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Wheat Industry News

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

 

Speaking of Wheat

“This [baking certification] course is an excellent way to stimulate the bakery sector, [that is] essential for the daily lives of Brazilians, even more. We embrace this idea because it aligns with the commitment we have to strengthen and develop this industry that is so important for the country.” – Paulo Menegueli, President of the Brazilian Bakery and Confectionery Industry Association (ABIP), discussing the benefits of the U.S. Wheat Associates (USW) sponsored Online Baking Certification program developed by USW Santiago. Read more here.

Rain in Eastern Australia Threatens Wheat Crop

Widespread rains in Australia’s eastern grain producing states could hurt that region’s 2022/23 wheat crop, traders and analysts told Reuters this week. “Nearly half the wheat crop, or around 6-7 million tonnes, is at risk of quality downgrades in [New South Wales],” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney. “We could end up having large volumes of feed quality wheat on the east coast.” Read more here.

U.S. Gulf Grain Exports Slowed by Low Mississippi River

U.S. crop exports at Louisiana Gulf Coast terminals were at their lowest level in nine years for the first week of October, a period when export shipments typically accelerate, according to U.S. Department of Agriculture (USDA) data issued on Tuesday. Low water on southern sections of the Mississippi River closed the major shipping waterway for days last week, halting the flow of grain barges from Midwest farms to the nation’s largest grain shipping port. Read more here.

U.S. Rail Strike Back on Table?

The U.S.’s third largest railroad union rejected a deal with employers on October 10, renewing the possibility of a strike that seemed to be averted when a tentative agreement was reached in September. Wheat farmers are uniquely reliant on rail due to the large distances between production and consumption. Rail has moved more than 27 million metric tons of U.S. wheat over the last five years. The group that represents the railroads in negotiations shared disappointed that the union rejected the agreement, but emphasized the union agreed to keep working for now.

Past USW Chair Still Giving Back

Keith Kisling, who served as U.S. Wheat Associates (USW) Chairman in 2004/05, and his wife Marlene recently donated a large volume of wheat from their farm that will help fund a new state-of-the-art teaching, research and Extension facility for the agricultural division of Oklahoma State University. With the gift, a faculty office in the new facility will be named in their honor. The Kisling family farms near Burlington, Okla. Read more here.

Climate Smart USDA Grant Earmarked for Idaho Wheat Growers

University of Idaho’s College of Agricultural and Life Sciences is set to receive up to $55 million to help Idaho farmers and ranchers combat climate change through agricultural practices. The five-year USDA grant will support research on building cropping systems, including for wheat, that are more resilient to climate change. The grant will directly benefit more than 100 Idaho farmers and ranchers. Research will focus on the state’s staple commodities, such as wheat, potatoes, beef, sugar and other crops.

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.

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Surprising U.S. Small Grains Summary Report Added Market Volatility

With a significant decline in U.S. wheat production, the September 30, 2022, the USDA/NASS Small Grains Summary report took many wheat traders and analysts by surprise. The report estimated total production at 44.91 million metric tons (MMT) 1.65 billion bushels of total U.S. wheat production, down 3.62 MMT from August estimates.

The quarterly report is the culminating outlook for the U.S. wheat crop and follows the Grain Stocks report in January, the Prospective Plantings report released in March, and the Acreage Report released in June.

An article in  Farm Futures, noted that all the pre-report trader estimates missed the mark except for white wheat production. Wheat futures rallied after USDA released the Small Grains Summary. December 2022 Chicago soft red winter futures closed 3% higher on the tighter outlook. Kansas City and Minneapolis exchanges were also higher. Reflecting the now apparently standard volatility, futures prices then retreated as speculators adjusted their market positions at the start of the new month.

Behind the Production Drop

U.S. wheat farmers faced many obstacles this year. Hard red winter (HRW) farmers experienced prolonged hot and dry conditions in the lower Plains states, especially Kansas, Oklahoma, the Texas Panhandle, and Colorado. In the upper Plains states, hard red spring (HRS) farmers faced heavy rain and cool temperatures early in the planting season, causing planting delays and ultimately lowering the amount of spring wheat area planted this year, offset a bit by an increase in harvested area compared to the 2021 drought year.

USDA-NASS data on changes to production, yield and stocks for winter wheat from the 2022 Small Grains Summary

Drought in parts of the southern and central hard red winter wheat production region and other factors prompted USDA’s National Agricultural Statistics Service (NASS) to make a substantial reduction in total 2022 U.S. wheat production in its Sept. 20 Small Grains Summary.

The Small Grain Summary showed an improved yield when combining all wheat classes. The “All Wheat Classes” yield was up 5% from 2021 at 46.5 bushels per acre (bu/acre). The improved yield was boosted by a dramatic recovery in spring wheat which the report recorded at 46.2 bu/acre compared to 32.6 bu/acre in 2021, a 42% improvement in yield. However, winter wheat yield was down 6% compared to 2021 at 47 bu/acre. Durum wheat also saw a significant improvement in yield year-over-year at 40.5 bu/acre up 64% compared to last year.

