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Crop Quality Concerns, Minimal Farmer Selling Drive U.S. Spring Wheat Export Prices

By Claire Hutchins, USW Market Analyst

Despite the potential for reduced U.S. hard red spring (HRS) production year-over-year and crop quality concerns on late-harvested HRS, the United States is still well-stocked to meet overseas customer needs throughout marketing year (MY) 2019/20. As domestic sellers and buyers manage their risk in a dynamic market, however, overseas buyers should expect HRS export basis to increase. U.S. Wheat Associates (USW) wants to provide a closer analysis of this rather unique situation.

Unrelenting precipitation in the Northern Plains continued to challenge HRS wheat producers throughout the 2019 harvest season. Excess moisture on unharvested wheat can lead to low falling numbers, reduced test weights, reduced percentage of DHV and increased DON levels. By Sept. 20, only 76 percent of the country’s spring wheat was harvested compared to 96 percent in 2018.

As markets considered potential quality issues on the rest of the harvest, HRS export prices jumped significantly between Sept. 13 and Sept. 20. The average Gulf HRS 14.0 (12% moisture basis) export basis for nearby delivery increased 20 cents/bu from $1.40/bu to $1.60/bu. In the same week, average Pacific Northwest (PNW) HRS 14.0 export basis for nearby delivery jumped 36 percent from $1.05/bu to $1.65/bu. Market uncertainty carried into the week of Sept. 27 when the country’s HRS harvest was only 87 percent complete, well behind the 5-year average of 99 percent. By Sept. 27, the average Gulf HRS 14.0 export basis increased another 30 cents to $1.90/bu and the average PNW HRS 14.0 export basis added 27 percent to $2.10/bu, both driven by crop quality concerns and minimal farmer selling.

Source: U.S. Wheat Associates Price Report, Oct. 4, 2019

In its October World Agricultural Supply and Demand Estimates (WASDE) report, USDA estimated the United States would produce 15.2 million metric tons (MMT) of HRS in 2019. On Oct. 15, USDA reported harvest was 94 percent complete, still well behind the average completion date of around Sept. 30. Many industry sources now believe the HRS harvest is essentially over as farmers struggle to enter their fields due to ongoing precipitation, including heavy snow in parts of North Dakota and Montana. If realized, this would put the total 2019 U.S. HRS harvest closer to 14.3 MMT, 12 percent lower than last year.

As noted, the United States is still well-stocked to meet export throughout MY 2019/20. Industry experts estimate between 60 and 65 percent of this year’s HRS harvest, about 8.94 MMT, is high-quality, milling grade wheat. USDA estimated 2019 HRS beginning stocks at 7.16 MMT. This puts the total supply of U.S. milling wheat in MY 2019/20, including the remainder of last year’s excellent harvest, at 16.1 MMT.

However, customers should be aware that a large portion of these stocks remain in storage as farmers are reluctant to sell wheat at current local prices. HRS export basis levels continue to climb because producers have several incentives to hold their high-quality HRS into the coming months.

First, Minneapolis Grain Exchange (MGEX) forward futures contracts show a significant carry between December 2019 and December 2020. As of the last trade on Oct. 15, the December 2019 MGEX HRS futures contract (MWEZ19) traded at $5.45/bu while the December 2020 MGEX HRS futures contract (MWEZ20) closed at $5.95/bu. Each MGEX HRS futures contract gains about 10 cents per contract period starting in December 2020, a reason for farmers to hold supplies until cash prices increase.

Source: MGEX

Second, average local basis levels are firming across the Northern Plains, which signals to farmers that the discount between futures values and the cash price they receive could shrink over time. For example, according to DTN data, the average HRS local basis value in North Dakota decreased from negative $0.79/bu to negative $0.72/bu between Sept. 30 and Oct. 15. At one elevator in North Dakota, the gap between the December futures price and the local cash price shrank 42 percent from negative $1.05/bu to $0.65/bu. Over the same period, the local average HRS cash price in North Dakota increased from $4.66/bu to $4.74/bu.

Finally, storage space is not under pressure. Typically, HRS moves into the market around harvest and when storage space is needed for row crop harvest, which in 2019 has seriously affected in the Northern Plains. For example, the heavy snow hit North Dakota with only 1 percent of the corn harvest and 16 percent of the soybean harvest completed. With no other crops coming out, farms and country elevators do not yet need to move much HRS wheat out of storage.

