You are here: / / Wheat Letter Blog
Inland grain elevator with grain rail cars to help demonstrate rail rates.
,

Secondary Rail Rates, Tight Elevation Capacity Continue to Support Wheat Export Prices

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

Gulf and Pacific Northwest (PNW) hard red spring (HRS) and hard red winter (HRW) basis values have jumped significantly in the last month due to increased domestic secondary rail rates and limited export elevation capacity, both driven by stronger-than-expected U.S. agricultural export sales to China.

It is important for overseas wheat buyers to understand the potentially significant impact of price movement in the domestic secondary rail market on export prices.

U.S. railroads auction domestic freight in the “primary railcar auction market.” Grain shippers can meet their need for rail capacity by trading this freight among themselves in the secondary railcar auction market at prices above or below the primary tariff rate, depending on national supply and demand conditions. According to the USDA Agricultural Marketing Service (AMS), the secondary railcar market evolved to enable rail movements of grain to be more responsive to market pressures, like increased commodity exports or reduced railcar availability.

This year, AMS data show the average secondary rate for shuttle trains to be delivered in October was up 36 percent between July 30 and Aug. 20 to $1,172/car, nearly three times greater than the previous 3-year average.

Over the same period, Gulf HRS 14.0 (12% moisture basis) export basis increased 16 percent to $2.20/bu, PNW HRS 14.0 export basis increased 21 percent to $2.00/bu. Gulf HRW 12.0 export basis increased 11 percent to $1.95/bu and PNW HRW 12.0 increased 24 percent to $2.55/bu.

According to U.S. grain traders, the unexpectedly swift pace of agricultural commodity exports to China and rail labor shortages due to COVID-19 furloughs are supporting secondary rates and, in turn, wheat export basis levels.

“If rail logistics through October, November and December run smoothly, we could see secondary rail rates plateau,” said one grain trader. “But if things go wrong in terms of weather or continued labor shortages, we could see more upside to secondary rail rates in the near future.”

Limited export elevation capacity out of the Gulf and PNW due to the swift uptick in Chinese demand for U.S. agricultural goods continues to add support to wheat export basis values.

“September and October are at capacity; we can’t add a lot more business for those months. If anyone were to sell anything for delivery in those periods, it would raise elevation costs substantially,” said another grain trader. Additionally, export elevators are going to charge more to elevate wheat in the next couple of months because they expect to store more corn and beans at that time of year. 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.

Soybeans. “A lot of customers are surprised by the fact that export capacity is filling up so quickly with soybeans,” said a U.S. grain trader. The reason, however, is no surprise: China’s dramatic increase in U.S. soybean purchases this year compared to previous years. According to USDA, China bought 17.0 million metric tons (MMT) of U.S. soybeans for delivery in the soybean marketing year 2019/20, which ended Aug. 31. That is 21 percent more than the 14.1 MMT China purchased for delivery in marketing year 2018/19.

Corn.  Export sales to China for marketing year 2019/20, at 2.24 MMT, are more than five times greater than the amount sold in 2018/19.

Wheat. It is no secret China has re-emerged as a buyer of U.S. wheat in a big way. According to USDA, as of Aug. 20, total U.S. wheat export sales to China total 1.22 MMT, for delivery in the current wheat marketing year. magnitudes greater than the 60,500 metric tons (MT) sold this time last year. China is currently the second largest market for U.S. wheat in marketing year 2020/21, which started June 1.

“If China wants to purchase more U.S. wheat for October, November and December deliveries, we could see export basis levels go higher in the near future,” said an industry contact.

 

/by
,

A Legacy of Commitment – NAWG, USW Lead the Way Through Issues Affecting Wheat Farmers

Research by USW Communications Intern Dylan Davidson

U.S. farmers working hard to produce six distinct, high-quality classes of wheat must manage a multitude of risks to put bread on tables at home and across the globe. Beyond the agronomic and economic challenges, the decisions and policies of the U.S. government and international trade policy have affected wheat farm families for decades.

