Wheat Letter Blog Archive - Page 23 of 104

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

Speaking of Wheat

“Jim Pellman brings a broad skill set in agriculture and wheat production to the officer team at USW and follows earlier NDWC members who served as USW officers and Chairs during the past four decades: J. Ole Sampson of Lawton, Cecil Watson of Cavalier, Alan Lee of Berthold, and Brian O’Toole of Crystal, North Dakota.” Neal Fisher, Administrator, North Dakota Wheat Commission. Pellman was elected to serve as USW Secretary-Treasurer starting in July 2023 for 2023/24.

Photo Above: Wheat Leaders Greet Members of Congress

National Association of Wheat Growers (NAWG) President Nicole Berg (left) and U.S. Wheat Associates (USW) Chair Rhonda K. Larson (right) greet Sen. Debbie Stabenow (D-MI), Chair of the Senate Agriculture Committee (center) at the “Wheat 106” educational event and reception Jan. 13, 2023. At the event, growers and industries engaged in wheat production and processing informed Members of Congress and their staff about how vast and important the wheat value chain is to the U.S. economy and food supply.

Snow Makes Grain

Over 2 meters (78 inches) of snow this winter has eased farmer Lee Lubbers’ moisture concerns about his South Dakota wheat crop. After a four month stretch last summer and fall with almost no measurable precipitation, “the snow will provide the moisture we need to get our [winter] wheat crop off to a good start. This was a big concern as 2022 came to an end,” Lubbers told Successful Farming. In 2022, South Dakota farmers produced about 1.1 million metric tons of hard red winter and hard red spring wheat.

Call for Entries in “Greater Grain” National Wheat Yield Contest

The National Wheat Yield Contest (NWYC) is accepting entries for 2023. Farmers growing winter, spring, irrigated or dryland wheat are encouraged to get their entries in now. There are a couple of changes to this year’s contest rules. There is now only one deadline and one price for entries per growing season. Winter wheat entries are due May 15, 2023, and spring wheat entries are due August 1, 2023. Read more here.

Congratulations to Dr. Brett Carver on Receiving OSU Eminent Faculty Award

“As leader of the Wheat Improvement Team, Dr. Carver has unparalleled success in the development of plant variety cultivars with a record five wheat varieties in 2020,” said Tom Coon, vice president and dean of Oklahoma State University’s college of agriculture. Carver collaborates with the Wheat Foods Council to advocate for wheat and to educate the public on wheat products through a video series. He served on trade team delegations for U.S. Wheat Associates and the Oklahoma Wheat Commission and has been named a Fellow in both the Crop Science Society of America and the American Society of Agronomy. Read an interview with Dr. Carver here.

Past Chair of House Ag Committee Named Wheat Leader

The National Association of Wheat Growers (NAWG) named U.S. Rep. David Scott (D-GA) its 2022 Wheat Leader of the Year Award for his work as the Chair of the House Agriculture Committee during the 117th Congress. “We appreciate all the work Rep. Scott does on behalf of wheat farmers and are proud to present him with the 2022 Wheat Leader of the Year Award,” said NAWG President and Washington wheat farmer Nicole Berg. NAWG also presented six other Members of Congress with its Wheat Advocate Award for their support in 2022. Read more here.

UK Farmer Sets Guinness World Record Wheat and Barley Yields

In 2022, United Kingdom grain grower Tim Lamyman, who farms 600 hectares in the county of Lincolnshire achieved a wheat yield of 17.96 metric tons (MT)/hectare (267 bu/acre), beating the previous record of 17.40 MT (259 bu/acre) from New Zealand farmer Eric Watson in 2020. He also registered a barley yield of 16.21 MT (310 bu/acre) to the hectare, beating his own world record by two metric tons. Read more here.

