Wheat Letter Blog Archive - Page 36 of 104

U.S. Wheat Highlights from USDA’s First Look at 2022/23

An increase in planted area, production and lower prices are among the U.S. wheat highlights USDA shared Feb. 24, at its 2022 Agricultural Outlook Forum.

These U.S. wheat highlights and USDA’s outlook for all U.S. agricultural products represent the first predictions for marketing year 2022/23. The new year for U.S. wheat starts June 1, 2022, and changes are to be expected. In addition, it is important to note that USDA’s outlook does not account for unknown potential effects of the conflict in Ukraine.

In the “Grains and Oilseeds Outlook for 2022,” USDA cited high current wheat prices and tight stocks to predict U.S. farmers will plant 48.0 million acres (19.43 hectares) to wheat for harvest in 2022. That is about 3% more than was planted for 2021. Using an assumption of normal spring planting and summer crop development conditions, USDA expects U.S. wheat prices will come down in 2022 with higher U.S. wheat production and ending stocks.

Winter Wheat Up; Competition for Spring Area

U.S. wheat highlights included the National Agricultural Statistics Service (NASS) estimate of 34.4 million acres of winter wheat planted for harvest in 2022. That is the largest area since 2016/17. The report noted that “combined spring and durum wheat plantings for 2022/23 are also projected higher,” but could be constrained by higher potential return from other crops that farmers in the Northern Plains can grow.

Image shows a large farm planter and tractor to illustrate planted area among U.S. wheat highlights for 2022

USDA’s initial outlook for U.S. wheat highlights in 2022 includes a significant increase in planted wheat area as farmers try to take advantage of higher farm gate prices.

Again, assuming normal conditions through harvest and the long-term trend, USDA initially expects average yield (production per acre) for all U.S. wheat in 2022 to increase 11% from the drought-affected 2021 yield. If farmers achieve this increase, USDA expects the larger crop will help increase total U.S. 2022/23 supplies by 5% to 2.708 billion bushels or 73.71 million metric tons (MMT).

Total U.S. Wheat Use Up a Bit

Annual use for food, seed and feed is one U.S. wheat highlight that stays relatively flat. And USDA expects 2022 to be no exception. Total domestic wheat use in 2022 is predicted at 30.68 MMT.

USDA does expect U.S. wheat exports to rebound slightly from 2021/22 to 23.14 MMT. “U.S. wheat export prices have continued to rise amid tight supplies, making the United States less competitive globally,” USDA reported.

Illustrates export demand among U.S. wheat highlights in USDA's 2022 outlook.

One U.S. wheat highlight from USDA’s Global Grains and Oilseeds Outlook for 2022 is for increased exports.

Given these predicted market factors, USDA expects the United States will end the marketing year with 19.9 MMT of wheat stocks. That is up 13% from USDA’s current prediction for 2021/22, but still less than the 5-year average.

Follow USW’s Supply and Demand Report

As USDA adjusts its U.S. wheat highlights and global estimates each month, U.S. Wheat Associates (USW) updates its comprehensive Supply and Demand Report. It is available online at the USW website. For additional U.S. wheat highlights, free subscriptions to USW Price Report, Harvest Report, and the Wheat Letter blog are available here.

February 28, 2022/by Steve Mercer

Wheat Export Supply System

U.S. Wheat: Still the World’s Most Reliable Choice

The world’s wheat buyers have heard the claim that dependable U.S. farmers produce “the world’s most reliable choice.” U.S. Wheat Associates (USW) and the farmers we represent believe in that claim because so many customers rely on several classes of U.S. wheat to meet their specific end-use and quality needs and because importing U.S. wheat carries less risk.

The situation the world’s wheat buyers see today is uncertain. The invasion of Ukraine has disrupted already stressed exportable supplies. Market volatility is the result.