Given this situation, USW believes HRS export basis will continue to rise until local cash prices increase enough to encourage producers to liquidate their HRS stocks into the milling and export channels. The United States has plenty of high-quality HRS available to sell into MY 2019/20, but it will take a significant shift in local cash price dynamics across the Northern Plains for these supplies to reach export terminals.

 

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Revised China Tariff Quota Rules Could Have a Significant Impact on U.S. Wheat Exports

By Dalton Henry, USW Vice President of Policy

While the trade policy headlines from the month of October have mostly been written about a possible “phase one” trade deal between the United States and China, much less has been said about the recently revised and published China Tariff Rate Quota (TRQ) rules for importing wheat and other agricultural products – though their impact could be nearly as significant for the affected commodities.

China’s TRQ rules were expected to be changed because of the World Trade Organization (WTO) ruling last April that found China had not complied with the terms they agreed to upon joining the WTO in 2001. TRQ’s govern the import of specified levels of products at a specific tariff rate that is lower than the global or Most Favored Nation (MFN) rate. Without TRQ, Chinese importers cannot profitably access the world market for wheat, as China’s MFN tariff is 65%. Restricted fill rates on TRQ over the past decades have proven to be the biggest constraint to growing market share for imported wheat in China. Today, imported wheat rarely exceeds 5% of mill use.

Upon accession to the WTO, China established a 9.64 million metric ton (MMT) TRQ for wheat, but that annual TRQ has never fully filled, despite world wheat prices and market conditions conducive to doing just that. When the United States filed the case at the WTO in 2016, they alleged that China had used a series of policies in administering the TRQ that were not “transparent, predictable or fair” and by doing so they, “…limited opportunities for U.S. farmers to export competitively priced, high-quality grains to customers in China.”

That limitation has had effects beyond the impacts on U.S. farmers though, as it also severely limits Chinese millers’ access to high quality wheat grown outside of China. In especially short supply in the domestic market are both soft wheats – often used for pastries and cakes as well at higher protein spring wheats, which are necessary for pizza crusts and hamburger buns.

When the United States won the WTO case, China agreed not to appeal and that they would come into compliance with the ruling by December 2019. That put the case on a relatively fast track to be completed, spanning just under three years since it was filed, much to the joy of U.S. wheat farmers who had long pushed for U.S. government action to force change in the TRQ administration.

U.S. Wheat Associates (USW) has been reviewing the new measures along with the U.S. government and Chinese flour millers. USW Regional Vice President for China and Taiwan, Jeff Coey, has found several of the new rules promising, especially the announcement’s stated goal for both the state and non-state portions of the TRQ to be fully utilized so long as market conditions allow it. Full utilization of both segments of the TRQ hasn’t previously been stated as a goal, leading to significant optimism about access to wheat supplies in 2020. Other positive changes include the allowance for more state-owned entities to apply for TRQ allocations and for non-state-owned entities to apply for the portion of the TRQ that was previously reserved for the state – essentially giving both groups the potential ability to import for the first time.

The TRQ changes and the need for quality wheat supplies may make China a significant wheat importer in 2020. If the changes are in fact implemented, and Chinese millers can respond to market signals, most of the 9.36 MMT TRQ should be used. The net result of that would be China becoming a top world wheat importer, even as they have adequate domestic wheat stocks on hand. From a quality supplier point of view, this opens many opportunities for the United States to provide technical expertise and assistance to our Chinese customers. While allowing those customers access to lower costs and wheat with specialized end-use applications that distinguishes U.S. wheat from domestic supplies.

As with so many issues in trade policy, only time will tell how effective these announced changes will be in allowing Chinese millers to source imported wheat. Both the U.S. government and U.S. Wheat Associates will be closely monitoring the changes to ensure compliance with the WTO ruling, but for now 2020 looks likely to start off on a better foot for U.S. producers and their Chinese customers.

 

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The 2019 Soft White Crop Shines Again

Pacific Northwest (PNW) farmers produced another fine soft white wheat (SW) and white club (WC) crop with good test weight and very acceptable finished product characteristics for 2019. Adequate soil moisture at planting and throughout the growing season did contribute to higher moisture and protein content compared to 2018 but protein remained lower than the 5-year average. In fact, the higher SW protein segment provides opportunities in blends for crackers, Asian noodles, steamed breads, flat breads, and pan breads. Variations in performance data for 2019 compared to 2018 and the 5-year averages are included below for this 6.09 million metric ton (MMT) crop, including 170,000 MT of WC.