Research Shows Wheat is Good for Soil Health

Dr. Laura Van Eerd, professor of sustainable soil management at Canada’s University of Guelph-Ridgetown, has studied long-term soil characteristics and changes as part of research started in 1995. Of all treatment combinations, including wheat in a rotation has been the greatest factor in improved soil function over time, greatly increasing soil organic matter (SOM). Increasing organic matter in soils has implications for the soil’s water holding capacity and the soil’s nitrogen cycling capability. Listen to more in a Michigan State University Extension podcast.

USDA Funding Advances “Climate Smart” Farming

USDA is releasing the first $850 million in conservation program funding from the $18 billion provided by the Inflation Reduction Act (IRA) to ramp up adoption of climate-smart farming practices. The new funding will be available through Environmental Quality Incentives Program, Conservation Stewardship Program, Agricultural Conservation Easement Program and Regional Conservation Partnership Program. Provisions in the IRA require the new funding to be targeted toward practices that can build soil carbon and otherwise reduce greenhouse gas emissions. Read more here.

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.

February 15, 2023/by Steve Mercer

Exports, Flour Milling, Soft Red Winter, Soft White, Wheat Foods

‘Snackification’ Movement Growing Stronger Around the World – and U.S. Wheat Could Benefit

Instead of asking “what’s in store” for crackers and cookies and other wheat-based snack foods in a post-COVID world, those in the U.S. wheat industry may want to ask the same question in a slightly modified way.

What’s in the store?

When COVID hit in 2020, international consumers had already been drawn to convenient foods that fit snacking lifestyles. Boxes of crackers were tucked into office drawers. Sleeves of cookies – often referred to as “biscuits” in some foreign markets – were slid into backpacks. While work routines and travel screeched to a halt, snacking habits sped forward. In fact, market research over the past year has indicated that, in many countries, on-the-go snacking is now preferred over traditional sit-down meals, especially by younger consumers.

This movement was aptly labeled “Snackification.” It’s changing the look of grocery and supermarket shelves around the world.

It’s also creating potential opportunities for U.S. wheat.

A 2022 survey by Euromonitor International revealed growing numbers of global consumers who look for snacks when shopping for food.

Snack ‘Em if You Got ‘Em

A Euromonitor survey conducted in 2022 showed South Asia as having the most robust snacking habits. About 45% of Vietnamese consumers surveyed indicated that when shopping for food, they “look for snacks that are convenient to take and eat outside the home.” Roughly 38% of consumers in the Philippines responded the same way. The survey revealed that in Latin America, Colombia had the highest number of outside-the-home snackers with 37%. Brazil was close behind at 36%.

As a comparison, and for perspective, fewer than 30% of consumers in the U.S. were focused on snacking while shopping for food.

Those who study global consumer trends expect the new generation of “snackificators” to munch its way into the future.

“Snack brands already had a large portion of the breakfast category – breakfast bars, breakfast cakes and pastries, and so on – but with consumer preferences changing during COVID, snack foods are now intentionally being positioned as meal replacements throughout the entire day,” offered Carl Quash, head of Snacks and Nutrition for Euromonitor International, an independent market research firm based in London.

Quash, who oversees packaged snack research and analysis in more than 100 markets worldwide, presented a webinar titled “Snackification: The Future of Occasions” to USDA stakeholders on Jan. 30.

“Snacking is likely to increase as people become busier and more mobile, and as they feel more comfortable in traveling once pandemic fears fade for good,” said Quash. “Add to that the fact many consumers are now replacing meals with snacks – they snack throughout the day instead of sitting down for a meal.”

Market research has shown increased demand for snack foods, as the dining habits of global consumers continue to evolve. USW continues to work with millers and bakers around the world to help in the development of new snack food products made with U.S. wheat and the improvement of existing products.

An Opportunity Knocking?

U.S. Wheat Associates (USW) recognized the new shift, even before snackification became a buzzword. USW’s offices around the world have long been involved in helping develop new snack products made with U.S. wheat, while also helping improve and promote existing products in all markets.

USW promotes the quality advantages of all six U.S. wheat classes. For snack foods, soft red winter (SRW) wheat and soft white (SW) wheat are most commonly used. But hard white (HW) wheat, hard red winter (HRW) wheat and hard red spring (HRS) wheat each are a quality ingredient – ether for snack foods and breads, or as part of flour blends to produce snack foods.