In April 1950, Clifford R. Hope was a U.S. Congressman from Garden City, Kan. He told wheat farmer leaders that “there are many questions that come before Congress that need answering by wheat-oriented people.” He was speaking to farmers meeting in Kansas City, Mo., who would go on to create the National Association of Wheat Growers (NAWG) to represent the interests of wheat farmers with members of Congress. After leaving Congress, Hope was hired as the first president of Great Plains Wheat.

As U.S. wheat stocks piled up, the government created federally managed grain reserves and in 1954, with support from NAWG and state wheat associations, the U.S. Congress passed Public Law (PL) 480 to help expand exports of surplus agricultural products. This was a huge incentive to form commissions and, by 1960, to create Great Plains Wheat and Western Wheat Associates to promote U.S. wheat in designated countries under PL 480 and other commercial overseas markets. The final details of the merger that created U.S. Wheat Associates (USW) were developed on the sidelines of a NAWG conference in 1980.

Celebrating Together. Representatives of NAWG and the Kansas Association of Wheat Growers participated in the January 1959 opening of the first European office of Great Plains Wheat. At the office in Rotterdam, left to right: KAWG Vice President Ora Root of Garden City, Kan.; NAWG President Floyd Root, Wasco, Ore.; USDA/FAS Assistant Agricultural Attache Henry Baehr; and GPW/Rotterdam Director Harvey E. Bross.

In many ways, NAWG and USW have grown up together. In coalition with its state wheat associations, NAWG lobbies Capitol Hill and the Administration on behalf of U.S. wheat growers. USW works to develop and maintain export markets.  While their missions are different, they share a goal to work for the common good of U.S. wheat farm families.

Essential Organizations

“This is a positive relationship where each organization’s role helps the other,” said NAWG CEO Chandler Goule. “For instance, NAWG is able to lobby to Congress in an effort to create policies that improve the livelihoods of wheat farmers. USW cannot lobby members of Congress but does have the capabilities to promote wheat abroad, creating international markets where U.S. wheat farmers sell their crops. Both organizations are essential.”

As the wheat industry continued to develop domestically and abroad, both organizations continued evolving to meet farmer needs. As with any long-term partnership, the relationship at times proved challenging. Yet with the positive influence of the farmers who fund and direct each organization, NAWG and USW have worked through any issues to work more closely in representing the U.S. wheat industry.

“Working together means we can share resources and provide a better voice for our farmers and our customers abroad,” said Ron Suppes, Dighton, Kan., wheat farmers and the 2007/08 USW Chairman.

Kansans Ron Suppes (above, testifying on Capitol Hill on the crucial role of wheat in food aid programs) and John Thaemert established joint board meetings when they were leading USW and NAWG in 2007/08.

Meeting Together

As USW Chairman, Suppes worked with fellow Kansan and NAWG President John Thaemert to establish joint board meetings of the two organizations. Today, that effort has evolved into two joint board meetings each year and joint committees that evaluate and propose policies that cross over both U.S. government oversight and the NAWG and USW missions, such as trade policy, wheat breeding innovation, food aid and wheat quality.

Each committee includes four members of each organization and a chairman. The chairmanship of each committee rotates annually between the USW and NAWG to promote equal representation for each organization.

The Joint USW/NAWG International Trade Committee meets together two times each year to review trade policies that affect U.S. wheat farmers and their overseas customers.

“The committees are critical for both organizations,” said USW President Vince Peterson. “They really get into the details of policy issues and it is where some of the main collaboration between the two organizations happen.”

In Kenya, November 2019, representatives of NAWG and USW visited a refugee camp to observe direct donations of U.S. wheat by the World Food Programme. U.S. rice and sorghum organizations also participated in the visit to Kenya and Tanzania.

Policies developed in these joint committees and working groups are reviewed and approved by each organization’s full board of directors. Often, these policy positions are shared publicly through joint statements shared with domestic and international media, such as on trade agreements and wheat breeding innovation.

In addition, “every month, the top leaders of each organization get on a call to discuss our shared priorities,” said Dave Milligan, a wheat farmer from Cass City, Mich., and current President of NAWG. “I feel both organizations are realizing more and more that when we work together, we are able to move the wheat industry forward and make it prosperous.”