That is a summary of results from the U.S. Wheat Associates (USW) 2019 SW and WC crop quality analysis to be posted soon at https://www.uswheat.org/market-and-crop-information/crop-quality/. To complete the analysis, the Wheat Marketing Center (WMC) received and tested SW and WC samples from Idaho, Oregon, and Washington. The Federal Grain Inspection Service (FGIS) graded and ran wheat protein on each sample. WMC conducted wheat, flour, Solvent Retention Capacity (SRC), dough, and finished product tests on composites based on production zones and protein levels. Funding for the annual survey come from state wheat commission USW members and the USDA Foreign Agricultural Service.

As always, buyers are encouraged to review their quality specifications to ensure that their purchases meet their expectations.

Wheat and Grade Data: The Overall average grade of the 2019 SW and WC crops is U.S. No. 1. The average SW test weight of 61.6 lb/bu (81.0 kg/hl) is slightly lower than last year’s 61.7 lb/bu (81.1 kg/hl); WC test weight of 60.6 lb/bu (79.7 kg/hl) is slightly higher than 2018’s 60.4 lb/bu (79.5 kg/hl). SW has fewer damaged kernels, fewer shrunken and broken kernels, and less foreign material than the 5-year averages. WC shrunken and broken kernel percentages are lower than last year and the 5-year averages. WC foreign material is higher than last year and 5-year averages. WC dockage is slightly higher than last year and the 5-year averages. Other WC grade factors are similar to past averages. Wheat moisture for both SW and WC is above last year and the 5-year averages.

The Overall SW and WC wheat protein content (12% mb) of 10.0 and 9.8%, respectively, are 0.7 and 0.8 percentage points above the respective 2018 values, but below those of 5-year averages. SW and WC wheat ash contents (14% moisture basis) are similar to last year and the 5-year averages. Thousand kernel weight for SW is above 2018 and the 5-year average levels; WC is lower than last year and higher than the 5-year average. SW kernel diameter is the same as last year, but larger than the 5-year average. WC kernel diameter is smaller than last year, but larger than the 5-year average. Falling number values are 317 sec for SW and 355 sec for WC.

Flour, Dough, and Bake Data: The 2019 Buhler Laboratory Mill flour extraction average for SW and WC at 72.1% and 72.8% respectively are lower than last year and the 5-year averages. Flour protein content (14% mb) is 8.9% for both SW and WC. Flour ash content (14% mb) for both SW and WC are higher than last year but the same as 5-year averages. Amylograph peak viscosity value for SW is 485 BU, slightly lower than last year; WC is 523 BU, much higher than last year. Starch damage value is slightly higher for SW than last year but lower than the 5-year averages. WC starch damage is lower than last year and the 5-year averages.

Solvent retention capacity (SRC) water values for SW and WC are less than last year and 5-year averages. SW lactic acid and sodium carbonate values are similar to last year and the 5-year averages. WC lactic acid values are higher than last year, but same as 5-year average. SW and WC gluten performance index (GPI) values are similar to last year and 5-year averages. SW farinograph peak and stability times are shorter than last year and the 5-year averages. WC peak time is slightly longer than last year and 5-year averages. SW and WC water absorptions are similar to last year, but less than the 5-year averages. The SW and WC alveograph L values are considerably longer than last year and 5-year averages. SW and WC extensograph resistance is larger than last year and the 5-year averages. SW and WC extensibility values are longer than last year and the 5-year averages.

Sponge cake volume for SW at 1104 cc is larger than last year, but smaller than the 5-year average, and the total score is slightly lower than last year and the 5-year averages. The sponge cake volume for WC at 1141 cc is slightly larger than last year, but smaller than the 5-year average, and total score the same as last year and much higher than the 5-year averages. SW and WC cookie diameter values are smaller than last year, but similar to the 5-year averages. SW and WC cookie spread factors are more than last year and the 5-year averages.

Chinese Southern-Type Steamed Bread: In southern-type steamed bread compared to a control flour, the 2019 SW and WC specific volumes are slightly less than last year and the 5-year averages. The SW total score is higher than last year and the 5-year averages; WC is the same as last year, but lower than the 5-year average.

