increase unit price. They expect cake products will take the lead in the company’s product matrix.

On Feb. 17, 2023, USDA FAS Agricultural Attaché Alan Hallman and colleagues published a Global Agricultural Information Network (GAIN) report on China’s “Post-COVID Food and Agricultural Situation” that provides insight into relevant aspects of end-use wheat demand in this important swing market for U.S. wheat.

While there were closures early in the pandemic, “some bakeries were able to turn the crisis into an opportunity for growth,” the report stated. “Community bakeries increased sales due to strong demand for convenience foods and third party delivery services. Bakeries with strength in group-buying and sales to institutions also benefited. Many businesses and other organizations gave bakery shopping benefits to their employees. Bakeries with brick- and-mortar stores, online order platforms, and delivery services generally remained strong and grew their business during the pandemic.”

Increased Hiring

Mr. Guo Jiguang, chairman of Fujian Fumao, told USW the company is actively opening more stores and hiring more employees in Southeast China to expand its business in 2023. Bread, cakes and desserts remain the main products with fastest growing sales. Mr. Guo added that even if cake and pastry products are becoming more popular among young generations, consumer preferences are changing and both opportunities and threats coexist in the future bakery market.

Photo of busy retail Fujian Fumao bakery in China

A bakery operated by Fujian Fumao in China remains busy and the company plans to open more stores in Southeast China as the country recovers from zero-COVID policies.

Mr. Philip Zhou, chairman of Guangdong Chuandao, is also bullish on baked goods.

“For us, Chinese pastry and western style bread are the two main product categories showing the greatest sales momentum,” he said. “Our company’s plan is to explore new distribution channels and cover more supermarkets and distributors to realize reasonable sales growth goals.”

Optimism with Constraints

Concluding its report, the China FAS team repeated the optimism that recreation, travel and tourism in the country are expected to grow as zero-COVID policies end. “Some businesses have become stronger, and companies have an opportunity to rebuild…” Yet consumer spending will remain somewhat constrained.

USW and dozens of other non-profit organizations in the United States are partners with FAS in agricultural export market development. Through the support of U.S. wheat farmers and FAS programs, USW conducts wheat export market development activities in China through offices in Beijing and Hong Kong.

March 2, 2023/by Steve Mercer

Board of Directors, USW Board Team

USW Board Team in Asia Meeting Customers and Consumers of U.S. Wheat

A team of farmers and state wheat commissioners is in the initial stages of a visit to three crucial Asian markets to represent the U.S. Wheat Associates (USW) Board of Directors, meet with customers of U.S. wheat and learn about changing consumer trends.

The 2023 USW North Asia Board Team arrived in the Philippines on Tuesday, Feb. 28. It will eventually move on to Japan and South Korea before returning to the United States March 10.

On the trip are Bob Delsing, of the Nebraska Wheat Board (NWB); Bill Flory, of the Idaho Wheat Commission (IWC); Keven Bradley, of the Montana Wheat and Barley Committee (MWBC); and Kent Kupfner, Executive Vice President of MWBC.

USW colleagues in Manila, Tokyo and Seoul have scheduled several meetings for the team with flour milling companies and bakers in each country. Other highlights of the trip include attending the prestigious FCBCi Bakery Fair in Manila, sessions with the Japan Flour Millers Association and U.S. Embassy Agricultural Affairs officials in Tokyo, and discussions with members of the Korea Flour Millers Industrial Association in Seoul.

The USW Board Team members recognize the importance of the three markets to U.S. wheat farmers.

Pride in Representing Farmers

“To be able to meet with millers and bakers and see how our wheat is being milled and blended to meet each baker’s satisfaction is special, and it’s a real honor to represent Nebraska and U.S. wheat,” said Delsing, who serves on USW’s Long Range Planning Committee and grows hard red winter (HRW) wheat on his family’s farm in northwestern Nebraska. “The Philippines, Japan and South Korea are among our largest customers, so meeting them face-to-face and getting their input and thoughts on the wheat we grow will be very valuable.”

Kupfner, a former wheat trader and grain company manager, is eager to get to know USW staff working in each of the markets. He also has a long list of questions for buyers and millers about things that can help U.S. wheat earn an even larger share in the markets.