NAWG President Dave Milligan, a wheat farmer from Cass City, Mich.

“With shared trade issues, technological changes and economic stresses, there has never been a more important time for all wheat farmers in the country to work together,” said Darren Padget, a wheat farmer from Grass Valley, Ore., and current USW Chairman. “I am glad that our two organizations continue to lead the way, together.”

USW Chairman Darren Padget, a wheat farmer from Grass Valley, Ore.

 

Then NAWG President Wayne Hurst (center,  just right of Pres. Obama) and then USW Chairman Randy Suess (just right of Hurst) represented wheat growers at a reception celebrating the signing of the Trade Adjustment Assistance (TAA) for workers, and the Korea, Panama and Colombia Free Trade Agreements, in the Rose Garden of the White House, Oct. 21, 2011. Official White House Photo by Pete Souza.

 

NAWG President Ben Scholz (standing left) and USW President Vince Peterson (2nd from left) represented wheat farmers at the formal signing of the U.S.-Japan Trade Agreement Oct. 7, 2019, as President Donald Trump and other representatives watch U.S. Trade Representative Ambassador Robert Lighthizer and Japanese Ambassador to the U.S., Shinsuke Sugiyama, do the honors. Official White House photo.

Read other stories in this series:

Western Wheat Associates Develops Asian Markets
Great Plains Wheat Focused on Improving Quality and HRW Markets
Evolution of a Public-Private Partnership
The U.S. Wheat Export Public-Private Partnership Today

/by
thumbnail
, ,

Dependable People: A Spotlight on the Colorado Wheat Administrative Committee

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: Colorado Wheat Administrative Committee
Member of USW since 1980

Location: Fort Collins, Colo.
Classes of wheat grown: Hard Red Winter (HRW) and Hard White (HW)
USW Leadership: Harrell Ridley, 1982/83; Ray Selbe, 1991/92

The Centennial State has a proud history of wheat farming that goes back to the state’s formation in 1876. Despite the rough topography and arid climate that Colorado is famous for, wheat is grown in more than 40 of its 64 counties, with more than two million acres of wheat on average planted in Colorado each year. The Colorado Wheat Administrative Committee (CWAC) is a producer-elected board whose goal is to help wheat farmers in the state produce, develop, maintain and increase domestic and export sales, consumption and utilization of Colorado Wheat, while also supporting education, research and promotional programs.

The Colorado Wheat Administrative Committee Board takes a picture before taking a tour of the National Laboratory for Genetic Resources Preservation in Fort Collins, CO.

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

Roughly 80 percent of Colorado’s wheat crop is exported, and as one of Colorado’s top ranked exports, it averages $234 million in value each year, second only to beef exports. Hard red winter (HRW) and hard white (HW) wheat produced in Colorado is sought after in many of the world’s major wheat markets, including Mexico, Japan, Southeast Asia and Africa. This makes developing overseas markets a top priority. Colorado wheat farmers are devoted to producing a high-quality product for millers and bakers around the world. They recognize the value brought by USW staff living and working in these areas, promoting the quality of Colorado and U.S. wheat to these competitive markets.

Steve Beedy (R) on a USW board team trip to Asia in 2012.

How have Colorado wheat farmers recently connected with overseas customers?

Over the years, Colorado has hosted several USW trade delegations and has also sent several of its board members overseas. In the last nine years, Colorado has focused more on funding improved quality characteristics in public varieties than on trade missions, but we have continued to connect with overseas customers through representation by the USW overseas offices and continued board member involvement at national meetings. Most recently, CWAC Executive Director Brad Erker, took part in a virtual crop quality seminar with Chilean flour millers. During the seminar, he discussed the production conditions and quality of the U.S. HRW crop.

