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Black Sea Grain Corridor, Weather and Harvest Pressure Wheat Prices

Russia’s unprovoked invasions of Ukraine sent already bullish wheat futures prices soaring earlier this year.

However, the first grain vessel to leave Ukraine since Russia’s February invasion set sail on Monday, August 1. The ship, carrying 27,000 metric tons (MT) of corn bound for Lebanon, was able to sail nine days after Ukraine and Russia agreed to a deal brokered by the United Nations (U.N.) and Turkey.

The news of the Ukrainian grain cargo’s safe arrival in Turkey sent Chicago Board of Trade wheat futures down more than 3% on August 2. Harvest across the northern hemisphere is another factor helping global wheat prices soften. However, the weather will play a crucial role in the weeks ahead. Hot weather could slash yields as it did in India this year. Too much rain could create quality issues.

In its July World Agricultural Supply and Demand Estimates (WASDE) report, the USDA forecast that global wheat production would total 771.6 million metric tons (MMT), falling 1.7 MMT from USDA’s June estimate and 7.3 MMT less than in 2021/22. Global consumption is forecast at 784.2 MMT, outpacing production by 12.6 MMT.

The tighter balance sheet for worldwide wheat year-over-year is partly due to the Black Sea conflict, but other key exporting regions are worth a look.

Line chart of wheat futures prices since February 2022

United States

The most recent USDA Crop Progress Report, published August 1, reported that 82% of the winter wheat crop was harvested. USDA expects 2022/23 hard red winter (HRW) production to reach 15.9 MMT, falling 6.0 MMT from last season. Soft red winter (SRW) production is estimated at 10.2 MMT, higher than last season, and winter soft white (SW) production at 7.8 MMT, 1.3 MMT more than 2021/22. Many state wheat commissions have reported very limited disease pressure because of dry conditions during the growing season.

In the same report, the USDA rated U.S. spring wheat at 70% good or excellent. Last week the annual hard red spring (HRS) tour estimated that HRS yield would reach 49.1 bushels per acre (bpa) (3.3 MT/ha), the highest since 2015 and above the 5-year average of 39.4 bpa (2.6 MT/ha). In a weekly update, the North Dakota Wheat Commission said spring wheat remains behind in its maturation but added that recent warmer temperatures are helping the crop develop.

Read the weekly U.S. Wheat Associates (USW) Harvest Report here. In addition, North Dakota Wheat Commission Policy and Marketing Director Jim Peterson reviewed U.S. and global durum supply and demand in a webinar sponsored by the Northern Crops Institute (NCI) Aug. 3.

Canada

Canada is rebounding from a drought that slashed spring wheat and durum production there in 2021/22. The USDA raised the Canadian wheat forecast by 57% compared to last year. An analyst with MarketsFarm warned that the USDA is too optimistic and does not take into account the late plantings in the eastern Prairies and the lingering drought in western Canada. The USDA puts 2022/23 exports at 25.0 MMT.

European Union

The European Union (E.U.) has recently been hit with a severe heat wave. Last week the E.U.’s crop monitoring service, MARS, cut its yield forecast to 5.74 MT/ha. France, the largest wheat-producing country in the E.U. experienced its driest July on record and the driest month since 1961. Last week, Agritel, a French consultancy, cut its forecast for French wheat. German farm group DBV, increased Germany’s 2022 winter wheat harvest by 1%  to 21.38 MMT.

While the hot weather in some E.U. countries is concerning, a drought in Romania is affecting the water levels on the Danube River. The river is a major artery for transporting Romanian and, increasingly, Ukrainian grains to E.U. countries and to the Black Sea. The lower water levels mean that ships must sail at reduced tonnage. The Rhine River in Germany and Po River in Italy are also low meaning that barges carrying grain are either unable to sail or must sail with reduced cargos.

Australia

Production in Australia is expected to fall 6.3 MMT to 30.0 MMT this season following the bumper crop harvested in 2021/22. Exports are expected to fall 3.5 MMT to 24 MMT, but this is still 45% above the 5-year average. Even with the surplus of exportable wheat, port capacity in Australia is tight, making it hard for exporters to manage increased demand.

Argentina

The USDA Foreign Agricultural Service attaché, on July 25, lowered the 2022/23 export forecast to 12.35 MMT or 1.15 MMT less than the July WASDE forecast. The wheat-growing region is experiencing prolonged dry weather due to a protracted La Niña weather event making it difficult for farmers to plant their wheat crops.

Russia

Russia is expected to harvest a record crop this season. SovEcon, a Russian market analyst, put total wheat production at 90.9 MMT. The USDA estimates a more modest 81.5 MMT, but even that is 8% higher than in 2021/22 if realized. Recent heavy rain has affected the quality of the wheat being harvested reported Reuters. AgriCensus said that the amount of wheat designated as feed grain would be higher.