Wheat can also be used in other forms to make snack products. Flaked or puffed wheat is commonly used to manufacture breakfast cereals and cereal snack bars. Wheat bran is added to biscuits, cakes, muffins and breads to increase the dietary fiber content. Wheat germ can be added to breads, pastries and biscuits, or sprinkled onto yogurt, breakfast cereal or fruit dishes to increase the B-Vitamin, protein and fiber content.

USW also provides millers and bakers around the world technical support, including assistance in applying Solvent Retention Capacity (SRC) analysis to better predict performance characteristics of flour for cookies, crackers and cakes.

USW Bakery Consultant Roy Chung says consumers in Asia are more and more interested in quick, "on the go" foods - crackers, cookies and even sometimes as simple as a slice of bread with various toppings.

USW Bakery Consultant Roy Chung says consumers in Asia are more and more interested in “on the go” foods – crackers, cookies and even something as simple as a slice of bread with toppings.

A ‘Wheat Team’ Effort, Here and Abroad

“Snackification is definitely a thing in the Philippines, with bread being primarily used for snack foods,” said Joe Bippert, USW Associate Regional Director in South Asia. “All across the region, there are many, many products that have fallen into the snack category, some traditional like crackers and cookies, and some new. We are working with buyers, millers and bakers to make sure U.S. wheat is part of this snackification movement. We also continue to work with our partners to develop new products with U.S. wheat.”

One of those partners is the Wheat Marketing Center (WMC). Based in Portland, Oregon, the WMC regularly conducts research projects on snack food-related topics and wheat flour formulations. USW offices around the world connect snack food makers to the WMC, which works to develop new products to meet changing consumer demands for attributes such as lower sugar or salt, new flavors or even different shapes of crackers, cookies, cakes, breads and other snacks.

A Universal Phenomenon

No one seems to know who created the term “snackification,” but it began appearing in trade journals and food blogs a decade ago. As it did then, today it is used to describe a trend in which consumers snack in place of meals.

A Harris Poll survey commissioned by Mondelēz International last year polled consumers in 12 countries. It found that more than 55% of consumers “nibbled frequently throughout the day” in place of three standard meals, while 71% said they snacked at least twice each day.

Mondelēz International’s fourth annual “State of Snacking” report that “snacking increasingly replaces traditional meals in consumers’ lives.”

“Our State of Snacking report confirms that in these trying times, consumers around the world view their favorite snacks as affordable and necessary indulgences,” Dirk Van de Put, Chairman and CEO of Mondelēz International, noted in the report. “Snacking continues to be a way for consumers to connect or to enjoy a moment of delight in their day, further demonstrating our belief that every snack can be enjoyed in a mindful way.”

Looking back, it is clear urbanization drove snackification, Quash explained.

“Convenience and portability were key due to time pressures and a culture where people were constantly under constraints and were looking for foods to eat while on the go, foods they could eat on their way to the office or in the office while working,” he said. “Although people are still spending more time at home than they did pre-pandemic, snacking has become part of the routine.”

Crackers, Cookies, Biscuits . . . and Bread, Too

In some cases, foods just changed roles. One key consumer trend for U.S. wheat is the fact that breads that were once a big part of traditional sit-down meals are in some countries being used to anchor snack time.

Roy Chung, USW Bakery Consultant based in Singapore, said consumers in Asian countries are walking into retail stores looking for “simple and fast.” In many cases, how the foods are packaged is the biggest factor.

“When it comes to wheat, products range from simple slices of bread made into different types of sandwiches, or just plain bread spread with margarine and topped with sugar, then packaged to eat on the move,” Chung explained. “There are buns with different kinds of fillings, including steam-type buns. These are considered a snack that can fill you up without having to pause to prepare a meal. Grab it and go, as they say.”

Microwave-ready cakes and muffins, prepared in a paper cup and baked at the store, are common.