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USW Video Team Focuses on Supply Chain and Soft White Wheat Seeding in Oregon

Every year, several trade delegations of overseas buyers, millers, bakers and government officials visit the Pacific Northwest (PNW). Its proximity to many stops along the wheat supply chain allows customers to witness the reliability and transparency of the U.S. grain marketing system firsthand. This includes Padget Ranches, on the arid Columbia Plateau above the John Day River, where Darren Padget’s family has farmed since 1910. As one of many U.S. farm families who contribute to the wholesome quality of U.S. wheat for dozens of food products around the world, U.S. Wheat Associates (USW) traveled to Oregon to include Padget’s story and the PNW supply chain in a video it is producing. With previous visits to Kansas, Ohio, Washington state, North Dakota and Oklahoma the project will be completed in 2020 and include additional farm families and information about the U.S. wheat supply system.

 

Darren Padget

Darren Padget stops for an interview during seeding.

Today, Darren farms with his wife Brenda and their son Logan, as well as his dad Dale, a retired wheat farmer who recently participated in his 67th wheat harvest. Their dryland wheat and summer fallow rotation currently produces registered and certified seed on 3,400 acres annually. Darren started his involvement in wheat leadership with the Oregon Wheat Grower’s League and the National Association of Wheat Growers, before being appointed to the Oregon Wheat Commission by the state’s Director of Agriculture. Currently, he serves on the USW Board of Directors as Vice Chairman and is slated to serve as Chairman in 2020/21.

Darren Padget and USW Director of Communications Amanda Spoo

USW and the video crew also visited United Grain Corporation (UGC) in Vancouver, Wash., to speak with UGC President and CEO Augusto Bassanini – a long-time friend of USW – and capture footage of the receiving and export process at UGC’s export terminal. The team’s final stop on this trip was at the Federal Grain Inspection Service (FGIS) in Portland, Ore., to capture footage demonstrating the U.S. wheat industry’s differential advantage in its effort to consistent meet high quality grain standards.

USW with its video crew and creative agency, 502, at United Grain Corporation.

Capturing barge and rail footage along the Columbia River.

USW wants to thank Oregon Wheat’s Chief Executive Officer Blake Rowe and Director of Communications Shanna Hamilton for their help and participation in this project, as well as UGC and FGIS staff for hosting us at their facilities. And many thanks to the Padget family for graciously taking the time out of their day to share their story and welcome us to their ranch.

Federal Grain Inspection Service

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Good Milling and End-Product Performance is Available in 2019 Hard Red Winter Wheat Supplies

Unexpectedly high yields from the U.S. Plains to the Pacific Northwest (PNW) resulted in lower wheat and flour protein in the 2019 hard red winter (HRW) wheat crop, but the crop exhibits good milling and end-product characteristics. Even though mixing times and tolerances are shorter than the five-year averages, the loaf volumes achieved indicate there is adequate protein quality to make quality bread. This crop meets or exceeds typical HRW contract specifications and should provide high value to the customer. The 2019 HRW crop can be characterized as clean and sound with very good milling properties, but with below average protein content still capable of producing good end products.

That is a summary of the major regional results for HRW from the upcoming U.S. Wheat Associates (USW) 2019 Crop Quality Report. California HRW data is reported separately. Plains Grains, Inc., in cooperation with the USDA/ARS Hard Winter Wheat Quality Lab, Manhattan, Kan., analyzed 494 HRW samples collected from grain elevators in Texas, Oklahoma, Kansas, Colorado, Nebraska, Wyoming, South Dakota, Montana, Washington, Oregon and Idaho. Funding for the annual survey come from USW member state wheat commissions and the USDA Foreign Agricultural Service.

Weather and Harvest: The 2019 HRW planted area represents near historic 100-year lows, continuing the trend of recent years. Despite stagnant planted area, HRW production is estimated at 22.9 MMT (840 mil bu), a 27% increase over 2018. USDA estimates the HRW supply (excluding imports) is the third highest in the last 20 years.

Various climatic conditions challenged this crop. However, moisture remained adequate, or even excessive, in the central and southern production areas and resulted in better than expected yields, lower than average protein, but otherwise good milling and processing characteristics. The U.S. Southern, Central and Northern Plains experienced an unusually wet spring, slowing crop maturity and uniformly delaying the beginning of harvest two weeks or more. At the same time, the PNW and Montana experienced abnormal swings in temperature and severe storms. Despite intense and prolonged moisture during later stages of crop development, disease and insect pressure in most production areas was unusually low.  Once harvest began, it progressed normally in most production areas.