Ukraine

Ukraine is expected to harvest 19.5 MMT of wheat in 2022/23 according to USDA, falling 41% behind its 2021/22 production level. Exports are expected to fall to 10.0 MMT, dropping nearly 9.0 MMT year-over-year. Exports are down because of Russia’s Black Sea blockade; however, grain exports through the Black Sea resumed this week. Unfortunately, the ultimate outcome of this deal remains unknown.

Kazakhstan

The Kazak minister of agriculture said that wheat production in the Central Asian country would be 15% to 20% higher this year compared to last. The minister forecasts up to 13.5 MMT total wheat production this season. The Kazakh Grain Union is even more optimistic, indicating 16.0 MMT of wheat production and 9.0 MMT of grain available for export.

Nontraditional Wheat Exporters

Brazil is expected to harvest a record wheat crop in 2022. According to Conab, the food supply and statistics agency, wheat farmers in Brazil planted the largest area in 32 years, around 2.9 million hectares (7.16 million acres), and will harvest a record 9.0 MMT of wheat if the weather holds up. Conab said that Brazilian farmers boosted their plantings due to higher prices caused by supply disruptions.

India boasted plans to export as much as 10.0 MMT of wheat this season. However, hot weather weeks before harvest cut yields. The country instead banned wheat exports, thereby adding even more uncertainty and disruption to the global wheat market.

Chicago Board of Trade (CBOT) wheat futures have averaged $9.61 since January. On Tuesday, August 2, the September contract was trading at $7.74. This is good news for wheat buyers. Allowing Ukrainian wheat back into the market via the “grain corridor” is a positive move for the global price of wheat. The weather in key growing regions, both during harvest and during fall planting, will be the thing to keep an eye on.

By USW Market Analyst Michael Anderson

 

 

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U.S. Wheat Customer Trade Teams are Back

U.S. Wheat Associates (USW) invests funding from USDA Foreign Agricultural Service export market development programs to bring several trade teams of overseas customers and stakeholders to the United States. Visiting wheat-producing states connects customers with farmers as well as state wheat commissions and industry partners that co-sponsor local visits. The goal is the same for USW and partners: to promote the reliability, quality and value of all six U.S. wheat classes to customers around the world.

Substituting virtual trade visits during the pandemic did allow more customers to learn about the 2020 and 2021 U.S. wheat conditions and harvest. And virtual experiences will remain part of USW’s trade service and technical support.

However, “we are excited to be able to bring customers to the U.S. again to meet face-to-face with U.S. wheat farmers and to learn about the U.S. marketing system,” said Stephanie Bryant-Erdmann, U.S. Wheat Associates (USW) assistant regional director for Mexico, Central America, the Caribbean and Venezuela, who led a team of Mexican flour milling executives to Kansas and Ohio in June. “The face-to-face conversations and hands-on experiences an in-person trade team offers are invaluable.”

Photo shows participants in a USW-sponsored trade team of Mexican flour millers with USW and Kansas Wheat representatives at the IGP Institute.

Mexican Millers. A trade team of flour millers from Mexico, the largest importer of U.S. wheat in the world, learned about the U.S. hard red winter wheat industry in June through visits with the Kansas Wheat Commission (above), the IGP Institute and the Kansas Wheat Innovation Center in Manhattan, Kan.

Club Wheat Exchange

In mid-July, USW brought a team of three quality control managers from Japanese flour millers to Portland, Ore., to exchange information with the Wheat Marketing Center and Pacific Northwest wheat commissions about U.S. club wheat functional performance (photo above). The demand for the highest quality cakes and confection products leads Japan to be the leading importer of U.S. Western White wheat. This is a subclass of soft white (SW) that includes a blend of not less than 10% club wheat and 90% SW, which allows the customer to define quality targets and adjust the proportion of SW and Club wheat in the blend according to price and quality expectations.

Up-to-Date Trade Information

The grain companies with elevators in the Pacific Northwest process an estimated 60% of all U.S. wheat exports. That is why the Pacific Grain Exporters Association often participates in USW-sponsored trade team activities. Association members met with a trade team of Korean flour milling executives July 22, a day that included stops at USW’s West Coast Office and the Wheat Marketing Center in Portland and the EGT Grain Terminal in Longview, Wash. The millers also spent a full day on wheat farms hosted by growers David Brewer and Jeff Newtson with support from the Oregon Wheat Commission.

Next Generation Millers

Also in July, members of the next generation of flour millers and commodity buyers from operations in Morocco, Algeria, Egypt and Oman spent 12 days on an educational tour to Idaho, Kansas and North Dakota.