“In the cracker category, there is canned tuna or salmon or sardines packaged with a stack of crackers, which are popular for people taking a day trip or a bus ride somewhere and are eaten in place of lunch or even dinner,” said Chung. “All of these products are a showcase for the quality of U.S. wheat.”

Consumers shopping their local food store for snacks have other demands, too.

“The snacking trend remains based on convenience, but consumers around the world have become more focused on three things: mobility, value and health,” said Quash. “For the wheat industry, those are generally good things because wheat products tend to deliver on all three.”

By Ralph Loos, USW Director of Communications

February 15, 2023/by Ralph Loos

Dry Bulk Freight

Ocean Freight Rates Revert to Pandemic Lows

As the COVID-19 pandemic fades into a not-so-distant memory, one can remember a time when “Supply Chain Disruptions” made every headline and container backlog in the Port of Long Beach required direct intervention from the U.S. government. Since the highs hit in the fall of 2021 freight prices have dropped to lows not seen since June 2020. Coupled with a recent break in wheat prices, decreased ocean freight costs have helped turn the tides back in the importers’ favor.

As Jay O’Neil of HJ O’Neil Commodity Consulting says, “the current outlook is not bullish, but vessel owners believe things must go up, as they don’t believe they can go lower…”

The Baltic Index price chart of dry bulk freight rates shows the impact on rates from the Russian invasion of Ukraine.

On February 6, the Baltic Dry Index hit 621, a level not seen since June 2020. The index has fallen 88% from its peak in October 2021. Source: Tradingview.com.

The China Effect

In recent years, dry bulk freight and Chinese economic growth have become interconnected. Dry bulk vessel sizes known as Handy (25,000 to 39,000 deadweight tons (dwt)), Handymax (40,000 to 49,999 dwt), and Panamax (60,000 – 78,999 dwt) that carry wheat and other grain cargos are also used to ship iron ore. And, according to S&P Global Commodity Insights, China accounts for almost 60% of dry bulk demand to help supply the country with over 1.1 billion MT of iron ore.

Until recently, however, China’s Zero Covid policy severely impacted economic growth. In 2022 China’s GDP growth slowed to 2.8% from 8.1% in 2021, thus diminishing iron ore demand by 2% as steelmaking slowed. With decreased Chinese vessel demand, freight rates have plummeted. As the seasonal lulls in economic activity around the Chinese Lunar New Year holiday dissipate, China remains a wildcard in global shipping as the country relaxes its COVID-19 restrictions, potentially opening the door for accelerating growth and industrial activity.

Congestion

According to Lloyd’s List, in the fall of 2021, 5.7% of the world’s bulk fleet was anchored off Chinese ports due to strict quarantine requirements. As the global economy started its recovery from the pandemic, immense port congestion tied up hundreds of vessels, sending dry bulk freight soaring. Easing congestion in Chinese ports is expanding dry bulk capacity and will continue to play an essential role in freight markets in 2023, especially as China lifts more COVID-related restrictions.

Port congestion in China supported the bulk carrier rates in 2021, with upwards of 600 vessels queued to load or discharge cargo. Source: Lloyds List Maritime Intelligence.

Vessel Supply and Demand

Over the last 13 years, the dry bulk vessel fleet has increased steadily, marking an average yearly increase of 4.8%, total growth of 53.8% since 2010. In 2022 dry bulk fleet growth slowed to 2.8% and is forecast to slow to 2.3% in 2023 (S&P Global, HJ O’Neil Commodity Consulting). Meanwhile, dry bulk demand declined by 1.9% in 2022 due to low iron ore and reduced grain shipments. If vessel supply continues to outpace demand, the downward pressure will continue to impact ocean freight.

Bar chart showing a 53% increase in the global dry bulk vessel fleet from 2007 to 2020 to show the effect on freight rates.

The bulk vessel fleet size had grown by 53.8% on a steady pace over the last decade. Source: Drewry Shipping Consultants Ltd.