Fortunately, overseas customers know they can depend on the integrity of the U.S. supply chain, the quality of U.S. wheat and our unmatched reliability as a supplier. Here is why U.S. wheat remains the world’s most reliable choice.

The U.S. “Wheat Store” is Always Open

U.S. farmers overcome significant risk every year to meet domestic wheat demand and still provide half their crop for export markets. Farmers and commercial warehouses can store and efficiently transport wheat in top condition to meet overseas demand when needed and throughout the marketing year.

Prices are Transparent and Honored

U.S. wheat export prices are discovered openly through futures exchanges and basis costs and are always available to customers. Private exporters use risk management tools to honor sales contract prices often made months in advance of vessel loading.

Quality is Assured

USW publishes weekly reports during harvest that summarize initial wheat quality findings. USW works with several organizations and laboratories to analyze hundreds of harvest and export wheat samples for all six U.S. wheat classes and publishes all results in the annual Crop Quality Report. Our staff, farmers and industry experts then travel the world to present the results to our customers and end-users. Those customers know U.S. wheat will meet their specifications because the supply chain follows uniform grain segregation and inspection procedures.

Photo shows an FGIS inspector and wheat kernels demonstrating another reason why U.S. wheat is the world's most reliable choice.

The Federal Grain Inspection Service (FGIS) independently inspects wheat at vessel loading to certify that the quality loaded matches the quality stated in the customer’s contract. Those inspections yield valuable data down to the sub-lot level of 1,000 to 2,000 metric tons that customers can use, with assistance from USW, to get the most value from their tenders.

The Federal Grain Inspection Service (FGIS) independently inspects wheat at vessel loading to certify that the quality loaded matches the quality stated in the customer’s contract. Those inspections yield valuable data down to the sub-lot level of 1,000 to 2,000 metric tons that customers can use, with assistance from USW, to get the most value from their tenders.

Direct Government Export Intervention is Banned

The world’s most reliable choice is protected by several U.S. federal laws that assure the sanctity of all export contracts. The only exception is a declared national emergency. Export tariffs are forbidden in the U.S. Constitution, fully adhering to World Trade Organization disciplines, and U.S. policy prevents using food as a weapon.

Buyers Receive Unmatched Trade Service and Technical Support

With funding from dependable U.S. wheat farm families and USDA’s Foreign Agricultural Service, experienced USW staff and consultants add exceptional value to all U.S. wheat class imports.

Photo from a flour mill showing technical service that support U.S. wheat as the world's most reliable choice.

Technical Support and trade service from U.S. Wheat Associates adds value to imported U.S. milling wheat, helping make it the world’s most reliable choice.

Fostering Trade

USW invests substantial funding from farmers and federal programs to help overcome trade or technical barriers that would otherwise keep end-users from realizing the highest value and most revenue from using U.S. wheat.

The U.S. wheat industry is proud of its position as the world’s most reliable choice. All of us who participate in the industry believe that it contributes to world food security and economic stability, and work to maintain a transparent and open market to sustain that valued reputation.

February 22, 2022/by actualize

Wheat Industry News

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

Speaking of Wheat

“The key going forward is how the market allocates remaining very tight [durum] stocks in Canada, the U.S. and … Europe. The next…harvest will take place in June. Obviously, that takes a while to get in market position after harvest, so we could have a couple pretty tight months…depending on what happens with demand.” — Jim Peterson, Policy and Marketing Director, North Dakota Wheat Commission, in a webinar on U.S. and world durum supply and demand sponsored by Northern Crops Institute.

The Passing of Fred Schneiter

Fred Schneiter

U.S. Wheat Associates (USW) recently learned that retired colleague Fred Schneiter passed away on Jan. 31, 2022, at 94. Fred started working with Western Wheat Associates in the early 1960s representing U.S. wheat farmers in the Philippines and Taiwan. After USW was formed in 1980, Fred accepted a position in Hong Kong and helped build strong demand for U.S. wheat in the Peoples Republic of China until his retirement in 1991. USW will share more about Fred and his career in an upcoming Wheat Letter post.