The team included future industry decision-makers. Some attendees were students and had part-time jobs in their family’s flour mills to prepare them to take over from their parents. USW used this opportunity to introduce information about the U.S. grain marketing system at an early stage in the careers of these young professionals and build strong relationships to lay the foundation for future opportunities like potential combination cargos.

“These young generation millers represent their family businesses and are exposed to the U.S. grain marketing system at a very early age,” said Tarik Gahi, milling and baking technologist in the USW office in Casablanca, Morocco, who accompanied the team. “Visits to different states on this trip were an opportunity to introduce different classes of U.S. wheat and learn about efforts implemented by organizations and facilities to produce the best quality wheat.”

Photo shows participants in a USW trade team from the Middle East and North Africa around a large red tractor on the Bill Flory farm in Idaho.

Touching Ground. Visiting farms as part of USW-sponsored trade team activities is a memorable experience for U.S. wheat customers and important for U.S. wheat industry stakeholders. This team of next generation flour millers from North Africa and the Middle East touched ground at Idaho Wheat Commissioner Bill Flory’s farm in July.

South American Visits

Senior managers and wheat buyers from five Colombian flour mills and the leader of Fedemol, the Colombian milling and wheat food industries association, just returned home July 30 from a nine-day trade team activity in Washington state, Ohio and Kansas. Colombian millers purchase more U.S. hard red winter, soft red winter and soft white wheat each year than any other South American country. Colombia has ports on the Gulf of Mexico receiving U.S. hard red winter and soft red winter wheat, and on the Pacific Ocean receiving U.S. SW wheat.

In addition, technical managers from flour mills in Peru and Ecuador arrived in July 31 for a USW-sponsored trade team to meet with industry representatives from Minnesota, Idaho and Oklahoma. They will be in the United States through Aug. 6.

Over the next two months, additional trade teams from Japan, the Philippines, Taiwan and South Asian countries will have that personal experience meeting with the dependable people who make up the U.S. wheat industry.

USW wants to thank our partners with USDA-FAS, state wheat commissions, educational organizations and of course the farmers we represent who make these activities possible.

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Spring Wheat Tour Scouts Say the Crop Has Excellent Potential

The 2022 Hard Spring Wheat Tour sponsored by the Wheat Quality Council ended July 28 with a very positive outlook for the U.S. hard red spring (HRS) and durum crop. The wheat is behind its normal development at this time of year because of late planting, but more than 50 industry participants determined a total weighted average HRS yield estimate of 49.1 bushels per acre (about 3.3 metric tons per hectare). The weighted average durum yield was 39 bu/a, or about 2.7 MT/ha.

Those estimates are the highest since the spring wheat tour estimated an average HRS yield of 49.9 bu/a in 2015. Following the drought-ravaged 2021 crop, the much-improved potential of this crop is welcome news to spring wheat farmers. Harvest is not expected to start for at least 3 weeks, depending on weather conditions but the industry is cautiously optimistic.

Photo of Tyllor Ledford on 2022 Spring Wheat Tour

Measuring for Yield Potential. USW Assistant Director, West Coast Office, Tyllor Ledford measures a section of a North Dakota HRS crop to start calculating yield potential on the 2022 Hard Spring Wheat tour. Photo by Jeff Beach, AgWeek.

Neal Fisher, Executive Director of the North Dakota Wheat Commission told Progressive Farmer/DTN that there is a lot of potential “if we do not have an early frost of rain at harvest, and we can keep diseases [and pests] at bay.” The spring wheat tour scouts did see evidence of grasshopper damage in the crop, pest pressure likely resulting from the drought last year.

Happy Customer

In the same article, a representative of a large U.S. snack food company said participating in the spring wheat tour helped him understand future [supply] risks. He added that he was happy with the yield potential and thought the wheat quality “was great.”

Buyers and Farmers Together

U.S. Wheat Associates (USW) Assistant Director, West Coast Office, Tyllor Ledford participated in the 2022 spring wheat tour. Dave Green, Executive Director, Wheat Quality Council, noted that having representatives from milling and wheat food processing industries participate with farmers and other stakeholders is a crucial part of the annual tours.

The real value of the tour said one farmer is connecting with buyers and end-users in the fields to show them how farmers manage their crops for the best potential yield and functional quality.

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FAS Trade Mission to Philippines Includes Wheat Customer Meetings

USDA’s Foreign Agricultural Service (FAS) Administrator Daniel Whitley recently returned from leading a U.S. trade mission to the Philippines. The mission’s objective was to help foster stronger ties and build economic partnerships between the United States and the Philippines. The mission included representatives from 29 U.S. agribusinesses and farm organizations and 10 state departments of agriculture who are interested in exploring export opportunities in the Philippines.