Wheat and Grade Data: The 2019 crop has generally very good kernel characteristics. Overall 93% of Composite, 91% of Gulf-Tributary and 97% of PNW-Tributary samples graded U.S. No. 2 or better. Average test weight of 60.6 lb/bu (79.6 kg/hl) is below 2018 but above the 5-year average. Average dockage (0.5%), total defects (1.3%), foreign material (0.2%) and shrunken and broken (0.8%) are all equal to better than 2018 and the 5-year averages. Average thousand kernel weight of 32.7 g significantly exceeds last year and the 5-year average (both 30.7 g). Kernel characteristics, including test weight, thousand kernel weight and kernel diameter are very good and consistent with favorable growing conditions. However, growing conditions favoring kernel size and test weight are not conducive to accumulating protein, which is below last year and the five-year averages. The average wheat falling number is 378 sec, indicative of sound wheat.

Flour and Baking Data: The Buhler laboratory flour yield average is 74.0%, comparable to the 2018 average of 75.1% and the 5-year average of 75.5%. The 2019 flour ash of 0.48% (14% mb) is comparable to last year’s 0.44% but significantly lower than the 5-year average of 0.55% due to milling adjustments made in 2018. The alveograph W value of 223 10-4 J is significantly lower than last year but comparable to the 5-year average of 234 10-4 J. Farinograph peak and stability times, 3.3 min and 7.3 min, respectively, are significantly lower than last year’s 5.2 min and 12.2 min. Average bake absorption is 62.7%, below the 63.7% value for 2018 but comparable to the 5-year average. Overall loaf volume averaged 863 cc, well below last year’s 901 cc, but comparable to the 5-year average of 851 cc.

Complete 2019 crop quality data for all six U.S. wheat classes will soon be available online and at annual USW Crop Quality Seminars.

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It Takes Some PhDs to Bake a Cake

By Michael Anderson, USW Assistant Director, West Coast Office

Reading the directions on the back of a cake mix box and adding the ingredients step by step may seem simple enough but it is no easy feat to ensure the consumer ends up with a consistent cake from box to box. How do baked good brands stay the same store to store, how does a cake get its perfect lofted middle, how do crackers keep their shape? The answer is simple: from science. Yet the means of getting there is anything but simple.

Two familiar names leading the discussion on U.S. wheat quality characteristics and versatility through education and training are Dr. Jayne Bock, Technical Director, and Dr. Lingzhu Deng, Food Scientist, of the Wheat Marketing Center, Portland, Oregon.

Dr. Jayne Bock, Technical Director, Wheat Marketing Center

Both Dr. Bock and Dr. Deng have food science backgrounds and roots in farming. Dr. Bock grew up in Kansas where her family had a wheat farm and Dr. Deng grew up helping her uncles on their rice farm in Southern China. Deng said that the poor growing practices in the area inspired her to find a better way which as an accomplished cereal scientist, she has.

Dr. Lingzhu Deng, Food Scientist, Wheat Marketing Center

These scientists say they enjoy research and academia, which is key to a job tasked with improving end-product quality. Their role at the Wheat Marketing Center is to improve the understanding of wheat functionality and end use characteristics. They assist overseas customers with hands-on opportunities, allowing visiting technical teams to objectively judge the quality and functionality of a given product.

Many markets that purchase U.S. wheat are well developed with a sophisticated knowledge of what characteristics they are looking for. Those customers however, may be interested in new food trends and the ingredients needed to produce them. Technicians from markets where demand for wheat foods is still less developed may not be as aware of the importance of functionality as it relates to end-product quality or cost. Bock and Deng are eager to help customers develop the answers they seek.

Many experienced bakers know that quality products start with quality flour. Flour from a strong, extensible hard wheat is great for bread, but a mellower soft wheat makes the best cake flour. High ash content may make good bread products, but you do not want it in your cake. Selecting the right flour ingredient is complicated, so it makes sense that it takes highly trained PhDs to help build the practical knowledge needed for any type of product.

As wheat food demand sets new records across the globe almost every year, businesses look for ways to make more products that are attractive to more consumer market segments. Automation has become an increasingly important component of the baking industry and, as bakers try to keep up with and expand demand for their products, knowledge of wheat quality characteristics and consistency becomes more important.

Dr. Jayne Bock discussing wheat quality and sustainable production at the 2019 USW World Staff Conference.