Learning More About Wheat

Scott Huso and his wife Elizabeth manage Ridgeline Farm near Aneta, N.D. As a country representative on the North Dakota Wheat Commission, Huso recently participated in the IGP Institute Flour Milling Short Course on the Kansas State University campus in Manhattan, Kan. USW Assistant Director, West Coast Office, Tyllor Ledford also participated in the course. In a Ridgeline Farm blog post, Huso said the course made him aware that the milling process is much more intricate than he imagined and an appreciation for the wheat quality demanded by domestic and overseas millers.

Adapting Wheat to Climate Variability

The University of California, Davis, will lead a five-year, $15 million research project to accelerate public wheat breeding to meet new climate realities and train a new generation of plant breeders. The USDA National Institute of Food and Agriculture grant will create a coordinated consortium of 41 wheat breeders and researchers from 22 institutions in 20 states. Researchers from Mexico and the United Kingdom are also participating. Read more here.

U.S. Agricultural Export Value

USDA recently announced the U.S. agricultural industry posted its highest annual export levels ever recorded in calendar 2021. The final 2021 trade data published by the Department of Commerce showed U.S. farm and food product exports totaled $177 billion, topping the 2020 total by 18% and eclipsing the previous record, set in 2014, by 14.6%. Read the full news release here.

Subscribe to USW Reports

USW publishes various reports and content that are 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.

February 17, 2022/by Steve Mercer

Market and Crop Analysis, Michael Anderson, Wheat Production and Harvest

Dry Conditions Continue Affecting Global Wheat Production

In a market-moving report in February, USDA cut its 2021/22 global wheat production estimate by more than 2 million metric tons (MMT) from its January estimate. USDA also increased its world wheat consumption estimate.

What is behind this change so late in the marketing year?

This year, high wheat prices remain a fixture as drought in major exporting countries cut trade supplies. However, coming into better focus is the hard-hitting drought in Middle Eastern countries that usually grow more wheat for domestic use.

Supply Restrained

Iran, Syria, Iraq, Turkey, and Egypt have all seen crop reductions during the 2021/22 growing season, contributing to lower global wheat production. That suggests higher wheat import volumes will be needed to meet domestic demand. This is significant because, taken as a whole, the region is expected to import 35.5 MMT of wheat in 2021/22. That is 17% of USDA’s global import forecast of 204.8 MMT. In 2020/21, these five countries imported 25.9 MMT or 13% of the global wheat trade.

USDA’s Foreign Agricultural Service (FAS) report on Iran estimates wheat production to be down 3 MMT to 12 MMT total. Syrian wheat production is estimated at 2 MMT, and in Iraq, production is estimated at 3.5 MMT. Much of the production shortfall is being made up by imports from Russia, which enjoys a transportation advantage, FAS reported.

A look into the situation in these countries is helpful.

Iran

In October 2021, Reuters reported that Iran, which has imported around 1.0 MMT of wheat annually over the last five years, would need to import 8 MMT in 2021/22 to ensure a steady bread supply. The Foreign Agricultural Service forecast wheat imports at 7 MMT this year, up nearly 5 MMT compared to other years. Iran suffered its worst drought in half a century during the 2021 growing season, cutting the wheat crop by 30%, said industry sources.

Syria

In Syria, the “Year of Wheat” campaign has been challenged by low rainfall, leaving an import gap of 1.5 MMT. The United Nations (UN) Food and Agriculture Organization (FAO) said that Syria would need to import at least 1.5 MMT of wheat. The organization said the government’s target of 1.2 MMT of local wheat, purchased through forced sales of wheat from Syrian farmers to the government, “looked unrealistic.”