WASDE Reflects Changes

The USDA applied the revised production data from its Small Grains Summary in its October World Agricultural Supply and Demand Estimates (WASDE) on October 12. While 2022 production was lowered 3.62 MMT, beginning stocks were raised. Looking ahead, 2022 ending stocks were lowered, led by a 900,000 MT reduction in SRW stocks. The ending stocks estimate, pegged at 15.68 MMT, is down nearly 14% from last year and, if realized, would be the lowest since 2007/08. Exports were trimmed 1.09 MMT to 21.09 MMT, if realized this will be the lowest export total in over 50 years (noting that U.S. exports were 21.20 MMT in marketing year 2015/16).

New Information, Different Result

In keeping with the volatile pattern, despite USDA’s latest estimate reducing total U.S. and world wheat production, futures did not rally as they did after the Small Grain Summary. Instead, the Chicago December SRW contract was down 18 cents. Kansas City HRW was down 20 cents, and the Minneapolis HRS contract was down 18 cents. Including supply changes, this market is loaded with uncertainty, including the on-going conflict in Ukraine, the high value of the U.S. dollar relative to other currencies, and news of challenging weather conditions here in the United States and other wheat exporting countries. As always, your local U.S. Wheat Associates (USW) representatives are ready to help the world’s wheat buyers navigate these challenging conditions.

By USW Market Analyst Michael Anderson

 

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U.S Wheat Reconnects with Brazilian Millers at Annual Industry Meeting

Building upon its long relationship with Brazilian flour millers while also learning about current market conditions across South America, U.S. Wheat Associates (USW) recently took part in the Abitrigo Congress in Foz de Iguazu, Brazil.

During this year's Abitrigo Congress, USW presented a course completion certificate for its Online Baking Certification program to the owner one of Brazil’s largest milling companies

During this year’s Abitrigo Congress, USW presented a course completion certificate for its Online Baking Certification program to the owner one of Brazil’s largest milling companies.

Abitrigo, the association representing the Brazilian wheat milling industry, had not held an in-person annual meeting since 2019. USW President Vince Peterson said attendees from all industry sectors were thrilled to finally be able to engage in business face-to-face.

“Everyone we spoke with noted how nice it was to be back together,” said Peterson, who was joined by USW Vice Chairman Michael Peters and staff members from the USW Santiago Office. “Our presence is a way to show how important Brazilian millers and buyers are to U.S. wheat producers and the entire U.S. wheat industry. It gives us an opportunity to interact with key wheat buyers and have discussions with both new and long-time representatives of the mills.”

Peters, who was attending his first Abitrigo meeting, was impressed with the work of the USW Santiago office, which was represented by Regional Director Miguel Galdos, Assistant Regional Director Osvaldo Seco, Technical Specialist Andres Saturno and Senior Marketing Specialist Claudia Gomez.

“It was very clear that our staff has tremendous relationships with millers in that part of the world and have earned the respect of the industry,” said Peters, a wheat producer and cattle rancher from Okarche, Oklahoma. “It is a tough and competitive market for U.S. wheat, but we’ve remained connected and have done a great job of maintaining U.S. wheat’s reputation for providing a high-quality product.”

USW took center stage during one segment of this year’s meeting when it presented a course completion certificate for its Online Baking Certification program, a new USW technical project that promotes baking methods using all six U.S. wheat classes. The recipient owns one of Brazil’s largest milling companies.

“Having a significant business owner take her personal time to take the USW baking course is quite a compliment,” Peterson noted.

Abitrigo provides more information about its endorsement of the USW Online Baking Certification program on its website.

While Brazil has been importing U.S. wheat for more than 40 years, it still is an extremely competitive market due to Brazil’s domestic production and advantages enjoyed by some U.S. competitors, including Argentina and other countries that have mostly duty-free access under the Mercosur Agreement. In 2019, Brazil agreed to implement an annual duty-free tariff rate quota (TRQ) of 750,000 metric tons of wheat imports from countries not part of the Mercosur Agreement.

Peterson pointed out that the quality of U.S. wheat remains desirable to many Brazilian buyers.

“The core of the Brazilian milling industry recognizes that U.S. hard red winter (HRW) and soft red winter (SRW) wheat – and even hard red spring (HRS) wheat, which has been purchased by Brazilian customers this year – are the most applicable wheat sources to produce the best quality Brazilian wheat food products. Because of this, the market continues to be a long-term priority. And we will continue providing the best service and support we can to Brazilian millers and bakers.”