There is a lot of thought that goes into something that seems as simple as a cake or a pizza. At the Wheat Marketing Center, it takes two PhDs plus a successful support staff to help keep the wheat flour and foods industry advancing and help U.S. wheat customers around the world develop a more sophisticated understanding of ingredients and processing. It is an understanding that Dr. Bock and Dr. Deng are eager to share.

Dr. Lingzhu Deng is a Food Scientist at the Wheat Marketing Center.

For more information about how the Wheat Marketing Center provides training opportunities and product development assistance, visit its website at https://www.wmcinc.org/. In addition, you can read a U.S. Wheat Associates (USW) profile of the Wheat Marketing Center online at https://bit.ly/2MPSOYw.

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U.S. Wheat Farmers Welcome New Chinese Imports, Hope for Long-Term Solutions

On Oct. 3, USDA announced that private exporting companies reported export sales of 130,000 metric tons (MT) of U.S. “white wheat” to China. That is welcome news for U.S. wheat farmers.

Chinese imports of U.S. soft white (SW), hard red spring (HRS) and hard red winter (HRW) wheat classes to China were trending up but abruptly ended when China implemented retaliatory tariffs on U.S. wheat and other agricultural commodities in March 2018. Private purchases of approximately 32,000 MT of HRS and 8,000 MT of SW have been the only sale since then.

“We are glad for this purchase ahead of the latest round of trade discussions between the U.S. and China,” said Doug Goyings, USW Chairman and a wheat farmer from Paulding, Ohio. “It remains to be seen if this is the start of a return to steady purchases by China. In the long run, that is what our farmers need along with good progress toward an agreement and continued support for the rules-based trading system that has given them access to more markets.”

USW Chairman Doug Goyings.

“Even though China has huge domestic wheat stocks, they were buying more U.S. wheat because they need it to meet the growing demand there for higher quality wheat foods, until their government retaliated against U.S. tariffs on Chinese goods,” said Vince Peterson, President of U.S. Wheat Associates (USW), the organization funded by farmers and the U.S. government to promote wheat exports. “So, we hope the new purchases signal a potential turn-around.”

USW President Vince Peterson.

Predictable access to markets is key for USW and their customers. Beyond the retaliatory tariffs that China has applied to U.S. commodities, China has been a challenging wheat importer historically. In recent dispute settlement cases at the WTO, the Office of the U.S. Trade Representative (USTR) demonstrated that, with respect to wheat, China’s government has consistently violated the trade rules it agreed to when it joined the WTO. The country’s domestic support for wheat substantially exceeds its WTO limits and it has never fully met its tariff rate quota for imported wheat. Those two policies have serious effects on farm gate wheat prices and trade. Going forward, USW is optimistic that China will eventually comply with the WTO rulings to facilitate more open trade in wheat.

Read more: U.S. Wheat Farmers Have Not Abandoned Customer Service in China

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Wheat Industry News

Recent news and highlights from around the wheat industry.

Speaking of Wheat: “The U.S. farmer is still holding about half a [hard red] spring wheat crop from last year that will provide some decent quality supplies. Canada, on the other hand, was an aggressive exporter of wheat last year; a poor quality crop will reduce their exportable supplies in this marketing year.” – Michael Krueger, Independent Market Analyst.

Columbia River Reopens to Barge Traffic. A critical navigation lock on the lower Columbia River reopened Sept. 27, according to the U.S. Army Corps of Engineers. That means barges full of grain and other materials waiting to get from Inland Northwest ports to Vancouver and Portland and out to export markets can resume. Boat traffic on the international trade route has been stopped since September 5 to repair a lock at Bonneville Dam. Crews with the Army Corps’ Portland division have been working around-the-clock the past three weeks to open the channel. Read more here.

New Partner in New Grain Trade Initiative. Glencore Agriculture Ltd. is joining several other major grain traders in the industry’s initiative to modernize global agricultural commodity trade operations. The initiative is looking at such new technologies as blockchain and artificial intelligence to automate grain and oilseed post-trade execution processes, reducing costs needed to move agricultural and food products around the globe. The group is projecting launch of a new platform in the second half of 2020 subject to regulatory approval. Read more from a joint news release here.

