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Wheat Industry News

Recent news and highlights from around the wheat industry.

Speaking of Wheat. “Many of the more exciting projects associated with sequencing the wheat genome are still in the toddler stages. More important than ever is minimizing or eliminating the tradeoff between yield and quality. Milling and baking have a tremendous stake in what comes from this research and have every reason to take a seat at the table in this exciting effort.” – Josh Sosland, Editor, Milling & Baking News in an Oct. 27 editorial in World-Grain.com.

Hybrid Wheat Research. Amir Ibrahim, Ph.D., Texas A&M AgriLife Research wheat breeder in Texas A&M’s Department of Soil and Crop Sciences, has spent the past seven years studying the hybridization of wheat in a partnership with Stephen Baenziger, Ph.D., University of Nebraska-Lincoln small grains breeder. Read more at AgriLife Today.

Too Early to Speculate on GMO Wheat Variety. AgWeek reported that North Dakota State University agricultural economist Dr. Frayne Olson says it is simply too early in the approval process to see how the new variety, HB4, recently approved by the Argentine government, will affect international, national and regional wheat markets. Olson said there has not been any approval by importing countries thus far. Read more at AgWeek.

Grain Handler Rail Challenges Debated. Agri-Pulse covered a U.S. Senate Commerce Committee meeting this week focused in part on domestic rail service performance amid the rapid row crop harvest and significantly increased overseas demand. Mike Steenhoek, Executive Director of the Soy Transportation Coalition said “service levels overall have been good” but he continues to hear about high rail rates and service performance issues. American Association of Railroads President and CEO Ian Jefferies testified that as “we’re getting into a peak season, we anticipate continually increasing volumes.” When it comes to rail service being on time, he said constant communication with grain handling customers is key. Read more at Agri-Pulse.

Subscribe to USW Reports. USW publishes a variety of reports and content that are available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts, the weekly Price Report and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online. Visit our Facebook page at 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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Dry Weather Brings Opportunities and Challenges for Great Plains Wheat

By Claire Hutchins, U.S. Wheat Associates Market Analyst

Persistent dryness is both a blessing and a curse to winter wheat farmers across the U.S. Plains states. Dry conditions accelerated the autumn row crop harvest, which allowed for quick planting and of hard red winter (HRW) wheat, but critically low subsoil moisture levels in states like Kansas and Colorado may leave producers more vulnerable to unpredictable winter weather. According to USDA, 41% of the crop for harvest in 2021 is in good to excellent condition, below some analysts’ average expectations of 53% and 15 points below this time last year.

Here is a look at winter wheat planting and development conditions by state.

Texas. HRW planting progress is right on schedule with 72% of the crop in the ground. While dryness persists in the Texas Panhandle, overall crop condition is in line with last year at 37% good to excellent. HRW planted area in the state is expected to increase for the 2020/21 crop. “We can attribute the increase in planted acres to improved prices and more favorable planting conditions,” said Darby Campsey, Director of Communications with the Texas Wheat Producers Board.

Kansas. Here, the HRW crop is 92% planted, 4 points ahead of this time last year. “Mid-September rains helped the early planted crop to emerge and come up pretty strong,” said Kansas State University Wheat and Forage Specialist Romulo Lollato, “but the crop planted after Oct. 5 is more hit or miss.” Kansas producers took advantage of dry autumn weather and a quick row crop harvest to accelerate rotational winter wheat planting. According to Justin Gilpin, CEO of the Kansas Wheat Commission, favorable harvest weather could increase Kansas winter wheat planted area year-over-year.

However, increased dryness throughout the state, particularly in the west, could challenge early winter wheat development. Excessive dryness at planting delays emergence and could delay every phase of crop development, said Lollato. Delayed crop development may push grain filling into hotter conditions, which has the potential to challenge test weight and yield. Producers are hoping for a mild winter and a cool spring with plenty of precipitation to boost the state’s yield potential. According to the National Oceanic and Atmospheric Administration (NOAA), the short term weather forecast in Kansas calls for moderate to heavy precipitation in southern Kansas, which would help early HRW development.