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2022 Soft White Wheat Crop Delivers Performance Customers Have Come to Expect

The return to more normal growing conditions for the 2022/23 Pacific Northwest (PNW) U.S. soft white (SW) wheat crop offers typically performance in producing the world’s finest cakes, pastries, biscuits and snack foods.

Compared to the drought stressed 2021/22 crop, soft white this year has very weak to medium gluten strength and good finished product characteristics. Higher protein SW supplies provide opportunities in flour blends for crackers, Asian noodles, steamed breads, flat breads and pan breads. The SW subclass Club wheat, with very weak gluten strength, is typically exported as the subclass Western White, defined as a blend of more than 10% Club with SW, for cakes and delicate pastries.

The following composite results come from analysis and testing of 457 SW (404) and Club (53) samples from elevators in Washington, Oregon and Idaho by the Wheat Marketing Center, Portland, Ore. The Federal Grain Inspection Service graded and tested wheat protein content.

U.S. Wheat Associates (USW) encourages buyers to review their quality specifications to ensure purchases meet their expectations.

Map and graphics showing the region and number of soft white samples analyzed for quality in 2022

The Season in Review

In fall 2021, continued drought delayed planting and emergence in the southern PNW. Snow and normal to below normal temperatures returned to improve conditions for the SW winter crop. Much needed moisture in April and May helped the winter and spring SW crops. Rains and cool temperatures during heading and grain filling were beneficial but delayed harvest by up to 2 weeks.

Estimated 2022 SW production is 6.9 million metric tons (MMT), a 46% increase from last year’s 4.8 MMT drought-stressed crop, and similar to the 5-year average of 6.5 MMT.

2022 Crop Highlights

  • The overall average grade of the SW and Club crop is U.S. No. 1.
  • Test weight SW averages range from 60.7 to 61.4 lb/bu (79.8 to 80.7 kg/hl) with an average of 61.0 lb/bu (80.2 kg/hl); Club averages 60.6 lb/bu (79.8 kg/hl).
  • Protein (12% mb) ranges from 8.1 to 11.5% for SW, with a weighted average of 9.5%. Club averages 10.1%.
  • Moisture ranges from 8.8 to 9.1% for SW with a weighted average of 8.9%. Club averages 7.8%.
  • Falling number average is 340 sec or higher for all SW composites and 356 sec for Club.

Flour and Dough Data

  • Wet gluten SW flour contents range from 13.1 to 31.1% depending on flour protein content. Club averages 14.5%.
  • Solvent retention capacity SW lactic acid values range 78 to 102%, indicating very weak to medium gluten strength. SW water SRC values range from 54 to 58%. Lactic acid and water SRC values for Club are 71% and 55%, respectively, and indicate very weak gluten with low water holding capacity.
  • Amylograph SW amylograph peak viscosities are between 576 and 607 BU for all composites. Club’s average amylograph peak viscosity is 580 BU. 
  • Farinograph SW water absorptions range from 50.0% to 52.8% with stability times of 1.1 to 3.2 min, showing desirably weak dough characteristics. The low farinograph water absorptions are typical for SW and in line with the water SRC values. Average Club farinograph water absorption is 50.0% with a stability of 1.1 min, showing very weak dough characteristics typical for Club.
  • Extensograph SW data at 45 min show maximum resistance in the range of 211 to 250 BU, extensibility of 13.5 to 17.1 cm and area from 47 to 51 cm2. Club extensograph 45 min maximum resistance, extensibility, and area are 115 BU, 15.3 cm, and 26 cm2, respectively.
  • Alveograph SW ranges include P values of 38 to 41 mm; L values from 61 to 90 mm; and W values of 71 to 91 (10-4 J). Average Club alveograph P, L and W values are 25 mm, 49 mm, and 33 (10-4 J), respectively.
Composite photo of soft white wheat testing processes at the Wheat Marketing Center.

Soft White Testing. The Wheat Marketing Center (WMC) supports the annual effort to evaluate new crop quality. Samples are collected and sent to WMC for testing. In 2022, the WMC tested 404 soft white samples and 53 Club samples. Photo by the Wheat Marketing Center.

Bake Test Data

  • Sponge cake SW volumes range from 1101 to 1157 cc, depending on protein content, with a weighted average of 1137 cc. Total sponge cake scores are 54 to 60 with a weighted average of 59. Club sponge cake volume is 1150 cc with a total score of 56. Some scores exceeded the control (a commercial Japanese cake flour from the 2021 crop) this year due to softer textures.
  • Average Cookie soft white diameters are 8.2 to 8.3 cm with spread factors of 7.9 to 8.7. Club diameter and spread factor are 8.7 cm and 9.8, respectively.
  • Average pan bread bake absorptions are 55.3 to 58.0% with loaf volumes from 605 to 727 cc, depending on protein content. Total scores are 4.0 to 5.0.
  • Chinese southern-type steamed bread specific volumes are 2.2 to 2.6 mL/g with total scores of 64.6 to 70.9. Club specific volume is 2.9 mL/g with a total score of 69.0. Most scores were similar to the control this year due to better specific volume, smoother skin, and whiter external color.