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

Colorado wheat farmers help fund the public wheat breeding program at Colorado State University (CSU) through a two cent per bushel assessment. Thanks to the help from Colorado farmers, the CSU wheat breeding program has built a reputation for success. The program has focused on developing varieties that not only are adapted to Colorado’s unique growing conditions, but also have excellent end use quality to meet the needs of millers and bakers. Varieties developed help with common issues the Colorado wheat farmer often faces. The Colorado Wheat Research Foundation (CWRF) and CWAC funded development of the CoAXium Wheat Production System, which helps farmers control winter annual grassy weeds in their fields and reduce dockage factors. The CWRF is licensing the technology to other breeding partners to help the entire production system be more efficient. The foundation also helped develop HW varieties with low polyphenol oxidase (PPO), which reduces browning in baked goods, a benefit in whole grain applications. A lot of attention is now turning to development of semi-solid varieties that resist the wheat stem sawfly, an emerging and devastating pest. Better genetic resistance to wheat stem sawfly will help Colorado farmers continue producing some of the highest quality wheat for customers around the world.

Learn more about the Colorado Wheat Administrative Committee on its website here and on Facebook and Twitter.

The CSU Wheat Breading team planting plots at the Agricultural Research, Development and Education Center (ARDEC) outside of Fort Collins, CO.

 

 

/by
thumbnail
, , ,

USW Demonstrates Hard Red Winter Wheat Performance to Chinese Customers

Chinese trading concern COFCO, as part of a commitment to purchase U.S. farm products, for the first time in recent history purchased hard red winter (HRW) wheat in marketing years 2019/20 and 2020/21. COFCO has purchased about 672,000 metric tons (MT) of HRW for immediate sale to Chinese flour mills.

On behalf of the farmers we represent, U.S. Wheat Associates (USW) helps buyers and end users make the best use possible of U.S. wheat. Because HRW has not been commonly used in China, the USW team in China decided to sample and test the wheat purchased to demonstrate the usefulness of this versatile class.

A representative sample of HRW for the study came directly from a COFCO shipment taken at a port in southern China’s Guangdong Province.

Thoughtful Test Design

USW Technical Specialist Dr. Ting Liu thoughtfully designed the study. After referring to some customer inquiries and previous studies done on HRW for various regional markets, Dr. Liu and USW Country Director Shirley Lu selected several end use applications to test using different flour blends with HRW that could be measured for performance against locally produced control flours.

The USW team worked closely with local flour mills and the Sino-American Baking School (SABS) in Guangzhou to mill the HRW sample on a Buhler laboratory mill. They analysed the characteristics of single HRW flour and blends with flour from U.S. hard red spring (HRS) and soft white (SW) wheat. Nine end products were produced and tested, including pan and sweet breads, sweet rolls, hamburger buns, baguettes, croissants, pizza dough, noodles and steamed breads.

“After some very intensive work in the test bakery, the hard red winter single flour and blends cooperated so well our team decided to run some tests twice to confirm the stellar results they observed,” said USW Regional Vice President for China and Taiwan Jeff Coey.

Sharing Results

On Aug. 14, 2020, USW conducted an online presentation to share the test results with an estimated 200 contacts from China’s mills and wheat trading organizations. The presentation focused on measured HRW wheat and flour quality, along with results of the baking tests. USW also shared typical HRW quality data from the 2019/20 crop and initial information on conditions of the 2020/21 crop.

In opening remarks to the participants, Coey said “in terms of end use quality, I want to advise you to consider U.S. hard red winter a very reliable medium- to high-gluten strength wheat that should perform well for you in a variety of your most demanding applications.”

Sharing photos and data from end products produced with single and blended flours, USW Beijing colleagues informed Chinese customers about the excellent performance of U.S. HRW in an Aug. 14 webinar.

The USW Beijing team greatly appreciates the cooperation of: COFCO for the chance to sample an actual HRW shipment; the Wheat Marketing Center, Portland, Ore., for data from their previous work on pizza dough and noodle results; the SABS staff who helped USW conduct its tests before its regular course schedule started; and several Chinese flour mills who allowed USW to use their instrumentation to help complete the testing.

Additional specific results or the tests are available from the USW Beijing office and the regional USW office in Hong Kong.