NOAA’s Quantitative Precipitation Forecast (QPF) predicts beneficial rainfall in southern Kansas, western Oklahoma and Northern Texas over the next few days.

“Pray for rain” in Colorado. About all the eastern third of Colorado, where most of the state’s winter wheat is grown, is under extreme drought. Two snowstorms between September and late October have been the “saving grace” for Colorado wheat producers. As of Oct. 25, USDA pegged Colorado’s HRW at 78% emerged, on track with last year and the 5-year average. “When you’re in a serious situation like this, any moisture is highly needed,” said Brad Erker, Executive Director of the Colorado Wheat Administrative Committee. However, only 24% of the state’s HRW is in good to excellent condition compared to 59% last year on extreme dryness. If drought persists through the winter, Colorado’s crop could suffer yield and test weight losses. Producers are hoping for solid winter precipitation which could revitalize critically low soil moisture levels and protect farmland from serious wind erosion.

The U.S. Drought Monitor shows abnormal to exceptional dryness in predominant winter wheat growing regions from northern Texas to the U.S.-Canadian border.

Nebraska. As of Oct. 25, the state’s winter wheat planting campaign for harvest in 2021 was complete. “Dry conditions were a ‘double-edged sword’ for Nebraska. It helped with a quick row crop harvest and allowed traditional wheat areas to be planted quickly. But some producers waited to plant due to extremely dry conditions,” said Royce Schaneman, Executive Director of the Nebraska Wheat Board. An early row crop harvest, favorable weather and strong marketing conditions could lead to increased Nebraska HRW acreage year-over-year.

According to USDA, only 43% of the state’s winter wheat is in good to excellent condition, compared to 61% this time last year on persistent dryness through the late summer and autumn. Recent snowfall in the west helped alleviate drought concerns, but more is needed in the coming months. Producers are hoping for much needed snow across the state to help boost soil moisture levels and protect the crop through the winter.

Good news from South Dakota. Relative dryness in South Dakota is a welcome change compared to last year’s overly wet field conditions. “Going into the fall, following this year’s incredible harvest, there were tremendous weather and price incentives for producers to plant more winter wheat compared to last year,” said Reid Christopherson, Executive Director of the South Dakota Wheat Commission. Most of the state’s winter wheat went into the ground ahead of recent, beneficial snowstorms. As of Oct. 25, 80% of the state’s winter wheat is emerged and 77% of the crop is in good to excellent condition. Looking ahead, producers in southern South Dakota expect mild to warm temperatures that would help with soil moisture absorption and strong early crop growth before the winter.

U.S. Wheat Associates (USW) will continue to monitor Great Plains winter wheat development in the coming months.

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2020 Records Larger, Improved Northern Durum Wheat Crop

The 2020 northern durum crop is notably larger than last year due to a significant increase in planted area with trendline yields, and a dry, steady harvest. Along with increased production, buyers will be pleased with the improved quality of the 2020 crop, especially on factors routinely valued in contract specifications. The crop boasts high test weights, high vitreous kernel contents and falling numbers, improved semolina color and a much lower incidence of DON compared with recent years.

U.S. Wheat Associates (USW) has posted the full 2020 Northern Durum Regional Report on its website here. USW previously reported on the 2020 Desert Durum® crop here, and posted the full 2020 Desert Durum® Regional Report and a Sacramento Valley Durum Report here and here, respectively.

 

Planting began in early May with slow initial progress due to cool conditions, but dry soils allowed for steady, accelerating progress with planting nearly complete by early June. Drought conditions eased with timely rains mid-season, boosting yield potential. Dry, warm conditions late-season accelerated crop maturity and limited disease pressures.

Harvest began in early August and progressed steadily on favorable weather until completed, ahead of average and well ahead of last year. Regional production is estimated at 1.7 million metric tons (MMT), up nearly 30% from 2019.

Here are highlights of data from the 2020 northern durum wheat crop.