 

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Efforts to Extend Shelf Life of Baked Goods an Example of USW’s Commitment

In an example of USW’s commitment to service, it has combined knowledge with experience to extend the shelf life of bakery products. Headline photo: USW Baking Consultant Roy Chung leading a bread baking course at the UFM Baking and Cooking School in Bangkok, Thailand. (Photo courtesy of UFM)

Expanding the window of time breads and cakes remain fresh would help retailers, food distributors and bakers around the world broaden their customer bases and grow their businesses. It would also benefit the U.S. wheat industry, which provides a key ingredient for baked goods in international markets.

But can the window really be expanded? U.S. Wheat Associates (USW) believes it can.

In an example of USW’s commitment to service, the organization’s technical staff and consultants have combined knowledge with experience to extend the shelf life of bakery products. USW has “explored all possibilities” to develop processes and procedures that result in products remaining fresh for days – even weeks – longer than current standards.

Eager to Share the Knowledge

USW, which plans to conduct educational courses late next year or early in 2024 to share what it has learned on the topic, is confident its classrooms will be full.

Most of USW’s work on extending shelf life has been conducted in Southeast Asia, but the lessons learned apply to every bakery across the globe.

“In Southeast Asia, a typical shelf life of bread is seven days, and the maximum shelf life is about 10 days,” explained USW Baking Consultant Roy Chung, who is based in Singapore. “For large bakeries and food distributors, extending it beyond that 10 days would mean they could sell baked goods in towns and villages farther away from their manufacturing base. Retail markets would benefit. Consumers would benefit. Everyone up and down the supply chain would benefit, too.”

USW is planning to conduct educational courses to share what it has learned about extending the shelf life of baked goods.

USW is planning to conduct educational courses to share what it has learned about extending the shelf life of bread and other baked goods. Lessons taught in the courses will apply to bakeries in every region of the world.

The ‘Squeeze Test’

Shelf life is defined as “the time during which a freshly-manufactured product remains acceptable to the consumer.”  Of course, consumers in each region have different tastes and preferences, but the main goal of extending shelf life is universal: The product must pass the “squeeze test.”

The test plays out every day, in every grocery or supermarket. A shopper eases up to a bakery shelf, positions a hand over an unsuspecting loaf of bread and gently squeezes in order to judge the freshness of a prospective purchase.

USW’s work aims to help more loaves and baked goods pass the squeeze test long after leaving a baker’s oven. The result would be more consumers in more places having the ability to purchase the products. That in turn creates more demand for U.S. wheat.

Enemies of Shelf Life

According to Chung, the two major factors that lead to failure in extending shelf life are mold and staling.

“These are separate issues that must be tackled separately, and those are the things we have been working on,” he said. “The mold problem involves things like sanitation, moisture, temperature, relative humidity, water activity and the use of preservatives. The staling problem involves formulation and ingredients selection.”

Tools and formulas in the effort are many, including natural gums and enzymes, sugars and fats, and chemical additives and alternatives to chemical additives. Packaging innovations are being addressed, too, such as packing bread and other baked goods in airtight plastic under a modified atmosphere.

The tools and formulas used are designed to match consumer preferences.

For example, the European market is less accepting of additives. The typical shelf life of a loaf of bread was traditionally one day, but now is 2 to 3 days.

“This is achieved either by using very high-quality wheat such as hard red winter (HRW) or hard red spring (HRS), which have a slower rate of natural staling than some lower-cost wheats,” Peter Lloyd, USW Regional Technical Manager based in Morocco, said. “Our efforts in the European Union and Middle East regions also promotes the use of HRS wheat in bread as a way of getting to cleaner labeling (less additives), a growing issue in that part of the world.”

Longer Shelf Life, Cleaner Labels

The various requirements and preferences in different countries and regions makes the USW effort to extend shelf life of breads and baked goods an ideal subject for baker education.

And a perfect topic for USW’s planned training course and technical support for its overseas customers.

“There are many details involved in achieving the ultimate goal of reaching more consumers with quality bakery products made with U.S. wheat,” said Chung. “We are planning to offer a course that addresses all those details, and from the conversations we have had, there is tremendous interest everywhere.”

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Expect Excellent Functional Quality in 2022 U.S. Hard Red Winter Export Supplies

Even in the face of dry conditions across much of the central and southern production area, U.S. farmers produced one of the highest quality hard red winter (HRW) wheat crops in several years for 2022/23.