 

/by
thumbnail
, ,

Stories from the Wheat Farm – Living with Purpose in North Dakota

U.S. wheat farm families grow six distinct classes of wheat across the diverse landscape of the United States. Those farmers take great care in producing the highest quality wheat in the most sustainable ways possible to honor their family legacies and to ensure greater value for their customers at home and abroad. Behind the world’s most reliable supply of wheat are the world’s most dependable people.

The Volk Family: Philip and Lisa Volk and their five children grow hard red spring (HRS) wheat on their family farm in North Dakota that was founded in 1942. Responsibilities are shared among them all, even their youngest who rides along with Mom or Dad during wheat harvest.

Location: York, N.D.
Classes of Wheat Grown:  Hard Red Spring (HRS)
Leadership: Philip Volk: Commissioner, North Dakota Wheat Commission (NDWC); USW Director; NDWC liaison to the Wheat Marketing Center; Chairman, SBARE Wheat Granting Committee.

View other videos and stories in this “Stories from the Wheat Farm” series:

The Next Generation in Kansas
Loving the Work in Ohio
Committed to Stewardship in Washington
A Passion for the Land in Oklahoma
Committed to Wheat Quality in Oregon
Embracing the Agricultural Lifestyle in Montana

/by
thumbnail

Wheat Industry News

Recent news and highlights from around the wheat industry.

Speaking of Wheat: “Even though the customers cannot be here in person, we want to assure them that they are welcome to ask questions and reach out to us, as well as visit us when it is safe to travel.” – Glen Squires, CEO, Washington Grain Commission, from an article about virtual wheat export promotion by state wheat commissions and U.S. Wheat Associates (USW) in Capital Press.

Congratulations to Ian Flagg and his wife Serena on the birth of their first child Aug. 11, a girl named Thea Juliette. Ian, who is USW’s Regional Vice President for Europe, Middle East and North Africa, says Mom and baby, who is named after her great grandmother, are doing well.

Pacific Northwest wheat producers rely on a complex system of rivers, rail, and highways to transport their product. Of all the wheat produced in Washington state for example, about 60% of it is transported via the Columbia-Snake River System. A comprehensive environmental impact analysis of the lower Snake River dams was recently completed and published. The Washington Association of Wheat Growers (WAWG) stated that the report balances the needs of farmers, salmon, power supply, and social welfare in the Pacific Northwest.

USW Recommends www.farmbabe.com. With an average social media reach of 2-3 million a month and 120K followers, Michelle Miller has made a name for herself as a dedicated myth-buster in the food industry as the Farm Babe™. Michelle brings a unique perspective as a big city globetrotter turned Iowa Farm girl, and plants the seed inside the minds of those looking to understand the truth about modern agricultural production. Farm Babe™ is one of the most popular and vibrant food and farming personalities in social media.

Registration Underway for Three September IAOM-KSU Milling Courses. IAOM has joined with Kansas State University’s IGP Institute to offer a variety of milling courses, which will be held in Manhattan, Kan. Review the class information and register here.

Our Hearts Go Out to Farmers in Nebraska, Iowa, Illinois and Indiana who lost crops and suffered damage from a devastating, long-lived thunderstorm Aug. 10. With straight line, hurricane-force winds, this “deracho” storm affected an estimated 37.7 million acres, primarily corn and soybeans. Reuters reported that “the toll from the derecho storm has worsened as farmers and grain handlers have spent the week assessing flattened corn fields and crumpled steel storage bins.” The storm also caused widespread damage to rural towns and cities in its destructive path.

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.

/by
thumbnail
,

Virtual 2020 Northern Durum Update Suggests a Range of Yield and Quality

The North Dakota Wheat Commission (NDWC) and the U.S. Durum Growers Association (USDGA) held a virtual “Northern Durum Pre-Harvest Update” Aug. 18 featuring industry experts, farmers and university Extension workers reporting on the 2020 northern durum crop. The hosts recorded the session which is now posted on the USDGA YouTube channel here and on the NDWC event page here.

More than 60 participants heard first-hand accounts about what is expected to be a larger crop by about 12 percent compared to 2019, mainly from increased planted area. Yield and quality likely will vary because early planted fields in North Dakota did not get rain at the ideal time for growth and tillering, while later planted fields caught rain in late June into mid-July at the right time for development. Precipitation across Montana’s western durum production region was more timely and yield potential is expected to be more consistent there.