Charlie Vogel, Executive Director of the Minnesota Wheat Research & Promotion Council, Red Lake Fall, Minn., shared his experience on the trade mission that included meetings with U.S. wheat customers in the Philippines.

People Make It A Small World

“Participating in the trade mission, I was reminded how big this world physically is and the miracle of modern transportation. However, from a human perspective, it is a small world,” Vogel said. “The concerns about geopolitics, world wheat supplies, market volatility, and weather were the exact same questions domestic buyers ask me about hard red spring [HRS] wheat. People are people the world over.

“A key takeaway from this trade mission is the value U.S. wheat farmers receive from the continued efforts of U.S. Wheat Associates (USW) and its staff, who set up meetings, tours, and dinners with millers, bakers and associations. Some themes became apparent. USW staff has developed deep and genuine relationships with these HRS buyers and end users. They provide technical skills and resources to assist these partners in maximizing use, expanding markets and product lines, and improving business. The consistent quality of HRS provided by U.S. growers, including from Minnesota, is essential to the value proposition USW utilizes. In the face of a rising U.S. dollar and uncertain geopolitics, these relationships are critical to continued success.”

Meeting Wheat Customers

USW Country Director Joe Bippert and the USW Manila team arranged a tour and meeting with Gardenia Bakery, a large commercial bread and wheat food company in Manila, for Vogel. In addition, Vogel and Bippert met with leaders of the Filipino Chinese Bakery Association.

Vogel’s photo at the top of this page is from a visit to the flagship store of Eng Bee Tin, an over 90-year-old landmark in the heart of the oldest Chinatown in the world. Eng Bee Tin produces hopia, a popular snack in the Philippines.

“We met wonderful, hospitable and genuine people in Manila, and I was happy to let them know how much our wheat growers in Minnesota and across the country appreciate their support for our products,” Vogel said.

Customer meeting during Philippines trade mission

Valued Customers. (L-R) Charlie Vogel and Joe Bippert met with Royce Gerik Chua, Eng Bee Tin, Jerry Midel, Philippine Society of Baking, and Henry Ah, Liberty Food Mart, during the FAS trade mission to the Philippines in July 2022.

World’s Most Reliable

USW and its legacy organizations have maintained an office in the Philippines for almost 60 years. Flour millers in the Philippines rely on U.S. HRS, soft white and hard red winter milling wheat to meet the growing demand for wheat foods in the island nation. Administrator Whitley also noted that the Philippines is the eighth-largest market for U.S. agricultural and food products, with even more potential. There is a reason for that, he said.

“Everywhere I go, trading partners are looking for a reliable supplier. And they view American agriculture to be the most reliable in the world,” Whitley said. “That, along with our outstanding qualities and the fact that we are embracing the challenge to produce commodities that are more sustainable.”

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Wheat Industry News

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

Speaking of Wheat

“The Russian naval blockade of Ukrainian ports has already shredded global chains of food supply. Adding insult to injury, Russia steals Ukrainian grain and bombs Ukrainian granaries. Russia is essentially playing hunger games with the world by keeping the naval blockade of Ukrainian ports with one hand and shifting the blame for it on Ukraine with the other hand.” –Ukrainian Foreign Minister Dmytro Kuleba. Read more here.

Best Wishes to Director of Communications Amanda Spoo

All of us at U.S. Wheat Associates (USW) and across the U.S. wheat industry want to thank Amanda Spoo (above) for her work on behalf of wheat farmers over more than 7 years on the USW Communications Team. Among the many highlights of her time with USW, Amanda managed a major overhaul of www.uswheat.org and built USW’s social media into a highly effective channel to overseas customers and friends at home. More importantly, she has been a respected colleague who made our work more fun. Vice President of Communications Steve Mercer and all Amanda’s colleagues wish her well as she moves on to new opportunities back in her eastern Oregon home.

Director of Communications Position Open

USW has an opening for a Director of Communications in a hybrid work environment based in its Arlington, Virginia, Headquarters Office. The Director of Communications reports to the Vice President of Communications and helps USW fulfill its mission by working collaboratively to plan and implement producer-focused and market development communications across a range of media; by managing all digital communication touchpoints, including content creation, deployment across the website, social media, email marketing, and other media channels, and performance analysis; and other critical domestic and international communications activities. The job description and application process are posted here.

USDA/FAS Welcomes New Foreign Service Officers

U.S. Department of Agriculture (USDA) Deputy Secretary Dr. Jewel Bronaugh recently administered the oath of office to 14 USDA employees who will serve American agriculture internationally as members of the Foreign Service. The diplomats begin their careers as agricultural attachés at U.S. embassies and diplomatic missions on five continents, where they will monitor and report on global agricultural production and trade, identify export opportunities, enhance food security and support U.S. foreign policy objectives. Read more here.