The new HRW crop has consistent kernel characteristics and protein across the export tributaries in the Gulf and Pacific. Flour quality attributes exceed last year and many of the 5-year averages, results that indicate this crop will make high quality end products. The 2022 crop meets or exceeds typical HRW contract specifications and should provide high value to the customer.

Image of a mature hard red winter wheat field in South Dakota in 2022 at sunset.

The 2022 U.S. hard red winter (HRW) wheat crop meets or exceeds typical HRW contract specifications and should provide high value to the customer.

Plains Grains, Inc., and the USDA/ARS Hard Winter Wheat Quality Lab, Manhattan, Kan., collected and analyzed 524 samples from elevators in 11 states and the California Wheat Commission collected and analyzed 93 HRW samples in its state. The results are weighted by the estimated production for each of 40 reporting area and combined into Composite Average, PNW, Gulf and California values. This report shares Composite averages, but U.S. Wheat Associates (USW) will post the full Hard Red Winter Wheat 2022 Quality Survey, including data for each export tributary, on its website in late October.

USW encourages buyers to review their quality specifications to ensure purchases meet their expectations.

The Season in Review

Planted area for the 2022 HRW crop is estimated 23.5 million acres (9.5 million hectares) seeded in fall 2021, similar to planted area the previous year.

Growing conditions varied across the hard red winter production regions. Southern and Central Plains experienced historic drought resulting in lower yields, smaller kernels and higher than average protein. The Northern Great Plains and Pacific Northwest, while dry, experienced more favorable growing conditions resulting in high yields, good kernel characteristics and desirable protein.

Estimated 2022 U.S. HRW production is 14.4 million metric tons (MMT), down 29% from 20.4 MMT in 2021 due to the widespread drought. That total is the lowest for many years. Carry-in U.S. HRW stocks are estimated at 9.6 MMT.

2022 Hard Red Winter Crop Highlights – Composite Averages

  • The Composite average grade for the 2022 HRW harvest survey is U.S. No. 1 HRW.
  • Test weight Composite average is 61.0 lb/bu (80.2 kg/hl), indicative of sound wheat.
  • Protein content Composite average is 13.0% (12% mb), well above the 5-year average.
  • Wet gluten average of 32.3% is well above last year and the 5-year average, reflective of excellent gluten strength.
  • Wheat falling number Composite average is 361 sec.
  • Kernels are larger and slightly harder than last year.
  • Flour ash average of 0.52% (14% mb) is comparable to last year and 5-year averages.
  • Dough properties suggest that this crop has excellent water absorption, higher than last year and the 5-year average with good stability slightly below last year but in-line with the 5-year average.
  • Composite average bake absorption is 65.3%, higher than last year and above the 5-year average.
  • Average loaf volume of 939 cc is well above last year and 5-year averages, indicative of excellent baking quality.
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Wheat Industry News

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

Speaking of Wheat

“It is an interesting year for sure. Drought is the primary concern that HRW producers are dealing with right now as we are just beginning the wheat planting window in Kansas. We received some rain overnight, and this burst of weather has ranged from spotty to adequate in some areas. However, meaningful amounts haven’t been widespread, and has been light in the southwestern areas of Kansas.” – Justin Gilpin, CEO, Kansas Wheat, in his Sept. 23, 2022, weekly report.

South Asian Biscuit and Cake Customer Visit

This week, U.S. Wheat Associates (USW) Bakery Consultant Roy Chung accompanied a team of biscuit and cake bakers from South Asia on a visit to the Pacific Northwest to learn more about the U.S. soft white crop production and quality. The trip included a stop at Tri-Cities Grain’s barge loading facility in Richland, Wash. (photo above), time with the Washington Grain Commission in Spokane, Wash., and a tour of the Wheat Marketing Center, Portland, Ore., including a discussion of the Solvent Retention Capacity (SRC) analysis for use in various confectionary baked goods.

USDA: Spring Wheat Harvest 96% Complete

According to USDA, 96% of the spring wheat crop had been harvested as of Sept. 25, with Montana and South Dakota 100% complete and Minnesota 98 percent complete. The North Dakota spring wheat harvest stood at 93% complete as of Sept. 25, up slightly from 91% the previous week. Progress was anticipated to be stronger this week, with more favorable forecast of warmer temperatures and clearer days. Read more here.

Agriculture Trade Nominees Await Floor Action

The Senate Agriculture Committee on Tuesday cleared the way for a vote on the full Senate floor for Alexis Taylor for the position of USDA’s Undersecretary for Trade and Foreign Agricultural Affairs. Taylor and Doug McKalip, nominee for U.S. Trade Representative chief agricultural negotiator, await a vote by the full Senate. Read more from the U.S. Wheat Industry here.