“USDA’s current forecast for North Dakota is 42.8 bushels per acre, which is above the trend line but less than in 2019,” said Jim Peterson, NDWC Policy and Marketing Director. “Production is estimated now at 62 million bushels, or 1.69 million metric tons, in the state.”

Sam Anderson, Industry Analyst and Marketing Coordinator with the Montana Wheat and Barley Committee, told the participants that farmers there are generally very pleased with their northern durum crops.

“There was more durum and hard red spring wheat seeded because of the extremely wet conditions last fall that kept farmers from putting in hard red winter wheat,” Anderson said. “As of Aug. 1, the average yield forecast is 38.0 bushels per acre, which would put the total production estimate in the state at 22.42 million bushels,” or more than 610,000 metric tons.

Farmers from across North Dakota also reported from their own fields. Mark Birdsall farms in Ward County and showed some later-seeded durum that has “a really good stand … tall with heavy heads,” that is about 3 weeks from maturity. His grandson Owen held plants from the field that stood close to his height of 5 feet (1.524 meters).

Mark Birdsall’s grandson Owen, who stands about 5 feet (1.524 meters) tall holds plants from a later seeded durum crop that almost match his height.

Blake Inman of Berthold, N.D., is USDGA’s President this year, and noted that his durum looked good, particularly the later-seeded fields. He expects to start his harvest in about 3 weeks but was somewhat concerned about variable maturity and late season weed growth that could cause challenges at harvest.

USDGA President and Berthold, N.D., farmer Blake Inman expects good yields from this northern durum field.

Adam Carney farms in Montana’s “Platinum Square,” as the northeast corner of the state is called. With plenty of timely rains, he says his durum “should provide a nice yield and quality.”

The northern durum harvest is currently underway and is a bit more advanced in Montana. U.S. Wheat Associates (USW) will soon begin reporting on northern durum quality as samples are collected and analyzed for USW’s 2020 Harvest Report.

 

/by
Image shows grain rail cars by a country elevator to illustrate USW comments to the Surface Transportation Board.
,

USW Transportation Group Supports Proposed Change in Rail Rate Review

By Claire Hutchins, USW Market Analyst   

U.S. railroads are a crucial part of the most efficient grain supply system in the world. The rail system fulfills an essential logistical function that neither grain handlers nor farmers can perform on their own.  

Yet rail rates and charges paid by wheat shippers make up a large portion of export basis and directly affect the price overseas buyers pay for U.S. wheat. Farmers and the grain companies who rely on domestic rail to ship wheat are also aware that rail rates have increased at a rapid pace at the same time that export competition has also increased.  

U.S. Wheat Associates (USW) and many of its state wheat commission members in 2017 formed a Transportation Working Group (TWG) to address issues of increasing wheat rail tariff rates and U.S. wheat’s competitive market position, especially compared to other commodities shipped from the same destinations to many export terminals.  

The Surface Transportation Board (STB) is a federal regulatory board that has broad economic oversight of U.S. railroads. In early July, the TWG met with STB commissioners to voice support for a possible procedure that would make it easier and more efficient for shippers to challenge unreasonable and uncompetitive rail rates.  

In the past year, the STB introduced the concept of a Final Offer Rate Review (FORR) that would help shippers in this effort. Over a 135–day timeline proposed under FORR: a shipper could challenge the railroad’s rate; both the shipper and the railroad could provide evidence supporting their position on the rate; both parties could suggest alternative rail rates; and if the STB finds the railroad is market dominant and imposed unreasonable rates, relief could be offered to the shipper as the difference between the initial rate and the new, lower rate offered either by the shipper or the railroad.  

The USW TWG filed public comments to the STB in mid-August supporting the Board’s FORR procedure.  

The FORR method offers wheat shippers a new system to challenge unreasonable rail rates. The TWG believes the FORR method is necessary because while farmers have faced depressed farm gate prices, wheat rail tariff rates have increased continually over time at a significantly higher rate than the railroads’ variable cost to ship the wheat (see chart). Additionally, wheat rates are substantially higher than the rates faced by similar commodities shipped over the exact same routes (see chart).  