“In the Philippines, for example, I’m interested in gaining insight into the specific end-products made with U.S. wheat and learn how we can increase use of wheat moved from the Pacific Northwest, especially hard red spring wheat,” said Kupfner. “In Japan, I want to understand cultural changes and see if there is more opportunity for U.S. wheat? Korea imports U.S. hard red spring, hard red winter and soft white, but there is competition from Canada and Australia, so I want to explore what we can do to maintain and grow our share of that market.”

Returning the Favor

Flory, a member of the USW Board of Directors and current Chair of the Wheat Marketing Center board, expects the team to make a compelling case that customers drive decisions of the farmers who grow wheat.

“In a highly competitive world, the U.S. producer needs to have an understanding of and relationship with the customer,” explained Flory. “We do this by inviting them to our farms, universities, and shipping ports. And we reciprocate by visiting them at their mills and bakeries.”

Following is a short video from the USW Board Team’s first stop in Manila, Philippines.

Stay tuned for regular updates from the 2023 USW North Asia Board Team.

By USW Director of Communications Ralph Loos

March 1, 2023/by Steve Mercer

Market and Crop Analysis, Tyllor Ledford, Wheat Production and Harvest

U.S. Farmers Respond to Higher Wheat Prices by Planting More

Since Russia’s unprovoked invasion of Ukraine sent them soaring one year ago, global and U.S. wheat prices have decreased significantly. Continued Black Sea Grain Corridor exports and improved production outlook in major exporters such as Russia and Australia have helped relieve the market of some supply pressure. Bulk ocean freight rates have also broken in favor of wheat and other grain importers.

Even more relief for buyers arrived with the USDA Grains and Oilseed Outlook released on Feb. 23 that projected an 8% increase in all U.S. wheat planted area. On Feb. 24, wheat futures fell as much as 30 cents overnight in response to that report.

In a classic supply and demand equation, tight global wheat stocks and the uncertainty of the Black Sea pushed prices higher and provided an economic incentive to plant more wheat and futures prices reacted to the news.

Chart showing U.S. wheat class futures price volatility over the past several years.

In response to the increased wheat acre estimates, Chicago Board of Trade (CBOT), Kansas City Board of Trade (KCBOT), and Minneapolis Grains Exchange (MGEX) wheat futures recently dropped, and have come down as much as 41% from the highs hit in March 2022 to prices not seen since September 2021. Source: Source: U.S. Wheat Associates Price Charting Tool.

Historical Perspective

Over the last two decades, competition for wheat acres has increased as profit margins have shifted to favor other crops such as corn and soybeans. Meanwhile, as market volatility persists, farmers increasingly utilize diversified crop rotations to mitigate price and input risk. The combined impact has resulted in a slow erosion of U.S. wheat annual planted area, with the most recent five-year average coming in at 46.0 million acres (18.6 million hectares), down 24% from the 2002.

In addition to supply pressures at home, enhanced production in competing exporters has highlighted the increasingly tight U.S. balance sheet. Production in Russia has increased 76% over the last decade, while Argentine production, increased 138% from 2012/13 to 2021/22, (excluding the historic drought impacting the 2022/23 crop).

Wheat planted area erosion and increased global competition, coupled with drought-inflicted production shortfalls in the U.S. over the last three marketing years have created a tight balance sheet both domestically and on a global scale, underpinning wheat prices.

Chart showing the volume of planted acres since 2013/14 for wheat, corn and soybeans to illustrate influence on wheat prices.

Wheat acres have decreased over the last decade, compared to the relative, recent stability of soybean and corn planted area. Source: USDA Economic Research Service Wheat Data, USDA National Agricultural Statistics Service.

A Break in the Trend

Breaking from the historical trend, in January 2023, the USDA Winter Wheat and Canola Seedings report projected the 2023 winter wheat seeded area at 37.0 million acres (14.9 million hectares), up 11% from 2022 and 14% above the five-year average. The Hard Red Winter wheat (HRW) area was up 10% to 25.3 million acres (10.2 million hectares), while white winter wheat is up by 3% to 3.73 million acres (1.5 million acres). Soft Red Winter wheat (SRW) experienced the most significant planting increase, jumping 20% from 2022/23 to 7.9 million acres (3.2 million hectares)

Further echoing the sentiment for increased planted area, the recent USDA Grains and Oilseed Outlook projected an 8% increase in all wheat planted area to 49.5 million acres (20.0 million hectares), driven primarily by the jump in winter wheat acres. The estimate is the highest since 2016 and 8% above the five-year average.