Reuters Covers Bioceres’ HB4 Drought-Tolerant Wheat

While there is no genetically modified wheat available for commercial sale today, the Argentinian company Bioceres has developed a transgenic event for drought tolerance in wheat and is seeking approval for commercial use in many countries. The Reuters news service recently published an article that examines the challenging environment of public opinion facing introduction of a transgenic wheat like HB4. Read the Reuters article here, and public statements from USW and the National Association of Wheat Growers here.

Global Grain Stocks Could Drop to Decade-low Levels

A ratio that factors in U.S. wheat inventories compared to usage, along with wheat stockpile levels, is expected to drop to a nine-year low in 2022-23, according to Reuters’ calculations of government data. The same ratio is also predicted to hit a nine-year low for U.S. soybeans. The Reuters story, which can be read here, also explains how lagging shipments and smaller than expected harvests by major crop producing countries is fueling predictions of the tightest grain supply in years.

Open Wheat Industry Position in Idaho

The Idaho Wheat Commission is accepting applications for its Communications and Programs Manager position. With responsibilities to help develop and implement communications strategies that promote use of Idaho wheat, this position offers excellent benefits and a great place to live in the Boise, Idaho, area. Read more about the position and how to apply, 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 more on LinkedIn.

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Headlines Keep the Global Wheat Market Bouncing

Grain buyers have the unenviable task of sorting through today’s news and determining what it means for tomorrow’s prices. Experienced buyers have plenty of tools to help with their decisions, but the volatility experienced in 2022 may be embedded for the near future. Talk of a global recession may soften commodity prices initially, but just as quick, geopolitics can reverse any downward trend as we’ve seen the last two weeks.

U.S. wheat futures price chart for one year from October 2021 to late September 2022 showing volatility affecting the global wheat market

Volatility seems to be the new normal in global wheat markets. U.S. wheat futures prices over the past year clearly demonstrate that condition.

Global Supply

The global balance sheet for wheat is down 10.0 MMT in 2022/23 compared to 2021/22 at 1.06 billion metric tons (MT). Beginning stocks this season are the lowest since 2017/18 while ending stocks are expected to be the tightest since 2016/17. Despite Russia’s huge wheat crop and rebounds in production for both the U.S. and Canada, reductions in the European Union (E.U.), Argentina, and Ukraine are helping to keep prices firm.

U.S. wheat production is up this year, increasing almost 4 MMT to 48.5 MMT according to USDA. Exports are expected to increase slightly to 22.5 MMT. According to the latest world agricultural supply and demand estimates (WASDE), production for all classes of U.S. wheat is expected to increase this year except for hard red winter (HRW) wheat which is estimated down 21%. Kansas, the primary HRW growing state, remains dry even as winter wheat planting is underway.

Black Sea Grain Corridor

Russia’s invasion of Ukraine has had the biggest effect on upending the global wheat market. The United Nations brokered an agreement to establish a grain corridor in the Black Sea. As a result, Ukraine has shipped more than 7 MMT of grain since July, when the agreement was signed according to APK. However, Putin’s criticism of the grain deal and escalation of the war on his neighbor have once again roiled markets and sent futures higher.

The multilateral agreement establishing the grain corridor will expire in November. Given the Russian president’s unpredictable actions so far, there is no guarantee that the agreement will be renewed.

Russian Potential

Russia has produced its largest wheat crops ever. The USDA forecasts Russian wheat production at 91 MMT this month while the European Union’s crop monitoring service, MARS, projects the Russian wheat crop will total 95 MMT. The USDA predicts exports could reach 42 MMT. But Russian exports so far this season have been slow to move. According to IKAR, a Russian analyst, Russian wheat exports are expected to reach 4 MMT in September, well behind the 4.7 MMT exported a year ago. Russian wheat exports are not under any western backed trade sanctions, but shipping companies, insurers, and banks are still cautious to do business with Russia.

Additionally, heavy rain in the central and southern areas of the country is delaying plantings. SovEcon reported that 8.6 million hectares (21.2 million acres) of grain had been sown so far, 1.5 million hectares (3.7 million acres) behind their pace a year ago. The consultancy added that it’s the lowest area planted since 2013.

Dependability of Supply

India also played its hand in driving global wheat futures higher. After initial pronouncements of feeding the world’s hungry, India quickly reversed course and blocked wheat exports. The country is expected to instead import 25,000 MT of wheat this year.

Input Costs

High gas prices could affect access to nitrogen-based fertilizers. Yara International, a Norwegian-based fertilizer producer warned that the gas situation in Europe could create shortages and add to risk. Gas prices on the continent have risen 45% since June when Russia curtailed shipments following E.U. sanctions. Yara said it expects to pay $1.1 billion more for natural gas in the third quarter than a year ago. Natural gas is a key ingredient for making nitrogen-based fertilizers.

U.S. dollar value indexed to a basket of currencies showing the general rise over the past year.

U.S. Dollar Value continues to rise against many different currencies, affecting the cost of dollar denominated wheat trade. In such an uncertain global wheat market, even minor changes in the dollar index are adding volatility.