The TWG applauds the STB for proposing the FORR concept and believes it will help wheat shippers throughout the country challenge unreasonable rail rates which could help U.S. wheat reach overseas customers at more competitive prices.  

USW, state wheat commissions and the farmers we represent look to U.S. railroads as our vital partners in a mutually beneficial effort to increase the value of U.S. wheat to end users. We appreciate their consideration of how fair rail rates can help make U.S. wheat more competitive on the world market. 

/by
thumbnail

USDA Highlights Record Wheat Production, Demand and Ending Stocks

In its latest World Agricultural Supply and Demand Estimates (WASDE) report, USDA provided a look at what is shaping up to be another record year for wheat production, use and stock levels. Worth noting is the fact that USDA expects two traditionally non-exporting countries, China and India, will control more than 61% of the world’s wheat stocks at the end of marketing year 2020/21.

Each month, U.S. Wheat Associates (USW) updates a graphic summary of USDA’s WASDE report that includes global wheat market factors, major country and regional export history and U.S. wheat supply and demand summaries by class.

Here are some notable highlights from USW’s August World Wheat Supply and Demand report:

Global wheat production to hit another record of 766 million metric tons (MMT). USDA expects increases in Australia, Russia, Argentina, Canada and other countries to offset lower production in the European Union and the United States. Global use continues to grow and USDA expects it to reach another record in 2020/21 at 750 MMT.

Source: USDA World Agricultural Supply and Demand Estimates.

Global ending stocks are now projected at a record level of 317 MMT. If realized, that volume would be 5% more than 2019/20 and 14% more than the 5-year average. A more in-depth analysis of ending stocks shows the stockpiling of wheat in China and India continued unabated in large part because of government price guarantees that artificially incentivize wheat production and distort world trade. China’s record 2020/21 beginning stocks of 152 MMT could increase through the marketing year to end at 163 MMT and USDA expects India to hold a record level of 30.7 MMT at the end of 2020/21. China will not export any of its stocks. India, however, may start exporting as it has periodically when its subsidized production exceeds its ability to store and distribute it domestically.

Source: USDA World Agricultural Supply and Demand Estimates.

U.S. ending stocks are expected to decrease 11% from last year, the lowest in 6 years. The expected drop in U.S. ending stocks from 28.4 MMT in 2019/20 to 25.2 MMT in 2020/21 would be the fourth consecutive year of declining U.S. stocks.

Yet profitability from wheat is not a certainty for U.S. farmers. In fact, USDA indicates a decline in the average price U.S. farmers will receive per bushel, from $4.58/bu ($168/MT) last year to $4.50/bu ($165/MT) in 2020/21.

Partly as a result, all wheat area planted for harvest in 2020 was estimated at almost 44.5 million acres (about 17.9 million hectares), down 2% from 2019 and the lowest since USDA records began in 1919.

Source: USDA World Agricultural Supply and Demand Estimates.

/by
thumbnail
,

Dependable People: A Spotlight on the Arizona Grain Research and Promotion Council

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: Arizona Grain Research and Promotion Council
USW Member since 1987

Location: Phoenix, Ariz.
Classes of Wheat Grown: Durum
USW Leadership: Michael Edgar, 2008/09 Chairman

The Arizona Grain Research and Promotion Council utilizes grower check-off funds to aid in marketing for wheat and barley, to participate in research projects and other programs to assist in reducing freshwater consumption, to develop new grain varieties and to improve grain production, harvesting and handling methods. The Council is made up of seven Arizona grain producers appointed by the Governor.

Arizona farmers were growing durum wheat widely in the decades before 1980. As improved varieties were developed to provide consistently excellent semolina for fine quality pasta, growers identified an opportunity to promote their durum overseas. After the AGRPC was authorized by the state legislature in 1985, representatives attended a U.S. Wheat Associates (USW) meeting in 1986 and joined USW in January 1987.