Bar chart shows total wheat planted area in acres from 2012 through an estimate for 2023.

The 2023 estimate of wheat planted area mark a substantial increase in wheat acres compared to the last twenty years and the largest planted area since 2016. Source: USDA National Agricultural Statistics Service Data.

Looking Ahead

As producers begin their spring wheat sowing campaigns, Jim Peterson, Policy and Marketing Director at the North Dakota Wheat Commission, notes that though there is room for increased planting, many farmers minimized price risk by locking in their crop rotations and inputs for the season early, which tempers major acre shifts. He also added that spring wheat planted area increases this year would be in part a rebound after last year’s wet spring prevented many acres from being planted.

More clarity will come on March 31, when USDA publishes its annual Prospective Plantings Report outlining the initial spring wheat area and updating winter wheat area estimates. Likewise, the May 2023 World Agricultural Supply and Demand Estimates will provide the government’s first insight into the 2023/24 marketing year.

The incentive to plant wheat remains strong, but planted acres do not necessarily equate to production, especially as drought conditions persist in the southern plains. As always, the weather will play a crucial role in crop production as spring planting begins and the winter wheat crop emerges from dormancy.

By USW Market Analyst Tyllor Ledford

March 1, 2023/by Steve Mercer

Grain Science, Kansas State University (KSU)

Kansas State University Invests in the Future of Grain and Baking Industry Science

Be they students working toward a college degree in grain science or wheat professionals on campus for a quick lesson, thousands have experienced the sights, sounds and smells of wheat being milled into flour inside Shellenberger Hall at Kansas State University’s (KSU).

It won’t be long before the final kernels are gristed, separated and sifted inside the six decades-old building, which has been instrumental in the education and development of milling experts around the world.

Shellenberger Hall, long the center of the Kansas State University’s Grain Science and Industry program, will be torn down, according to KSU’s College of Agriculture. Earlier this month, KSU announced plans to upgrade facilities, including construction of a Global Center for Grain and Food Innovation Center. While it will not be built on the current site of Shellenberger Hall, the new facility will become the centerpiece of the grain program. According to KSU’s plans, the Innovation Center will be built to the west of the Grain Science Complex that includes the Hal Ross Flour Mill, O.H. Kruse Feed Mill, International Grains Program (IGP) Institute and other facilities.

Currently, Shellenberger houses the milling science pilot classroom. Teaching mills are located on the first floor, along with the Baking Science Lab.

Photo shows the flour milling classroom at Kansas State University (KSU) Shellenberger Hall with industry students test milling flour.

Currently, KSU’s Shellenberger Hall houses the milling science pilot classroom. Teaching mills are located on the first floor (above during a recent education program for U.S. industry and farmers, along with the Baking Science Lab.

Long and Storied History

“KSU’s Department of Grain Science and Industry has a long and storied history of career pathways into the flour milling industry worldwide and research and promotion of U.S.-grown wheat,” said Justin Gilpin, CEO of Kansas Wheat. “It’s exciting to see this new investment in infrastructure that will further enhance not only the student experience but the capacity for wheat industry engagement, research, and promotion of U.S. wheat usage and exports.”

This important addition to KSU’s Grain Science and Industry program holds promise toward reverse a trend in declining enrollment in flour milling and baking industry management programs.

Shellenberger Hall, named after John Shellenberger, head of KSU’s Department of Flour and Feed Milling from 1944 to 1966, has been a key waypoint for KSU graduates – and others. State wheat associations and organizations such as U.S. Wheat Associates (USW) regularly send staff and board members to KSU to learn the details of flour milling in short courses offered by KSU and IGP. In all cases, Shellenberger Hall has been instrumental in milling education.

Bigger Reach and Impact

“Walk into any flour mill in the United States and you’ll likely find a graduate from KSU’s milling science program presiding over the operation,” Arvin Donley, editor of World Grain, wrote in a recent editorial on the university’s plans. “Many of the industry’s future leaders will pass through the milling program, which is why having top-notch academic facilities to attract prospective students will not only benefit the university but the flour milling industry as well. The program also has sent hundreds of graduates to flour mills around the world over the years, making it a program with a truly global impact.”

An artist rendering of a new Global Center for Grain and Food Innovation Center at Kansas State University. Construction is scheduled to start in 2024. Courtesy of Kansas State University.