Wheat and Grade Data:

  • Grade – the overall average is U.S. No. 1 Hard Amber Durum (HAD); 87% of the crop grades U.S. No. 1 or 2 Hard Amber Durum (HAD), up markedly from 37% a year ago.
  • Test Weight averages 62.2 lb/bu (80.9 kg/hl), well above last year and the 5-year averages.
  • Total defects average of 1.5% is lower than 2019, as disease pressures were relatively low and harvest weather was near ideal.
  • Vitreous kernel (HVAC) content is 88%, up sharply from 64% in 2019, and also higher than the 5-year averages. Nearly two-thirds of the samples were above 90% HVAC.
  • Wheat Protein averages 13.4% (12% mb), lower than both 2019 and the 5-year averages.
  • 1000 Kernel Weight average of 46.7 g (14% mb) is exceptionally high, above last year and nearly 6 g higher than the 5-year average, due to excellent conditions during kernel development.
  • Wheat Falling Number average of 419 sec, is well above 2019 and higher than the 5-year averages and indicative of sound wheat.
  • DON average is 0.2 ppm, lower than both 2019 and the 5-year averages and disease pressures were minimal in 2020.

Semolina and Processing Data:

  • Semolina Extraction average is 58.5%, up from 2019. Commercial mills will likely see a greater increase in extraction due to high HVAC levels and excellent kernel qualities.
  • Color values are higher than 2019 for both brightness and yellowness.
  • Gluten index values are 74.4%, higher than both 2019 and the 5-year averages.
  • Semolina color values are higher than a year ago, for both brightness and yellowness, and more similar to the 5-year average.
  • Cooked spaghetti evaluations show lower values compared to last year and the 5-year averages with lower cooked weight and less cooked firmness.
  • Mixing properties reveal a slightly weaker crop compared to a year ago, a 6 (scale 1-8), but stronger than the 5-year averages.

Buyers are encouraged to review their quality specifications to ensure that their purchases meet their expectations.

View other summaries of the 2020 U.S. wheat crop:
Hard Red Winter 
Hard Red Spring
Hard White
Soft White
Soft Red Winter

View the full 2020 U.S. Crop Quality Report and other related resources here.

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2020 Hard Red Spring Crop Boasts Excellent Qualities and Soundness

The 2020 U.S. hard red spring (HRS) wheat crop boasts excellent kernel and grade qualities, with significantly improved kernel soundness compared to 2019. The crop had significantly higher vitreous kernel and falling number values. The crop shows less extensibility and more resistance compared to 2019, but similar to the 5-year average. Other quality factors include improved dough strength with very high bread scores. With above-average supplies and high-quality parameters, the 2020 U.S. HRS crop offers excellent value to buyers.

U.S. Wheat Associates (USW) has posted the full 2020 Hard Red Spring Wheat Quality Report on its website here.

Cool temperatures slowed planting and emergence in parts of the growing region. Timely mid-season rains and a dry, rapid harvest period limited disease pressures and benefitted kernel quality parameters. USDA estimates production at 14.4 million metric tons (MMT), slightly higher than the 2019 crop on reduced planting area.

Here are a few highlights from the 2020 HRS wheat crop.

Wheat and Grade Data:

  • Grade– the average grade on the 2020 samples is a No. 1 Northern Spring (NS).
  • Test Weight average of 61.8 lb/bu (81.3 kg/hl) is higher than 2019 and 5-year averages.
  • Vitreous kernel levels (DHV) are notably higher, with overall samples averaging 71%. Nearly two-thirds of the Western samples make the Dark Northern Spring (DNS) subclass.
  • Wheat Protein averages 14.3% (12% mb) protein, similar to 2019 and 5-year averages.
  • DON average is 0.2 ppm, down from 0.6 in 2019.
  • 1000 Kernel Weight average is 31.5 g, heavier than 2019 and 5-year averages, due to good kernel fill conditions.
  • Wheat Falling Number average is 374 sec, a vast improvement in kernel soundness across the crop.