Today, Arizona growers work with USW to promote Desert Durum®, an identity protected by a legal certification mark and owned jointly by the AGRPC and the California Wheat Commission. Desert Durum® is grown only under irrigation in the desert valleys and lowlands of Arizona and California.

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

Arizona’s growers are very favorably leveraged by USW’s promotional efforts around the world. Arizona’s growers receive just as much respect from USW and its export promotional programs as do its large wheat-producing members. This has been the case for 33 years and counting.

About half of the annual production of Desert Durum® (Arizona and California combined) has been exported for many years, with Italy as the perennial leading export destination, followed by Nigeria. One reason for Italy’s continued purchase of Desert Durum® is that Italian pasta makers value the consistent semolina quality of Desert Durum® and are willing to pay more for its grain than for durum from other origins.

USW assists its members in numerous ways to educate growers and the public about the importance and role of wheat production and export in their states. Some of the means of providing such assistance include arranging board teams of state representatives to visit existing and potential importing countries and organizing trade teams of foreign customer representatives to visit U.S. wheat class production regions. USW members greatly appreciate these opportunities to promote their wheat classes for both export domestic audiences.

USW also publishes annual crop quality reports that characterize both Northern durum and Desert Durum® separately. This distinction allows potential customers to verify the uniform large kernel size, low moisture content, and other grain and processing traits of Desert Durum® that produce very desirable semolina quality.

How have Arizona wheat farmers recently connected with overseas customers?

One member of AGRPC has integrated export market development work through USW into his company’s efforts to provide customers with high quality grains for Identity Preserved markets. Michael Edgar, President of Barkley Seeds, Yuma, Ariz., for more than 30 years has participated in several overseas trade missions organized by USW, including his engagement in a trip to Morocco, Italy and Israel in 2016 to promote Desert Durum® and other U.S. wheat classes. Edgar served as an officer with USW including as its Chair in 2008/09.

AGRPC member Michael Edgar has worked for more than 30 years with USW to promote exports of Desert Durum® and all U.S. wheat classes. Here Edgar (right) accepts the USW Chairman’s gavel in 2008 from outgoing Chairman Ron Suppes, a Kansas Wheat commission member and farmer.

Edgar (second from left) joined other farmer directors of USW on a trade mission to Italy, Morocco and Israel in 2016.

AGRPC member Eric Wilkey has traveled to Latin America with a USW board team, joined by growers from Montana and Oklahoma. He learned that the excellent quality of Desert Durum® is recognized by pasta makers in that region.

Arizona and grower members of AGRPC have also been privileged to entertain numerous USW trade teams from most of the regions that have traveled to the U.S. to learn about the country’s durum producers and their production efforts.

AGRPC member Eric Wilkey joined growers from Montana and Oklahoma on a USW trade team to Latin America.

In 2012, Wilkey described the nature of the Desert Durum® industry to members of Group FORAFRIC, a Moroccan milling firm, who made a self-sponsored visit to Arizona and California, facilitated by USW, to investigate the production and purchase of Desert Durum®.

What is happened lately in Arizona that overseas customers should know about?

Arizona hosts several private breeding programs that focus intensely on the varietal traits desired by local wheat growers, such as yield, standability and pest resistance, as well as the quality traits that pasta manufacturing customers covet, including bright amber color, strong gluten strength and high falling number.

Here is a wheat breeding nursery like those maintained by each of the private breeding enterprises in Arizona, which has no publicly supported wheat breeding program. AGRPC does support grain production research conducted by the University of Arizona.

AGRPC recently commissioned a University of Arizona study that reviewed a wide range of literature related to water use by irrigated grain production in a desert environment. The paper concluded that Arizona’s durum wheat production, as currently practiced, has a water footprint that is lower, to much lower, than evidenced in many other durum production regions.

Learn more about the Arizona Grain Research and Promotion Council on its website here and on Facebook.

/by

Think Farm Export Programs Don’t Matter? Think Again.

GET THE REST OF THE STORY

DTN Wheat Detail
DTN Corn Detail

2008-2013 U.S. Wheat Associates. All Rights Reserved
Privacy Policy | Non-Discrimination Statement