The Rising U.S. Dollar

Overall, the U.S. Dollar (USD) continues to strengthen. Yet in this environment even subtle changes up or down in USD value can move U.S. and global wheat prices.

There is no shortage of headlines that directly affect the global wheat market. It is tough to say how much the road will curve in the near term. Grain buyers will remain busy absorbing the headlines as fast as they come.

By Michael Anderson, USW Market Analyst

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Seeds of the New U.S. Winter Wheat Crop Already Sown

It is planting season for U.S. winter wheat growers. Conditions and timing vary by region, but a lot of the 2023 hard red winter (HRW), soft red winter (SRW) and even fall-seeded soft white (SW) area has already been seeded.

Long before farmers select and clean seed from their last crop or purchase certified seed wheat, researchers and breeders have developed new wheat varieties that meet the highest standards of yield and quality across a wide range of end uses at home and across the world.

Chart showing seasonal U.S. winter wheat and spring wheat planting and harvesting schedule.

U.S. Winter Wheat Planting starts in September and can last into early November depending on conditions. Winter wheat must experience a period of significant cold days to signal reproductive growth, a process called vernalization.

In a greenhouse at the Kansas Wheat Innovation Center in Manhattan, Kansas State University wheat breeder Dr. Allen Fritz talked about starting the process of creating wheat varieties.

Looking Back to the Future

“There are facilities like this around the country where people are working to improve varieties for those different regions,” he said. “They are working on specific market classes have different functionalities to be able to make almost any kind of wheat food product.”

Dr. Fritz added that to do that work, breeders are finding new ways to use historic wheat genetics to improve wheat quality and production.

“In some projects, we are reaching back into wild relatives and bringing some of those characteristics to bring healthy, nutritious food to the table and I think [breeders] have a passion to bring that forward.”

Naturally Stronger Gluten

At Oklahoma State University, Wheat Genetics Chair Brett Carver and his colleagues are developing new hard red winter wheat varieties that have better gluten strength to produce higher quality bread products while keeping yields and disease resistance high. With naturally developed dough strength, such new varieties may not need additional gluten, adding value to the U.S. wheat and flour produced from it.

“Simply stated, a truly unique combination of wheat quality in a high-performance wheat variety provides value-capturing opportunities to farmers, millers and bakers,” Dr. Carver recently told the High Plains Journal. “It is important that the genetics are maintained and delivered throughout the supply chain in its purest form. Then consumers will see value through a cleaner label on various wheat food products.”

Planting Stories

Image from inside a tractor of a dry Montana field in which Denise Conover is seeding winter wheat

This is Denise Conover’s “office” as she seeded hard red winter wheat on her family farm near Broadview, Montana, late in September 2022.

After years of testing and perfecting U.S. winter wheat seeds, planting looks different for every family farm depending on the region, the soil, the wheat class. In the arid conditions in north-central Oregon, for example, each field lies fallow for a year to improve moisture and add organic matter to the soil.

“Then in the fall, at the end of September to the first part of October, we start seeding,” said Logan Padget, a SW wheat grower in Grass Valley, Ore. “We put down our seed and fertilizer together in one pass, one right underneath the other so as soon as that seed starts to grow, it puts roots down, finds the fertilizer and just takes off.”

Near Okarche, Okla., HRW grower and U.S. Wheat Associates (USW) Secretary-Treasurer Michael Peters is seeing very dry conditions for planting. When the time is right, Peters said everything will be done to start the new crop.

Doing What It Takes

“We will start as early as we can in the morning, go late into night,” he said. “Then we may go home at night, and we are loading seed wheat for the next day or adjusting the planter, just to get it into the ground.”

Kyler Millershaski, a young farmer from Lakin, Kan., is fully committed to the work and challenge of growing another hard white and hard red winter wheat crop.

“I would say there is certainly a responsibility and a weight that you feel to not only provide a high-quality product, but enough of it to feed the world. That is why we are really selective in our varieties and make sure the crop has the right fertilizer and nutrients to grow and perform well. That way,” he said with a smile, “we can say we have the best wheat in the world – so buy from us.”

 

 

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As Projected Soybean Acreage Surges, Can Wheat Coexist?

A dramatic increase in demand for oilseeds could impact U.S. wheat production in coming years, with significantly more acres expected to be planted in soybeans destined for new and expanded crushing facilities.

Between 20 million and 25 million additional acres of soybeans will be needed to meet requirements of the renewable diesel industry, some analysts are predicting.

At the same time, global demand for wheat is also expected to rise, setting up dynamic competition for acreage in states where both crops are grown. For the U.S. wheat industry, the situation creates important questions: How much wheat acreage could potentially be lost to soybeans? Will lost acres impact the U.S.’ standing as the world’s most dependable wheat supplier? Can wheat and soybeans co-exist in a competitive environment?