Flour, Dough and Baking Data:

  • Laboratory Mill Flour Extractions average 67.4%, lower than 2019 and 5-year averages.
  • Flour ash was similar to 2019 at 0.52%, while flour color showed higher L* color scores in both regions.
  • Flour Wet Gluten Contents average 33%, lower than both 2019 and 5-year averages.
  • Amylograph values average 642 BU for 65 g of flour, sharply higher than 2019.
  • Farinograph indicates the crop has lower absorption compared to last year and 5-year averages. The average farinograph stability is 12.1 min, significantly stronger than 2019 and the 5-year averages.
  • Alveograph P/L ratio average is 0.59, similar to 2019, but lower than 5-year average and the W-value increased to 368 (10-4 J), up from 2019.
  • Extensograph analyses shows less extensibility and more resistance compared to 2019, but similar to 5-year averages. The overall extensibility and resistance to extension of the 135 min extensograph are 12.8 cm and 856 BU, with slightly more extensibility across Eastern areas.
  • Loaf volume average is 973, smaller than 2019, but similar to 5-year averages. Average bake absorption is 67.4%, higher than 5-year averages. Bread scores are similar in both regions in 2020, with Western area slightly lower than a year ago while the Eastern area is slightly higher.

 

View other summaries of the 2020 U.S. wheat crop:
Hard Red Winter 
Hard White
Soft White
Soft Red Winter
Durum

View the full 2020 U.S. Crop Quality Report and other related resources here.

 

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Annual USW Crop Quality Report Now Available for the World’s Wheat Buyers

Even in the face of a global pandemic, dependable U.S. wheat farmers persisted in their essential effort to produce the highest quality wheat in the world, while the reliable U.S. export supply system continued operating to move that wheat to the world.

As a key part of its commitment to transparency and trade service, U.S. Wheat Associates (USW) has produced its annual Crop Quality Report that includes grade, flour and baking data for all six U.S. wheat classes. The report compiles comprehensive data from analysis of hundreds of samples conducted during and after harvest by our partner organizations and laboratories. The report provides essential, objective information to help buyers get the wheat they need at the best value possible.

The 2020 USW Crop Quality Report is now available for download in English, Spanish, French and Italian. Arabic, Chinese and, for the first time, Portuguese, translations will be available soon. USW also shares more detailed, regional reports for all six U.S. wheat classes on its website, as well as additional information on its sample and collection methods, solvent retention capacity (SRC) recommendations, standard deviation tables and more. Download these reports and resources from the www.uswheat.org here.

The pandemic has changed other traditional parts of the USW Crop Quality outreach effort. Unfortunately, face-to-face Crop Quality Seminars are not possible in 2020. Instead, USW is preparing a unique way for our customers to experience and gain more knowledge about the 2020 U.S. wheat crops. For more information, please contact your local USW office.

Continue to look for updates from the 2020 USW Crop Quality Seminars on Facebook, Twitter and LinkedIn.

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2020 Soft White Wheat Crop Yields Excellent Performance Characteristics

The Pacific Northwest (PNW) experienced excellent growing conditions in 2020 resulting in a soft white (SW) and white club (WC) crop with very good quality and yields. The crop had lower protein and moisture with consistently high grade factors. Overall quality is characterized by very weak to medium gluten strength with excellent potential to produce SW and SW blended flour products. Average test weights for SW and WC are greater than in 2019 composites with good falling number and kernel characteristics. Flour characteristics align with protein contents and show good color and FN values with slightly lower flour yield than the 5-year average. Farinograph water absorptions are desirably low for both SW and WC, with weak to medium gluten characteristics for SW and very weak gluten for WC. For finished products, low protein composites produced good sponge cake total scores and cookie diameters. Higher protein composites showed good total scores for Chinese southern-style steamed breads.

U.S. Wheat Associates (USW) has posted the full 2020 Soft White Wheat Quality Report on its website here.

 

With adequate moisture at planting for winter and spring SW and WC varieties, and timely rains through May and June, yields were above average in Washington and Idaho and average in Oregon. USDA estimates total 2020 PNW SW production at 7.2 million metric tons (MMT), a new record for the region. Of the total, WC production is estimated at 0.26 MMT.

Here are highlights of data from the 2020 SW and WC wheat crop.

WHEAT AND GRADE DATA:

  • Grade – the overall averages are U.S. No. 1 SWH and U.S. No. 1 WHCB.
  • Test Weight averages are 61.9 lb/bu for SW and 61.6 lb/bu for WC, both well above the 5-year average.
  • Dockage, total defects and foreign material averages are low and similar to 2019 and the 5-year averages.
  • Wheat Protein at 9.8 (12% mb) for SW and WC is lower than the 5-year averages.
  • 1000 Kernel Weight average of 36.3 g (14% mb) for SW and 32.3 g for WC are significantly higher than the 5-year averages.
  • Wheat Falling Number – SW average is 323 sec and WC average is 322, indicative of sound wheat.