Oil Prices

After Russia’s invasion of Ukraine in February 2022, oil prices skyrocketed as sanctions were placed against Russia, the world’s second largest oil produce. As oil prices increase, the fuel input cost for dry bulk vessels also increase, supporting freight prices. In the year since the invasion, oil prices have normalized, taking pressure off the market.

Will This Pattern Hold?

As the freight market continues in freefall, importers and exporters must ask if this pattern is sustainable. According to Breakwave Advisors “one of the slowest weeks of the year for Chinese activity is now behind us” as we move into February and past the Lunar New Year festivities. Vessel supply and demand, port congestion, oil prices, and the on-going supply chain disruptions will continue to impact the market as economies normalize post-COVID; however, China remains in the driver’s seat of global freight. The resilience of the Chinese economy will be put to the test as economic activity increases post COVID, but for now, the world is waiting and all eyes are on China.

By Tyllor Ledford, USW Market Analyst

February 14, 2023/by Steve Mercer

Soft Red Winter, Soft White, Wheat Prices

Washington State University Economist Expects U.S. Wheat Prices Will Fall

Wheat prices “probably won’t be quite as good [for farmers]” in 2023 as they were last year, a top grain economist says.

“We won’t see last year’s prices, we’ll be several dollars short of that,” said Randy Fortenbery, the Thomas B. Mick Endowed Chair in Small Grain Economics at Washington State University, told farmers during the Spokane Ag Show. “We can’t be thinking we’re going to see 2022 wheat prices … unless there’s some other shock that’s not being anticipated.”

Soft white wheat ranged from $8.45 to $8.55 per bushel on the Portland market as of Feb. 8. Fortenbery advised farmers to be careful about assuming they’ll see prices above $10 a bushel. He expects wheat prices to trade within a $3 to $3.50 a bushel range. About $9.25 to $10 per bushel would be the high end, he said. [Editor’s Note: USDA lowered its February forecast of average farm gate wheat prices in 2023 to $9.00 per bushel.]

A Different of Opinion

The International Grains Council and USDA have conflicting forecasts for global wheat trade, Fortenbery said.

The council expects total world ending wheat stocks to be up 3% compared to last year and a 1.3% reduction in world wheat trade, which suggests a decline in prices. USDA projects world wheat stocks to be down 2.6% and trade to be up 5%, which suggests a price increase. Fortenbery said he leans toward the international council’s projections.

Both agencies agree the combination of Russia and Ukraine wheat exports will be up compared to last year. The flow of grain out of the Black Sea market appears to have stabilized the price impact of the conflict, Fortenbery said.

SW, SRW Back at Parity

The relationship between Portland white wheat prices and Chicago [soft red winter] wheat futures prices is returning to normal, after white wheat reached a peak of $3 above Chicago futures prices in recent years. The norm for Portland is closer to $1 above Chicago.

Because of the extreme difference, soft white prices didn’t respond last year when Russia invaded Ukraine, while Chicago [soft red winter] wheat prices “exploded,” rising to meet the higher white wheat prices, Fortenbery said. The relative prices are back in synch with each other, he said.

Line chart of USDA and U.S. Wheat Associates data showing wheat prices for soft white and soft red winter exports have converged to near parity in 2022/23.

U.S. soft white and SRW export prices have converged in 2022/23 to near-parity. Source: U.S. Wheat Associates (USW) Price Report – February 3, 2023.

“If the Black Sea ends up being a problem again this spring, we’ll get some bump out of that,” he said.

The market doesn’t currently expect that, but risk remains, Fortenbery said.

Commodity prices generally look favorable in the next few months, but input costs are also at historic highs, Fortenbery said. Almost every major expense category was significantly higher last year compared to 2021; some were up to 60% or more.

He’ll be watching general inflation, which affects interest rates and production loans, and natural gas and refined fertilizer shipments from the Black Sea.

For additional information on U.S. wheat export price trends, see this Wheat Letter post from January 30, 2023: Wheat Prices Trend Lower Even As Uncertainty Continues.

February 10, 2023/by Steve Mercer

Wheat Industry News

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