This chart shows acreage planted in soybeans and wheat in 2022 in the country's top 10 soybean states, according to USDA's National Agricultural Statistics Service.

This chart shows total acreage planted in soybeans and total acreage planted in wheat in the country’s top 10 soybean states in 2022, according to USDA’s National Agricultural Statistics Service (NASS).

Where possible, farmers may adapt and double-crop more wheat and soybeans to maintain supplies of both crops. It is already a common practice in top soybean states like Illinois, Indiana and Ohio, where soft red winter wheat is the dominant class. But in soybean states that produce hard red winter and hard red spring wheat – Kansas, Nebraska, South Dakota and North Dakota, for example – allotting acreage is more complicated due to average rainfall and shorter growing seasons.

The ultimate question is if U.S. farmers will be able to meet the demand for both wheat and soybeans by doing what they have always done – figure out a way to do more with less.

Many Options, Limited Acres

Mike Krueger, a grain industry consultant with Lida Communications, put a spotlight on the emerging “competition for acreage” during last month’s U.S. Wheat Associates World Staff Conference.

While describing volatility in global wheat and grain markets due uncertain market conditions, Krueger noted a more predictable factor that will affect markets and decisions made by U.S farmers.

“Renewable diesel is projected to increase eight-fold by 2030 and significant investments of more than $2 billion are being put into new and expanded soybean processing plants in the U.S. right now,” Krueger explained. “The U.S. soybean crush will expand by 10%, or more. We are talking vast numbers, and while sunflower and canola should be big beneficiaries of renewable diesel, soybeans are certainly going to be in even higher demand.”

A boost of 20 million acres would catapult soybean and go a long way toward meeting the projected oilseeds demand.

But at what cost?

The U.S. has consistently ranked as one of the top five wheat producing countries in the world and one of the top three wheat exporting countries. Would a major shift in acreage affect U.S. production, thus its place as a supplier?

“We must remember there’s also a global demand for wheat, as well as corn, and we have to consider ongoing drought and weather patterns, not to mention political conflicts that are impacting grain production and supplies all over the world,” Krueger said. “All of this, all the things going on that affect global trade, will put major emphasis on overall crop production in the U.S. and the entire Northern Hemisphere. To be honest, no crop can afford to give up or lose acres.”

Can Double-cropping Help?

Higher prices caused by global demand for wheat and soybeans appears to be motivating more farmers in the Midwest to consider seeding soft red winter wheat in the fall and soybeans in the same field following wheat harvest.

About 40% of producers responding to a Purdue University Ag Economy Barometer survey in June indicated they have utilized a wheat and soybean double-crop rotation in the past. About 28% of those producers planned to increase the amount of cropland devoted to this rotation by seeding more wheat this fall followed by soybean plantings on the same acres in spring 2023.

Some analysts have predicted that renewable diesel demand in coming years will require the planting of at least 20 million additional acres of soybeans. This chart from USDA shows soybean acreage over the past decade.

Some analysts have predicted that renewable diesel demand in coming years will require the planting of at least 20 million additional acres of soybeans. This chart from USDA shows soybean acreage and harvest over the past decade.

Ultimately, the biggest factor behind whether farmers begin growing an extra crop of wheat is what price they can get for the crop.

“The shift toward increasing soft red winter wheat acreage is likely the result of the expected profitability improvement of the wheat and double-crop soybean rotation,” James Mintert and Michael Langemeier, authors of the Purdue survey, noted.

A move by the federal government earlier this year to increase the number of counties eligible for double-cropping insurance was a move aimed at boosting U.S. production of wheat and soybeans by reducing the risk for farmers who decide to take the double-crop route.

Producers are well-aware that there are drawbacks to double-cropping wheat and soybeans.

“Compared to single-crop soybeans, double-crop soybeans have a shorter growing season due to the delay in planting until the wheat is harvested, which often result in reduced yields,” said Scott Gerlt, Chief Economist for the American Soybean Association (ASA). “Despite this drawback, double-cropping does allow increased production.”

Wheat Demand to Grow

Despite questions about acreage and production, U.S. wheat continues to be in demand by international customers because of its consistent quality and reliability.

Krueger expects the demand will continue to expand.

“A primary reason is that global wheat supplies are likely to shrink due to a renewed focus on soybeans, and to a lesser extent, corn,” Krueger said. “Another factor favoring U.S. producers involves shipping and logistics limitations that hamper competing wheat-growing countries, including Russia and Ukraine.”

Effects from a third consecutive La Nina would further pressure global supplies.

“These things will undoubtedly lead to more export demand for wheat,” Krueger said. “Can the U.S. meet the demand? That is the puzzle that’s still being put together. Farmers make decisions every single planting season. They only have so many acres to work with.”

 

 

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