FLOUR AND BAKING DATA:

  • Laboratory Mill Flour Extraction average for SW is 72.6%, slightly lower than the 5-year averages of 74.5%, while WC average is 74.7%, which is higher than the 5-year average.
  • Flour Ash levels of 0.43% (14% mb) for SW is slightly lower than the 5-year average; WC levels of 0.48% is slightly more than the 5-year average.
  • Alveograph L value of 112 (mm) for SW is significantly higher than the 5-year average of 101; WC L value of 101 is also well over the 5-year average of 76. Alveograph W value (10-4 J) for SW is 94 compared to a 5-year average of 91, with WC at 37, which is slightly below the 5-year average.
  • Farinograph peak and stability times of 1.9 and 2.3 min, respectively, for SW and 1.3 and 1.1, respectively, for WC indicate desirable weak dough characteristics.
  • Sponge Cake Volumes ranged from 1,088 to 1,171 cc with a weighted average of 1,120 cc for SW, with total score at 45. Volume for WC averaged 1,129 cc with a total score of 47.
  • Cookie Diameters for SW are 8.7 to 9.2 cm with spread factors of 9.6 to 11.4. WC cookie diameter and spread factor are 8.7 and 10.2 cm, respectively.
  • Chinese Southern-Style Steamed Breads analysis show SW volumes are 1.4 to 2.1 mL/g with total scores equal to or better than the control at 70 mL/g. WC specific volume is 2.1 mL/g with a total score below the control.

Buyers are encouraged to review their quality specifications to ensure that their purchases meet their expectations.

View other summaries of the 2020 U.S. wheat crop:
Hard Red Winter 
Hard Red Spring
Hard White
Soft Red Winter
Durum

View the full 2020 U.S. Crop Quality Report and other related resources here.

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Good Performance in Limited Exportable Hard White Supplies for 2020

Samples from the 2020 hard white (HW) wheat crop show good quality performance in milling, dough properties and finished products, including pan breads, Asian noodles and steamed breads. The Southern Plains, Pacific Northwest (PNW) and California composites all show good bread baking potential. Exportable supplies are limited.

U.S. Wheat Associates (USW) has posted a full 2020 California Hard White Regional Report on its website here.

The 2020 HW crop was grown primarily in Idaho, Kansas, Colorado, California and Nebraska. Other states including Montana, North Dakota and South Dakota had limited production. U.S. Wheat Associates (USW) estimates 2020 HW production at 894,483 metric tons (MT), down from 2019’s 979,321 MT reported by USDA.

Here are a few highlights from the 2020 HW wheat crop.

Wheat and Grade Data:

  • Grade – Five composites graded U.S. No. 1. The medium protein Southern Plains graded U.S. No. 3 due to 2.1% wheat of contrasting classes.
  • Test Weight ranged from 61.0 to 64.1 lb/bu (80.2 to 84.2 kg/hl).
  • Wheat Moisture ranged from 8.9 to 11.0%.
  • Wheat Protein ranged from 11.3 to 13.2% (12% mb).
  • Wheat Ash ranged from 1.43 to 1.62% (14% mb).
  • Kernel Hardness ranged from 59.0 to 81.5.
  • Kernel Diameters ranged from 2.47 to 2.86 mm.
  • 1000 Kernel Weight values of the Southern Plains medium- and high-protein composites are 29.3 and 27.5 g, respectively. All others are greater than or equal to 31.9 g.
  • Wheat Falling Number values are 396 sec or higher for all composites.