Iraq

Iraq’s state-grain buyer said it procured around 3.36 MMT of local wheat in 2021, down from 5.02 MMT in 2020. The Grain Board said in December it plans to import 2 MMT of wheat in 2022. Unlike the other countries discussed here, Iraq is less price-sensitive and buys high-quality wheat from U.S., Australian and Canadian origins. When Iraq’s Ministry of trade was actively tendering for wheat between 2017 and 2019, more than half its imports came from the United States. Before this year, two exceptionally large Iraqi wheat crops have met domestic demand.

Smaller Crops. Drought has hit several Middle Eastern countries, contributing to lower global wheat production and increased trade. Source: USDA/Foreign Agricultural Service Global Market Analysis.

Turkey

This month, the USDA/FAS agricultural attaché in Turkey reduced the estimate for wheat imports in 2021/22 by 5 MMT to 10.8 MMT. Even so, the revised estimate is 33% higher than imports from previous marketing years. The FAS office also said wheat production in 2021/22 had fallen 2 MMT to 16.25 MMT. The Attaché’s report is lower than the recent WASDE report, which put Turkey’s wheat imports at 11 MMT. The Turkish Statistic Institute showed that wheat imports during the first six months of the 2021/22 trade year (June-November 2021) grew by 20% year-on-year.

Egypt

Egypt is the largest importer of wheat in the world. It produces less than half the wheat it consumes annually. According to the Egyptian Supply Minister, the government is working hard to diversify its suppliers. The recent tension between Russia and Ukraine could disrupt 80% of Egypt’s grain flow. Despite an increased harvest forecast of 9 MMT for domestic wheat, 100,000 MT more than 2020/21, domestic consumption is expected to increase 400,000 MT. Egypt’s imports are expected to increase 7% compared to the 5-year average.

The chart shows a big increase in wheat imports by Middle East countries and effect on global wheat production

More Wheat Needed. With lower production, import demand for wheat is expected to be up this year in Iran, Iraq, Syria and other wheat-producing countries. Source: USDA/Foreign Agricultural Service Global Market Analysis.

Drought, Supply and Prices

Global wheat production challenges fueled by drought have certainly driven this market in the past. And this month, USDA summarized its report this way: “the global wheat outlook for 2021/22 is for lower supplies, higher consumption, increased trade, and reduced ending stocks.”

The price incentive for farmers to produce more wheat for 2022/23 is real. The world will be watching to see if Mother Nature supports that effort.

By Michael Anderson, USW Market Analyst

February 17, 2022/by Steve Mercer

Mexico, Wheat Foods

U.S. Wheat Associates and Latin American Cereals Institute to Promote Wheat Food Benefits

U.S. Wheat Associates (USW) has made a formal agreement to support the long-term mission of the Latin American Cereals Institute (IL Cereales) to promote the benefits of cereals and wheat foods in a healthy human diet.

IL Cereales, Mexico City, currently reaches Mexican consumers but plans to expand its mission to Central America. Its members represent Mexico’s largest wheat foods associations. USW will share scientifically sound nutritional information, expert consultants and other resources as part of the agreement with IL Cereales. With average annual imports of more than 110 million bushels, Mexico purchases more U.S. wheat every year than any other country.

Shared Goals

“We know the U.S. wheat foods industry shares our goal to help consumers understand that cereals and wheat foods should always be part of a healthy, nutritious diet,” said José Antonio Monroy, Chairman, Latin American Cereals Institute (IL Cereales).

Image from Wheat Foods Council to show the U.S. industry shares goals with IL Cereales

Universal Truth. Through their state wheat commission organizations, U.S. wheat farmers support the Wheat Foods Council with a shared mission with IL Cereales. Image Source.

Chairman Monroy added, “We intend to make the most of this agreement, and we thank U.S. Wheat Associates for their support.”