Middle East, North Africa Trade Team in the U.S.

Matthew Weaver of Capital Press reported trade team of flour millers from Morocco, Algeria, Egypt and Oman began their tour of the U.S. last week in Idaho. “These are young flour millers, a young generation (representing) their family businesses,” said Tarik Gahi, assistant technical director for U.S. Wheat Associates in the Middle East and North Africa region, based in Casablanca, Morocco. “They are 22, 24, 25 years old, just out of the university and they are supposed to take the lead in the coming years.” The tour will allow the millers to become familiar with U.S. wheat classes, marketing and the entire wheat system compared to wheat from other origins, Gahi said. Read more here.

2022 Hard Spring Wheat and Durum Tour

The annual Wheat Quality Council Hard Spring Wheat Tour is scheduled for July 25 to 28, 2022. The tour will provide the first production estimate for the 2022 U.S. hard red spring and durum crops. Tour information and registration are posted here. Customers can follow the tour in real-time by following #wheattour22 on Twitter and keep up to date on the entire U.S. wheat harvest with the weekly USW Harvest Report.

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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What is the Outlook for World Durum Production?

Global durum production is expected to rebound in 2022/23, but stocks are likely to remain tight this season.

Total durum production in 2022/23 is expected to increase 10% to 33.9 MMT, led by increases in the United States, Canada, and Mexico. While durum production in North America looks good, production across Europe and North Africa is expected to fall. Reductions are led by the E.U. and Australia. Kazakhstan is expected to produce more durum but has banned wheat exports through September. Countries across North Africa, including Morocco, Algeria, and Tunisia, grow significant domestic crops, but durum production this year is forecast to be smaller, increasing the need for imports.

Drought Slashed Production

Last year, leading durum producers, including the United States and Canada, experienced hot weather and dry conditions that drastically cut production. Worldwide, beginning stocks of durum, according to Stratégie Grains, are 7.9 MMT, 1.6 MMT less than 2021/22. However, unlike last year, durum production estimates outside the E.U. and North Africa look good.

European Union

According to Stratégie Grains, a European research analyst, production across the European Union (E.U.) is seen falling to historically low levels due to dry weather. Stratégie Grains cut its E.U. durum production forecast by 600,000 MT between May and July. Stratégie Grains now forecasts production at 7.0 MMT, 9% behind 2021/22; if realized, this would be the lowest durum production since 1997.

Italy is by far the largest European durum user. Demand is pegged at 6.1 MMT. It produces a sizeable domestic crop but is experiencing a severe drought this year. An extremely dry winter and spring followed by hot weather since late spring has left the growing area parched, leading to the worst conditions in 70 years. The Italian government this month declared a state of emergency.

Heat is On in Europe

According to Coldiretti, an Italian agricultural lobby, the country’s durum and “common” wheat production this year is expected to fall 15% as the drought slashes yields. The Italian Millers’ Industrial Association expects durum production to fall 10% to 3.5 MMT.

Italian durum production, estimated at 3.4 MMT, is expected to fall 2.6 MMT short of total demand. According to USDA sales data, for the 2022/23 marketing year, which began June 1, U.S. durum sales to Italy are up 124% compared to the same time last year.

United States

According to the USDA June Acreage Report, in the U.S., durum wheat planted area increased by 34% to 1.98 million acres (801,277 hectares). In the USDA’s July WASDE report, durum production in 2022/23 is forecast at 2.1 MMT, more than double 2021/22. Exports are expected to increase twofold to 800,000 MT.

The latest Crop Progress Report, published by USDA on July 18, rated 80% of North Dakota’s wheat good or excellent, while Montana reported 50% good or excellent. North Dakota and Montana together account for 93% of the durum wheat grown in the U.S.

USW chart showing U.S. durum production, stocks and export sales

More Durum, More Sales. USDA’s first forecasts of U.S. durum production and exports in marketing year 2022/23 are up significantly. The market will be watching conditions closely from now until harvest.

Canada

Canada, usually the largest durum exporter globally, saw sluggish durum exports in the 2021/22 season. Western Canada experienced a devastating drought in 2021, which slashed yields and cut production by 53%. According to Statistic Canada, durum exports were 60% behind their 2020/21 pace through February, the latest data available.

This year looks different. Statistics Canada projects a 75% increase in supply. Canadian production is forecast at 5.52 MMT in 2022/23 due to increased seeded area and improved yields. Exports are also expected to increase 72% to 4.3 MMT.