Flour, Dough and Baking Data:

  • Laboratory Mill Flour Extractions range from 70.6 to 74.2%, L* values (whiteness) 90.7 to 92.0, flour protein 10.8 to 12.7% (14% mb), and flour ash 0.45 to 0.50% (14% mb). These values are within the historical ranges of HW flour considering the wide production area.
  • Flour Wet Gluten Contents range 24.8 to 40.8% depending on flour protein content.
  • Amylograph peak viscosities are between 714 and 1039 BU for all composites.
  • Damaged Starch values are in the range of 3.1 to 5.5%.
  • Lactic Acid SRC values range 144 to 157%, indicating medium to strong gluten strength.
  • Farinograph water absorptions range 55.0 to 62.4% and stability times 9.0 to 37.0 minutes, exhibiting medium to strong dough characteristics.
  • Alveograph value ranges are: P (59 to 108 mm); L (99 to 135 mm); and W (240 to 395 (10-4 J)).
  • Extensograph data at a 135-minute rest shows maximum resistance in the range of 740 to 1013 BU, extensibility 15.6 to 23.2 cm and area 153 to 246 cm2.

All composites show good baking performance relative to protein content, with bake absorptions in the range of 59.9 to 67.4%, loaf volumes of 796 to 942 cc, and crumb grain and texture scores of 7.0 to 8.0 points.

Noodle Evaluation: HW flours and a control flour were evaluated for both Chinese raw noodles (white salted) and Chinese wet noodles (yellow alkaline). Overall, this year’s HW samples will produce noodles with acceptable color and texture if low ash patent flour is used.

  • Chinese Raw Noodles – The L* values at 0 hours of production and after 24 hours of storage at room temperature are acceptable for all samples (72 is the minimum value at 24 hours). The sensory color stability scores for PNW and Southern Plains samples are similar to or better than the control noodle of 7.0. Cooked noodle texture is softer for California composites.
  • Chinese Wet Noodles – Sensory color stability scores are acceptable for parboiled noodles from all composites. The cooked noodle texture is softer for PNW composites.

Steamed Bread Evaluation: HW flours were evaluated for Asian steamed breads in comparison with a control flour. Results show all composites are acceptable for steamed bread with total scores equivalent to or better than the control flour. Blending 25% SW flour with high protein HW flour would improve overall steamed bread quality.

Buyers are encouraged to review their quality specifications to ensure that their purchases meet their expectations.

View other summaries of the 2020 U.S. wheat crop:
Hard Red Winter 
Hard Red Spring
Soft White
Soft Red Winter
Durum

View the full 2020 U.S. Crop Quality Report and other related resources here.

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Wheat Industry News

Recent news and highlights from around the wheat industry.

Speaking of Wheat. “I believe soil is a living thing … Every living thing has rights. Therefore, soil also has rights. As long as you are consuming the natural resources – food, water, elements – coming from the soil, you owe it to soil to put something back, to give something back, whatever you can.” – Dr. Rattan Lal, 2020 World Food Prize Laureate. For more information on how U.S. farmers are caring for the soil, visit our website at https://www.uswheat.org/policy/innovation-and-sustainability/.

Leading soil scientist Dr. Rattan Lal officially received the 2020 World Food Prize Oct. 15 for developing and mainstreaming a soil-centric approach to increasing food production that conserves natural resources and mitigates climate change. Dr. Lal’s pioneering research on the restoration of soil health in Africa, Asia and Latin America led to revelations that impacted yields, conservation and climate change mitigation, practices that are now at the heart of efforts to improve agriculture systems in the tropics and globally.

Argentine government approves wheat variety with GMO trait. The wheat variety includes a drought resistant trait developed by the biotechnology firm Bioceres SA. However, the variety cannot be used commercially without official acceptance for import by Brazil’s government. There are currently no genetically engineered wheat varieties in commercial production in the United States. For more information, please see the Joint Statement on “Principles for Commercialization” from U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG).

Pioneering wheat work recognized. A U.S. research team earned the Borlaug Global Rust Initiative (BGRI) 2020 Gene Stewardship award for their work protecting global wheat crops from fungal pathogens. The plant pathologists, geneticists and agronomists from the USDA Agricultural Research Service (ARS) were recognized for research leading to a diverse range of strategies introducing and improving resistance to stem rust—particularly the highly virulent Ug99 stem rust strain. Read more in Seed Today.