More Women Are Running U.S. Farms. According to the most recent USDA Census of Agriculture, over the last five years, the number of female farmers in the United States has increased, while the number of male farmers declined. Women now represent 36% of farmers, a 27% increase from 2012. Now, 56% of farms have at least one female producer, although only 38% have a female primary producer, the person who makes the most decisions on the farm. USW looks forward to sharing the story of several women engaged in wheat production in 2020. Currently, two female farm owners serve as directors of USW: Rhonda K. Larson grows HRS wheat in northwestern Minnesota and was elected as USW Secretary-Treasurer for 2019/20; Denise Conover grows HRS and HRW wheat in south central Montana. Past Chairperson Janice Mattson of Chester, Mont., served as USW director and an officer, holding the chair in 2009/10.

Oregon Wheat Seeking New Chief Executive Officer. The Oregon Wheat Commission and Oregon Wheat Growers League are seeking a dynamic and proven Chief Executive Officer (CEO) to provide leadership, vision, focus, and unity to their organizations, following the announcement that Blake Rowe plans to retire from the position. The CEO will serve as the principal administrator of both the OWC and OWGL, operating under the direction of the OWC and the Board of Directors of the OWGL, respectively. The full job announcement and position description can be found at www.owgl.org/careers. Applications must be submitted by 4:00 PM on Oct. 20, 2019.

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 page at https://www.facebook.com/uswheat for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter at www.twitter.com/uswheatassoc and video stories at https://www.youtube.com/uswheatassociates.

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Production Update: USDA Confirms High U.S. Wheat Yields Offset Reduced Planted Area

By Claire Hutchins, USW Market Analyst

On Sept. 30, USDA released its Small Grains Summary noting that 2019/20 U.S. wheat production increased to 53.3 million metric tons (MMT), up 4 percent from last year due to significant improvements in yield despite lower planted area. While this is still 2 percent below the 5-year average of 54.2 MMT, the production volume coupled with significant carry-in stocks ensure that the U.S. wheat remains the most reliable supply for 2019/20. Here is a look at 2019/20 U.S. wheat production by class.

USDA’s Small Grains Summary indicates U.S. wheat yields offset a reduced planted area for 2019/20.

Hard Red Winter (HRW). Last fall, U.S. farmers decreased HRW planting in the U.S. Southern and Central Plans due to extremely wet conditions which delayed the soybean harvest and in turn HRW planting. A slight uptick in planted area in Montana and South Dakota partially offset reductions in other states. Total U.S. HRW planted area fell 2 percent year-over-year to 22.7 million acres (9.19 million hectares), 15 percent below the 5-year average of 26.6 million acres (10.8 million hectares). Cool temperatures and favorable moisture during the growing season boosted HRW yields substantially year-over-year in Kansas, Nebraska and Oklahoma. In Kansas, the largest HRW producing state, a higher average yield offset lower planted area and production increased 22 percent over 2018/19 levels to 338 million bushels (9.17 MMT). USDA estimates total 2019/20 HRW production increased 26 percent over last year to 834 million bushels (22.7 MMT).

Hard Red Spring (HRS). Cold soil temperatures and excessive moisture in certain areas delayed HRS planting across much of the Northern Plains. USDA says U.S. farmers planted 12.0 million acres (4.86 million hectares), 6% below last year but slightly higher than the 5-year average of 11.8 million acres (4.78 million hectares). A cool summer boosted HRS yields in Montana and South Dakota. Heavy, persistent rain has severely delayed the 2019 HRS harvest. According to USDA, as of September 30, U.S. spring wheat harvest is only 90 percent complete compared to the 5-year average of 99 percent. USDA estimates 2019 HRS production will total 558 million bushels (15.2 MMT), 5 percent lower than 2018, but 8 percent higher than the 5-year average of 518 million bushels (14.1 MMT).

Soft Red Winter (SRW). Last fall, U.S. farmers planted 5.54 million acres (2.24 million hectares) of SRW, down 6 percent from the year prior and 18 percent from the 5-year average of 6.7 million acres (2.71 million hectares) due to low wheat prices compared to soybeans and delayed planting. Excessive moisture continued through the growing season and slowed harvest progress in many places. USDA reported SRW production totaled 239 million bushels (6.50 MMT), down 16 percent from last year and 31 percent below the 5-year average of 348 million bushels (9.46 MMT).