Mexico

Durum production dominates Mexico’s total wheat production. USDA’s Foreign Agricultural Service in June 2022 dropped its forecast of Mexican wheat production slightly to 3.26 MMT for 2022/23. This change was based on information from industry and official government sources, reflecting unfavorable weather conditions and other factors. Mexico’s total durum and wheat exports are forecast at 850,000 MT.

Global Demand

Global demand for durum wheat is projected to increase 1.0 MMT to 32.9 MMT in 2022/23. As a result of the lower domestic production in many countries, global trade for durum is projected to increase 1.5 MMT to 7.4 MMT in 2022/23.

Stratégie Grains forecasts durum E.U. imports from non E.U. members to be 2.4 MMT, 1.0 MMT more than last year. Imports to Morocco are expected to increase 400,000 MT to 1.1 MMT.

Outlook More Optimistic

The tight ending stocks and a poor European harvest kept durum prices initially high at the start of 2022/23. Now increased planted acres and a positive outlook for the upcoming harvest have created an optimistic outlook for the North American durum crop and potentially easing export prices. However, another year of tight supplies and unknown variables, especially weather, between now and harvest could mean price fluctuations for the marketing year ahead.

The weekly Price Report, published by U.S. Wheat Associates, shows price indications, including durum wheat. USW also publishes annual crop quality data, including for durum wheat. The 2022/23 U.S. durum crop quality will be reported this fall.

Photo of durum kernels to illustrate durum production story

U.S. Durum Production is in North Dakota and Montana where Northern Durum is grown and shipped from Great Lakes and Pacific ports; Desert Durum® is grown primarily under contract in the desert Southwest and shipped via the Gulf or West Coast.

*Supply and demand estimates for durum wheat including world production, beginning stocks, EU-specific highlights, Italy, and Morocco, are based on Stratégie Grains’ July 15, 2022, Durum Report.

By USW Market Analyst Michael Anderson

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Ukrainian Wheat Farmers Struggle to Harvest Their Crop

As an export market development organization, U.S. Wheat Associates (USW) represents the interests of U.S. wheat farmers in overseas markets. We are happy to compete fairly with wheat farmers in other countries on the basis of functional quality and value. Yet, working for these hard-working farm families also gives us great empathy for wheat farmers everywhere.

As the U.S. winter wheat harvest rapidly progresses, our thoughts include Ukrainian farmers as they try to harvest their wheat amid the unimaginable challenges of an armed invasion of their lands. There is growing evidence that Russian forces are deliberately targeting ripe winter wheat fields. The Washington Post also reported that in recent fighting in the east devastated a large flour mill and grain elevator.

Failed Strategy

Targeting wheat fields and other agricultural infrastructure is also an attempt to demoralize the Ukrainian people, but that will be a failed strategy.

CNN and its reporter Ivan Watson recently showed why frontline Ukrainian wheat farmers vow never to give up.

“Military drone footage exclusively obtained by CNN shows Russian artillery pounding wheat fields, burning the summer harvest charcoal black,” Watson reported, as wheat farmers race to protect their crops. “Despite the threats, these brave farmers still bring in their harvest only to face another obstacle. [They cannot] sell wheat because the Russian military has blockaded Ukraine’s ports, so there is no way for this to be sold except at an enormous loss.”

German media company Deutsche Welle (DW) recently reported that Ukraine’s infrastructure minister accused Russia of “terrorism,” saying Moscow is “holding people all over the world hostage” by blocking the country’s grain exports. Putin wants to force the international community “to take off some of the sanctions and then the grain can get out,” he said.

A Ukrainian wheat farmer talks to CNN reporter Ivan Watson

Never Give Up. In spite of Russian strikes on his wheat fields, this Ukrainian farmer told CNN his country, its soldiers and the world need his crops. CNN Image.

Why We Keep Working

As a combine operates in the background, CNN’s Watson asked a Ukrainian wheat farmer to explain why he continues his work.

“Our soldiers are fighting and dying to get rid of these occupiers,” the wheat farmer said. “We need to feed our country, these soldiers, and help the whole world with our food. That is why we will keep working.”

The world is fortunate to have wheat farmers like this man and other Ukrainian farmers willing to do everything it takes to help feed us all.

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USW Expresses Support for Maintaining Lower Snake River Dams

On behalf of the U.S. Wheat Associates (USW) Transportation Working Group, we* appreciate the opportunity to provide comments on the draft Lower Snake River Dams Benefit Replacement Report.

The draft report raises serious concerns among U.S. Wheat Associates (USW) and its member states. The USW Transportation Working Group (TWG) questions many of the baseline assumptions argued in the draft report. The draft is incomplete because many of the key variables cannot be quantified. The Lower Snake River Dams (LSRD) provide a critical need that moves U.S.-grown wheat to high-value markets around the world. Breaching the dams would have serious economic consequences for producers and grain handlers. Removing the dams also runs counter to achieving climate-friendly goals.