Dr. Ernie Minton, dean of KSU’s College of Agriculture and director of K-State Research and Extension, said the project will begin with construction of an agronomy center that will house the field research component of the Department of Agronomy, including the wheat breeding program, and renovations to the Department of Animal Science’s Weber Hall and Call Hall. That project is expected to be completed in 2024. Construction of the new Global Grain and Food Innovation Center is scheduled to follow.

The photo at the top of this page, courtesy of Kansas State University, is an artist’s rendering of a proposed building at Kansas State University to replace Shellenberger Hall for the Department of Grain Science and Industry.

USW will follow the progress of this exciting addition to KSU’s programs and share more information as it is available.

By USW Director of Communications Ralph Loos

February 27, 2023/by Steve Mercer

Mark Fowler, USW Announcements

The Passing of Mark Fowler

Everyone at U.S. Wheat Associates (USW), Kansas Wheat, and the entire U.S. wheat industry are shocked and saddened by the sudden passing of our colleague Mark Fowler at his home in Manhattan, Kansas, on Feb. 20, 2023. Mark joined USW in 2017 and was Vice President of Global Technical Services.

Mark Fowler, 1970 – 2023

Mark was 52 years old and is survived by his wife Courtney, their daughters Piper and Paige, his mother Ruth Fowler, and his sisters Rhonda (Scott) Gordon and Amy Fowler. Funeral services were held on Saturday, February 25, at 10:30 a.m., at the College Avenue United Methodist Church, Manhattan, Kansas. Obituary and memorial information are posted at https://www.robertsblue.com/. Condolences may also be sent to robertsblue.com, mailed to Kansas Wheat, 1990 Kimball Ave, Manhattan, KS 66502, or emailed to [email protected] to be shared with the family.

“Mark’s passing is a great personal and professional loss for our organization and the wheat farmers we serve,” said USW President Vince Peterson. “Mark embraced his work and our mission with enthusiasm; as a result, our technical experts are better equipped and motivated partners for our many customers across the world. Our most sincere sympathy goes out to Mark’s family and to the wheat community he loved.”

“I’ve had the pleasure of working with Mark in various capacities in the wheat industry over the past 20 years,” said Justin Gilpin, Kansas Wheat CEO. “His impact and network of friends reached around the globe. He was a strong asset to the U.S. wheat industry and farmers, and a friend that will be dearly missed.”

Mark Fowler grew up on his family’s farm near Emporia, Kansas. He earned a bachelor’s degree in Milling Science and Management from Kansas State University (K-State), and later returned to complete a master’s degree in Agricultural Economics.

His career began as a flour miller first for Cargill, Inc., and then Seaboard Corp. In those roles, Mark ran flour mills, worked on projects in several developing countries, including Ecuador, Guyana, and Haiti, and worked as a technical director of the Africa Division within Seaboard’s Overseas Group in Durban, South Africa. Later, he spent 12 years back at K-State as a milling specialist and associate director at the IGP Institute, in the university’s Grain Science and Industry department.

As a highly respected flour milling expert, Mark also served as a technical milling consultant for USW, as well as the Northern Crops Institute (NCI), allowing him to become well acquainted with many USW staff and overseas customers.

Before joining USW, originally as Vice President of Overseas Operations, Mark was the President and CEO of Farmer Direct Foods, Inc. a farmer-owned, flour milling company in New Cambria, Kansas.

Mark Fowler with flour millers in Taiwan.

Mark Fowler served as a respected milling consultant, here with customers at a flour mill in Taiwan, before joining USW in 2017 .

“Throughout my career, I have experienced the global impact of the milling industry from several perspectives,” Mark said when he joined USW. “I am excited to engage with friends and colleagues in the industry to advance the U.S. wheat export market development mission.”

Mark most certainly did advance USW’s mission through his dedicated service, mentoring and friendship. The photo at the top of this page shows Mark with colleagues Ady Redondo, USW Manila; David Oh, USW Seoul, Roy Chung, USW Singapore; Marcelo Mitre, USW Mexico City; Joe Bippert, USW Manila; and Wei-Lin Chou, USW Taipei. All his colleagues will miss him deeply.

February 22, 2023/by Steve Mercer

Wheat Industry News

News and Information from Around the U.S. Wheat Industry