Extraordinary Biography of Wheat. A Montana State University (MSU) professor recently published the book, “Amber Waves: The Extraordinary Biography of Wheat, from Wild Grass to World Megacrop.” For Dr. Cathy Zabinski, a professor in the Department of Land Resources and Environmental Sciences in MSU’s College of Agriculture, the project meant getting out of her comfort zone in order to connect with her audience. “I wrote this to give us a sense of the history of our food production … helpful as we’re addressing the big question of how to produce enough food for the upcoming decades with a growing human population,” she said.

Subscribe to USW Reports. USW publishes a variety of reports and content that are available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts, the weekly Price Report and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online. Visit our Facebook page at 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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U.S. Wheat Export Prices Firm on Higher Futures Prices and Export Basis Values

By Claire Hutchins, U.S. Wheat Associates Market Analyst

It is no secret that wheat futures prices have reached unexpected heights recently. Higher futures prices usually pressure export basis values when farmers sell wheat “into the rally” because that increases exportable U.S. wheat supplies. However, we are seeing a completely different phenomenon in the recent market. Extremely tight elevation capacity out of the Gulf and Pacific Northwest (PNW) due to massive U.S. agricultural commodity exports to China is sustaining high wheat export basis values, despite increased farmer selling.

CBOT soft red winter (SRW) futures and KCBT hard red winter (HRW) futures, specifically, have jumped over the past month beyond expected levels. Between Sept. 11 and Oct. 9, for example, CBOT SRW futures prices increased 11 percent to $5.94/bu, the highest since December 2014. Over the same period, KCBT HRW future prices jumped 13 percent to $5.36/bu, the highest since August 2018. MGE hard red spring (HRS) futures have increased too, by 6 percent since Sept. 11 to close at $5.44/bu on Oct. 9.

Source: DTN and USW Price Charting Tools

U.S. grain traders agree generally that the “run up” in futures prices is attributed to technical buying, where “managed money” or commodity funds buy significant amounts of U.S. wheat futures contracts with the expectation that the contracts will gain value over time. While not the whole story, part of this technical buying spree can be attributed to varying severities of dryness from Argentina to the U.S. Great Plains to the Black Sea.

These high export basis levels could hold on. “Increased farmer selling hasn’t made a dent on export basis,” said one grain trader. Limited elevation capacity is the reason.  That is because China has purchased 22.1 million metric tons (MMT) of U.S. soybeans, 9.98 MMT of corn and 1.48 MMT of wheat for delivery in 2020/21, as of Oct.1. Such demand causing “nearly non-existent” elevation capacity for wheat is sending export basis values higher.

“October, November and now nearly all of December are at capacity; we can’t add a lot more business for those months. If anyone were to sell anything for those delivery periods, it would raise elevation costs substantially more,” said another industry contact.

Additionally, export elevators are likely to charge more to elevate wheat in the next couple of months because they expect to store and export more corn and soybeans. It is more complex and expensive for export elevators to handle multiple commodities at the same time, said a representative from the U.S. grain trade.

Between June 5 and Oct. 9, Gulf HRS 14.0 percent protein export basis (on a 12 percent moisture basis) jumped 55 percent to $2.40/bu, Gulf HRW 11.5 percent protein export basis jumped 31 percent to $1.90/bu and Gulf SRW export basis jumped 80 percent to $1.35/bu.

Over the same period, PNW HRS 14.0 percent protein export basis increased 55 percent to end at $2.40/bu and PNW HRW 11.5 percent protein export basis increased 47 percent to close at $2.50/bu.

The two components of FOB are the futures price plus export basis so when both go up, the FOB prices jump substantially.

Between Sept. 11 and Oct. 9, Gulf HRS 14.0 percent protein FOB jumped 6 percent to end at $288/MT, the highest since June 2018. Gulf HRW 11.5 jumped 9 percent to close at $267/MT, the highest since December 2014. SRW increased 11 percent to end at $277/MT, the highest in over five years.

Over the same period, PNW HRS 14.0 percent protein increased 7 percent to close at $288/MT, the highest since May 2018, and PNW HRW 11.5 percent protein jumped 9 percent to end at $289/MT, the highest in more than five years.

What does this mean moving forward?