Barging Benefits

USW strongly supports the sustainability and reliability of wheat transportation by barge. The Columbia Snake River System is an essential part of a logistical web that moves over half of all U.S. wheat exports to more than 20 Pacific Rim countries and encompasses some of the largest U.S. wheat buyers in the world. The Snake River moves more than 10% of all wheat that is exported from the United States. Because of the cost savings conveyed by barging grain and examples used in the draft report, we can conclude that farmers save considerably by using the waterway in place of rail or truck and are able to pass on savings to consumers.

Barge loading wheat to move through Lower Snake River Dams and down the Columbia River to export elevators.

The Lower Snake River Dams provide critical needs for wheat farmers, grain handlers, merchandisers, and millers. The draft report clearly outlines the benefits enjoyed by grain handlers, “barging is the lowest-cost option (per ton-mile) for wheat shipping, an additional benefit for Pacific Northwest producers, as they operate on narrow cost margins and use barging to maximize their profit per bushel.” Shifting the current volume of wheat and other grains moving via barge on the LSRD over to rail or truck is not a viable and straightforward solution as portions of the draft study imply. Rail and truck cost significantly more on a per bushel basis, and trucks have distance limitations.

Breaching Increases Transportation Costs

An excerpt from the draft report outlines the literal costs to farmers: “One of the most significant transportation impacts connected with LSRD breaching is shipping costs. Several studies cite shipping prices during scheduled lock outages for maintenance between December 2010 and March 2011 and found that during the outage, over 90% of the grain by volume was shipped by rail and that shippers experienced a nearly 40% increase in shipping and storage costs.” This example shows that railroads will use their power to raise rates when other alternatives, like the river system, are unavailable.

The Port of Lewiston is the most inland port in the U.S, Pacific Northwest. Its placement on the Snake River allows farmers in Idaho and other states to barge their wheat efficiently and affordably. The U.S. competes with six other primary wheat-exporting countries. According to the Foreign Agricultural Service (FAS), the United States is the third-largest wheat exporter in the world. However, for the U.S. to remain competitive with other wheat exporting nations, export prices must remain competitive. Inland transportation costs are a primary factor in determining the competitiveness of U.S. wheat. Using barges to ship grain is one of the most efficient and cost-effective ways that U.S. wheat farmers stay competitive.

Rail Cannot Make Up Difference

All wheat production zones in the U.S. would be impacted, not just those in close proximity to the Lower Snake River Dams system. The U.S. rail system has some severe issues with service and reliability, and in recent years, tariff costs to move wheat have steadily increased. Adding more volume to the system would raise costs for all farmers and lead to a decline in service for a significant portion of all U.S. wheat producers. This would directly impact U.S. wheat’s global competitiveness as an export market.

Transporting wheat by barge is an environmentally friendly alternative to rail and truck hauling. One four-barge tow can move as much grain as 144 rail cars or 538 semi-trucks. Removing the dams would not only remove clean hydroelectricity but would mandate more significant carbon emissions as grain handlers are forced to rely on railroads and semi-trucks for long-haul delivery to export facilities in Portland and elsewhere.

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

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

More Competition Not Less

The draft report provides no sincere considerations for alternative freight, and what suggestions it does make are unrealistic. While railroads and trucks compete with barge companies to move grain, farmers and grain handlers would be held captive without barges as an alternative.

USW supports the Columbia Snake River System and will continue to emphasize its importance in serving wheat buyers worldwide. Breaching of the dams on the Lower Snake River would have a devastating economic impact on wheat production and market competitiveness, not just in the Pacific Northwest Region, but nationally.

*This article represents public comments by the USW Transportation Working Group to the Lower Snake River Dams Benefit Replacement Report submitted July 11, 2022, by working group co-chairs Jim Peterson, Policy and Marketing Director, North Dakota Wheat Commission, and Charlie Vogel, Executive Director, Minnesota Wheat Research & Promotion Council.

 

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Sincere Condolences on the Death of Shinzo Abe

U.S. Wheat Associates (USW) President Vince Peterson shared this message of condolence following the assassination of former Japanese Prime Minister Shinzo Abe:

“Our colleagues and the wheat grower directors of U.S. Wheat Associates (USW) want to express our sorrow at the tragic loss of former Prime Minister Shinzo Abe.

“His leadership focused in part on creating a positive, beneficial trade environment for the Japanese people that including the successful completion of the U.S.-Japan bilateral agreement. That agreement helped protect our long and fruitful trade partnership of which we are so proud. In fact, past USW Chairmen Darren Padget and Doug Goyings were pleased to meet and shake hands with Prime Minister Abe and President Trump in September 2019 at the ceremony in New York City, N.Y., marking the beginning of negotiations on the U.S.-Japan trade agreement that entered into force in 2020.