White Wheat (Soft White, Club and Hard White). U.S. white wheat planted area fell 4 percent below 2018/19 levels to 3.95 million acres (1.60 million hectares). Mild growing conditions and good soil moisture in the Pacific Northwest (PNW) supported above-average winter and spring wheat yields. The average white winter wheat yield in Oregon increased 1.0 bu/acre (.067 MT/hectare) over last year to 68.0 bu/acre (4.57 MT/hectare) in 2019. Slightly lower planted area and above-average yields kept U.S. white wheat production stable year-over-year at 273 million bushels (7.43 MMT) and 8 percent higher than the 5-year average of 252 million bushels (6.87 MMT).

Durum. Anticipating less-than break even prices, farmers planted less durum area this year. In its Small Grains 2019 Summary, USDA estimated 1.34 million acres (542,000 hectares) were planted to durum, down 35 percent from 2018/19 and 32 percent below the 5-year average of 2.0 million acres (664,000 hectares). USDA estimated total 2019/20 U.S. durum production at 57.3 million bushels (1.57 MMT), down 26 percent from last year. Cool, wet weather boosted yields in the U.S. Northern plains. Both Montana and North Dakota durum yield potential reached a record high in 2019. The country’s average durum yield also reached a record high of 44.8 bu/acre (3.01 MT/hectare), up 13 percent from last year. However, as with HRS, a significant portion of the northern durum crop has not yet been harvested. Desert Durum® production fell 46 percent year-over year to 5.67 million bushels (154,000 MT) due to sharply lower planted area in both Arizona and California.

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Expanding Wheat Breeding Resources for Better End-Use Quality, Disease Resistance

The International Maize and Wheat Improvement Center (CIMMYT) reports that an international team of scientists has identified significant new chromosomal regions for wheat yield and disease resistance and created a freely-available collection of genetic information and markers for more than 40,000 wheat lines.

Reported recently in Nature Genetics, CIMMYT says the results will speed up global efforts to breed more productive and climate-resilient varieties of bread wheat, a critical crop for world food security that is under threat from rising temperatures, rapidly-evolving fungal pathogens, and more frequent droughts, according to Philomin Juliana, wheat scientist at CIMMYT and first author of the new study.

“This work directly connects the wheat genome reference map [published in 2018] with wheat lines and extensive field data from CIMMYT’s global wheat breeding network,” said Juliana. “That network in turn links to over 200 breeding programs and research centers worldwide and contributes to yield and other key traits in varieties sown on nearly half the world’s wheat lands.”

CIMMYT noted that the study found genomic selection could be particularly effective in breeding for wheat end-use quality and for resistance to stem rust disease, whose causal pathogen has been evolving and spreading in the form of highly-virulent new races.

Bread wheat improvement using genomic tools will be critical to accelerate genetic gains in the crop’s yield, disease resistance, and climate resilience. (Photo: Marcia MacNeil/CIMMYT)

“Farmers and societies today face new challenges to feed rising and rapidly-urbanizing populations, and wheat epitomizes the issues,” said Ravi Singh, CIMMYT wheat breeder and corresponding author of the study. “Higher temperatures are holding back yields in major wheat-growing areas, extreme weather events are common, crop diseases are spreading and becoming more virulent, and soil and water are being depleted.”

Juliana said the study results help pave the way to apply genomic selection, an approach that has transformed dairy cow husbandry, for more efficient wheat breeding.

“Molecular markers are getting cheaper to use; meanwhile, it is very costly to do field testing and selection involving many thousands of wheat plants over successive generations,” Juliana said. “Genome-wide marker-based selection can help breeders to precisely identify good lines in early breeding generations and to test plantlets in greenhouses, thereby complementing and streamlining field testing.”

The new study also documents the effectiveness of the global public breeding efforts by CIMMYT and partners, showing that improved wheat varieties from this work have accumulated multiple gene variants that favor higher yields, according to Hans-Joachim Braun, director of CIMMYT’s global wheat program.

“This international collaboration, which is the world’s largest publicly-funded wheat breeding program, benefits farmers worldwide and offers high-quality wheat lines that are released directly to farmers in countries, such as Afghanistan, that are unable to run a full-fledged wheat breeding program,” Braun explained.

The study results are expected to support future gene discovery, molecular breeding, and gene editing in wheat, Braun said.

USAID’s Feed the Future Innovation Lab for Applied Wheat Genomics funded the study. Contributing to the research are teams engaged in wheat improvement at CIMMYT, and the lab of Jesse Poland, Associate Professor at Kansas State University and Director of the USAID Applied Wheat Genomics Innovation Lab.

Photo above: U.S. Department of Agriculture, Crop Bioprotection Research.

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