While U.S. Wheat Associates (USW) does not have a crystal ball, based on our information, we expect  export basis levels will stay at these higher levels through January assuming Chinese buying remains strong.  Futures prices could come down off their recent rally if, for example, “managed money” reverses its long position in wheat futures, but there would have to be a significant downward correction to take pressure off current FOB values.

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Dependable People: A Spotlight on the Wyoming Wheat Marketing Commission

For 40 years, U.S. wheat farmers have supported U.S. Wheat Associates’ (USW) efforts to work directly with buyers and promote their six classes of wheat. Their contributions to state wheat commissions, who in turn contribute a portion of those funds to USW, qualifies USW to apply for export market development funds managed by USDA’s Foreign Agricultural Service. Currently, 17 state wheat commissions are USW members and this series highlights those partnerships and the work being done state-by-state to provide unmatched service. Behind the world’s most reliable supply of wheat are the world’s most dependable people – and that includes our state wheat commissions.

Member: Wyoming Wheat Marketing Commission
Member of USW since 1980

Location: Cheyenne, Wyo.
Classes of wheat grown: Hard Red Winter (HRW) and Hard Red Spring (HRS)

The Wyoming Wheat Marketing Commission (WYWMC) was established in 1975 with the goal to develop and maintain wheat markets around the globe. The WYWMC is also active in providing support and funding for wheat research, education and market development. The five-person board operates on a $1.75 cent-per-bushel checkoff which funds the activities promoted by the WYWMC, including its work with U.S. Wheat Associates. 

WYWMC Director Casey Madsen (right), Nebraska wheat farmer Kent Lorens (center) and Montana wheat farmer Al Klempel (left) admired milling equipment at Kenz Maroc in Casablanca, Morocco, as participants in a USW Board Team in 2019.

Why is export market development important to Wyoming wheat farmers and why do they continue to support USW and its activities?

Based on available information, about 60 percent of the wheat produced in Wyoming is exported. Being near rail crossroads, high-quality Wyoming HRW can move either south to Gulf ports and Mexico, or west to the Pacific Northwest ports. As global wheat production has changed, the opportunity to work with USW to increase sales in Asia and the west coast of South America is of vital importance to the continued success of wheat farmers in Wyoming and across the United States. 

WYWMC Director Casey Madsen (far right) and the 2019 USW Board Team participants visited family owned Harinas Polo flour mills in Barcelona, Spain. The mill produces more than 300 different flour and seed products.

How have Wyoming wheat farmers recently connected with overseas customers?

For several years, WYWMC members have taken part in overseas trade mission trips and have also participated in overseas buyers’ conferences. The opportunity to make connections with overseas customers by meeting with them face-to-face is invaluable. While current events have limited these opportunities, we joined USW and other state commissions in a virtual meeting with Colombian wheat customers earlier this summer. 

WYWMC Director Ken Tremain (right) visited  Groupe HM-owned Caribbean Milling in Port-au-Prince, Haiti, as a participant in a USW Board Team in 2017. Caribbean Milling is the newest mill in Haiti, and started importing U.S. hard red winter (HRW) in 2016.

What is happening lately in Wyoming that overseas customers should know about?

While Wyoming has a relatively small wheat production area compared to most other USW member states, our unique production issues compel us to conduct research for our high-altitude and short growing season. Wyoming is often the first to plant HRW, and often among the last to harvest. We look at experimental varieties from three neighboring states to produce wheat with higher end-use qualities for customers, while minimizing input costs so that Wyoming wheat farmers can remain profitable. We recently licensed a new variety from Colorado which will allow farmers in Wyoming to better address a new type of stripe rust, which periodically affects Wyoming wheat production.

The commission is also active in trade and domestic policy. We have actively engaged with U.S. government officials, including the Office of the United States Trade Representative (USTR), to promote expansion of trade access and avoid market disruption due to tariff implementation, while remaining in close contact with our Congressional delegation to influence domestic production issues.

Learn more about the Wyoming Wheat Marketing Commission on its web page here.

WYWMC Director Ken Tremain and fellow USW Board Team participants visited a food market in Santiago, Chile, to see local wheat foods in 2017.

 

 

 

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