“We send sincere condolences to our partners, friends and the Japanese people at this sad time.”

Image from September 2019 signing ceremony for U.S. Japan bilateral trade agreement

Witnessing the Start of Historic Trade Agreement. Former Japanese Prime Minister Shinzo Abe (seated left), former President Trump welcomed U.S. cabinet members, Japanese officials and U.S. industry representatives including Past USW Chairmen Doug Goyings (standing, 4th from left) and Darren Padget (standing, 4th from right) as they officially kicked off negotiations for the  U.S.-Japan trade agreement in New York City in September 2019.

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Wheat Industry News

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

Speaking of Wheat

“Virtual meetings, conferences and events have allowed USW to remain in close contact with our customers around the world during the past two years, but there’s nothing like riding in the combine with the U.S. farmer as they harvest their wheat; standing in the field of wheat rolling the wheat head between your hands to check the kernels; or breaking bread together, and we are pleased to be able to share these in-person experiences with our customers again.” – Stephanie Bryant-Erdmann, USW Assistant Regional Director, Mexican, Central American and Caribbean Region, during a recent trade team visit from Mexican flour millers to Kansas and other states. Read more here.

Happy 50th Anniversary to the Wheat Foods Council

Its members and supporters celebrated this month at its annual meeting in Charleston, S.C. In the early 1970s, wheat foods were under attack in the United States for containing a high portion of carbohydrates, which many people believed made foods fattening. In May 1972, wheat commissions from Kansas, Texas, Colorado, South Dakota and Nebraska met to create a coordinated response, resulting in the establishment of the Wheat Foods Council. Soon other state wheat commissions, along with milling, baking and other allied industry companies, joined WFC to increase its resources and expand its important efforts. Today, WFC uniquely remains an organization whose membership encompasses the entire wheat foods value chain. Read more here.

Washington Grain Commission Announces Leadership Transition

Glen Squires, CEO of the Washington Grain Commission (WGC), has announced he will retire on November 1. The WGC is pleased to announce that Casey Chumrau will be its new CEO and will begin in mid-September. Chumrau has worked in agriculture and international business for most of her career, promoting the U.S. wheat industry for over a decade. She is currently the executive director of the Idaho Wheat Commission and previously worked for U.S. Wheat Associates in its Arlington, Va., headquarters and in Santiago, Chile. Read the full release here.

Export Promotion Funding a Priority

The National Association of Wheat Growers (NAWG) recently shared its priorities as the U.S. Congress works towards reauthorizing the Farm Bill in 2023. With half of all U.S. wheat destined for export, NAWG recommends doubling the funding for the Market Access Program (MAP) and Foreign Market Development (FMD) program administered by the USDA Foreign Agricultural Service. U.S. Wheat Associates (USW) highly values its partnership with NAWG working to ensure U.S. farm families remain economically sustainable to continue meeting the growing global wheat demand.

USW to Fill Director of Communications Position

USW has an opening for a Director of Communications in a hybrid work environment based in its Arlington, Virginia, Headquarters Office. The Director of Communications reports to the Vice President of Communications and helps USW fulfill its mission by working collaboratively to plan and implement producer-focused and market development communications across a range of media; by managing all digital communication touchpoints, including content creation, deployment across the website, social media, email marketing, and other media channels, and performance analysis; and other critical domestic and international communications activities. The job description and application process are posted here.

NAWG Seeks to Hire Communications Intern

NAWG is looking to fill the newly created position of Communications Intern to assist in marketing and communications efforts. The NAWG Communications Intern’s main role is to assist the Director of Communications and Partnerships in implementing organizational communications and marketing strategies. If you, or someone you know, is interested in this opportunity and would like to learn more, find the description and application here.

Nebraska Wheat Board Job Opportunity

The Nebraska Wheat Board (NWB) is looking for a Marketing Specialist to join its team and work on behalf of Nebraska wheat farmers and the industry to communicate and coordinate NWB programs and issues. This position develops communication programs and expands outreach opportunities by managing and coordinating print, radio and television media, and leading the Board’s social media outreach, among other communication projects. Applications close July 7, 2022. Find more information here.

2022 Hard Spring Wheat and Durum Tour

The annual Wheat Quality Council Hard Spring Wheat Tour is scheduled for July 25 to 28, 2022. The tour will provide the first production estimate for the 2022 U.S. hard red spring and durum crops. Tour information and registration are posted here. Customers can follow the tour in real-time by following #wheattour22 on Twitter and keep up to date on the entire U.S. wheat harvest with the weekly USW Harvest Report

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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