This agreement was concluded following a recent meeting with IL Cereales and USW in Cabo San Lucas, Mexico. The USW delegation included Chairman Darren Padget, Secretary-Treasurer Michael Peters, President Vince Peterson, Vice President of Overseas Operations Mike Spier, and Regional Vice President, Mexico, Central America, Caribbean and Venezuela Mitch Skalicky. Representing IL Cereales were Chairman Monroy, Director General Dr. Luis Hernando Cervera, and José Luis Fuente, Executive Director of the Mexican Millers Association (CANIMOLT).

“In August 2022, U.S. Wheat Associates will celebrate 25 years with an office in Mexico,” said Skalicky. “This is the perfect time to work together with IL Cereales to help Latin American families better understand the health and well-being of wheat and cereal foods in their daily diet.”

Shared Responsibility

Noting the successful partnership with the Mexican wheat foods industry, USW President Vince Peterson said it is important to see that partnership from a broader perspective.

“Together, we are responsible for providing a very large proportion of the primary food and nutrition to our citizens and, more broadly, the world’s citizens,” Peterson said. “We share common goals, and we commend Mexico’s wheat food industry leaders for creating IL Cereales. It is a pleasure to be a partner and productive resource in this much-needed work.”

More on IL Cereales

IL Cereales (Instituto Latinoamericano de Cereales) (Latin American Cereals Institute) is the only Institute in Latin America that seeks to promote, generate and disseminate rigorous scientific knowledge on the nutritional value of cereals and their derivatives. Its members represent the Mexican Millers Association (CANIMOLT), the Mexican Bakers Association (CANAINPA), the Mexican Association for Food Ingredients Suppliers for the Baking Industry (ANPROPAN), Grupo Bimbo, and the Mexican Cookie, Cracker and Pasta Manufacturers’ Association (AMEXIGAPA).

February 15, 2022/by Steve Mercer

Market and Crop Analysis, Northern Durum

Northern Crops Institute Webinar: A Look at the World and U.S. Durum Market

The U.S. durum market remains supported by tight supplies, leading to a reduction in consumption that may, or may not, hold until the 2022 harvest. That is an observation by North Dakota Wheat Commission Policy and Marketing Director Jim Peterson in a Feb. 2, 2022, webinar sponsored by the Northern Crops Institute (NCI).

Following a run up fueled by supply issues, durum prices have “softened in values since mid-January,” Peterson said. That is reflected in what the International Grains Council estimates as a 20-year low in total durum use.

For example, USDA currently expects U.S. durum exports in 2021/22 at 410,000 metric tons (MT). U.S. Wheat Associates (USW) reports commercial U.S. durum sales at about 168,000 MT to date in marketing year 2021/22. That is down from about 658,000 MT at the same time last year. Canadian durum exports from August through December 2021 are also about half their total sales compared to the year before.

This bar chart of U.S. durum market supply and demand for the past six years shows lower production and demand in 2021/22.

U.S. Durum Market Supply and Demand. Drought cut U.S. durum production in 2021, and in Canada. Higher prices have rationed demand, reflected in USDA’s lower export estimate as of February 2022.

Buying Hand-to-Mouth

Peterson said durum buyers are only purchasing when the market gives them a chance to save some money. In addition, end-users are, when possible, increasing the amount of non-durum wheat flour for pasta production.

“We will see how long that rationing can continue,” Peterson said. He said buyers will have to replenish supplies before the 2022 harvest starts in June.

European durum prices are lower than Canadian and U.S. durum market prices. However, we sense more tightness in the European market and hopefully, that will translate into some export sales over the next few months,” Peterson said.

What is Ahead?

Jim Peterson, Policy and Marketing Director, North Dakota Wheat Commission.

North American farmers are now making spring planting plans. In the U.S durum market, farmers will consider the difference in federal crop insurance prices for hard red spring (HRS) and durum crops, Peterson explained.

“There is no question that the durum crop insurance price will be at a premium to spring wheat,” he said. Farmers will know what the difference is after February. In addition, Peterson said U.S. farmers will compare the potential income from durum and spring wheat before making their planting decisions.

Still, the Canadian and U.S. durum markets could see a 10% increase in durum planted area in 2022.

Tight Supplies

Of course, until the 2022 durum crop gets in market position, Peterson noted, “we could have some very tight months coming up depending on what happens with demand.”

Readers can watch a recording of NCI’s one-hour webinar on the world and U.S. durum market online here.

February 14, 2022/by Steve Mercer

Sustainability, Wheat Production and Harvest

Where Can I Learn More About Sustainable Wheat Production?

Here in the United States, the topic of sustainable agriculture is getting a lot of attention. Almost as much as what will happen between Russia and Ukraine. U.S. Wheat Associates (USW) believes people everywhere want to know where their food comes from and how it is produced. The following facts and resources will help the world’s wheat buyers learn more about sustainable wheat production in the United States.

Field to Market

Field to Market is an alliance of diverse member organizations formed to help “unite the supply chain to deliver sustainable outcomes for agriculture.” In December 2021, the National Association of Wheat Growers (NAWG) shared about sustainable wheat production from Field to Market’s latest “National Indicators Report.” That report provides an assessment of “where U.S. agriculture has made progress in driving improved environmental outcomes.”

NAWG noted the report shows wheat production saw improvement in its sustainability efforts in almost every category of land use, soil conservation, water and energy use. Review the Wheat section of the Field to Market report online here and the entire report here.

Farm Bureau

The American Farm Bureau Federation (AFBF) is a nationwide advocacy organization for U.S. farmers, including many wheat farmers and livestock producers. The organization has an interesting resource on “Sustainability in Agriculture.” AFBF co-founded the Food and Agriculture Climate Alliance and, to showcase the progress U.S. producers have made in achieving sustainability goals, also co-founded Farmers for a Sustainable Future.

This week, AFBF’s President Zippy Duvall wrote an important column pointing out some key facts about U.S. agriculture that may not be well-known. For example, he noted that “American agriculture makes up just 10% of greenhouse gas emissions, much lower than transportation, electricity generation and industry.” In addition, he said more than half the U.S. wheat corn, cotton and soybeans were planted using no-till or low-till methods (see chart below).

U.S. Sustainability Alliance

To help tell the story of sustainable wheat production to the world, USW is a member of the U.S. Sustainability Alliance. That is a group of American farmers, fishery managers and foresters who want to tell the world “how we grow.” The group offers many resources for learning more about responsible food production, including a Sustainability Podcast that will feature sustainable wheat production in a future episode.

A beneficial fact sheet titled “U.S. Wheat – A Global Leader in Sustainability” is also available from U.S. Sustainability Alliance and on the USW website.

USDA

The U.S. Department of Agriculture has important programs that benefit U.S. farmers and the environment. One example is the Conservation Reserve Program, which has a direct, positive impact on carbon sequestration. There are 140 million acres (56.7 million hectares) of privately owned land reserved from cultivation. In other words, that amount of land is more than the states of New York and California combined.

On Feb. 7, USDA Secretary Tom Vilsack announced “Partnerships for Climate-Smart Commodities” to support America’s climate-smart farmers, ranchers, and forest landowners. The $1 billion investment will create market opportunities for U.S. agricultural and forestry products that use climate-smart practices. Some of these practices include cost-effective ways to measure and verify greenhouse gas benefits. Read more about this initiative here.

In Their Own Words

There are no more trusted sources about sustainable wheat production than from farmers themselves. As part of its “Wholesome: The Journey of U.S. Wheat” film, USW included this segment titled “Sustaining the Legacy.”

USW also shares the stories of how six farmers adapt to the challenges unique to their production region to make choices that are best for the environment and their operation. Learn more about their sustainable wheat production practices and how they work every day to contribute to a sustainable future in agriculture here.

February 11, 2022/by Steve Mercer

China, Trade Negotiations and Barriers, Wheat Industry News