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Promoting Wheat Around the World

As U.S. Wheat Associates (USW) President Vince Peterson often says, at any given hour of the day there is someone, somewhere, talking about the quality, reliability and value of U.S. wheat. Wheat Letter wants to share some of the ways USW was working the past few months to promote all six classes of U.S. wheat in an ever more complex world grain market.

Morocco, Algeria and Tunisia. In October, USW organized a Maghreb cake course, the first of its kind in Morocco, for quality and research and development participants representing biscuit and cake manufacturers in Morocco, Algeria and Tunisia. The course focused on how to best utilize U.S. soft red winter (SRW) and soft white (SW) wheat and the use of solvent retention capacity (SRC) analysis to measure flour quality and functionality. A practical, hands-on session allowed participants to test different cake recipes with a variation of flour types and ingredients. Participants also were given an overview of biscuit, cake and wafer industrial production lines and discussed the importance of ingredient quality in minimizing breakdowns in a cake line.

Indonesia. The Federal Grain Inspection Service (FGIS) and USW Singapore Office conducted a week of hands-on wheat grading workshops for flour milling companies in Indonesia in mid-September. Barry Gomoll, Grain Marketing Specialist from FGIS’s International Affairs Division, traveled with Matt Weimar, USW Regional Vice President, to meet with more than 100 personnel from four major Indonesian milling companies. The workshops focused on an overview of FGIS and wheat grading procedures, as well as world and U.S. supply and demand, 2018 U.S. wheat quality and USW online resources.

South America. More than 450 participants from 30 countries, including Brazil, Bolivia, Chile, Colombia, Ecuador and Peru, attended the 2018 Latin American Industrial Millers Association (ALIM) conference in Puerto Varas, Chile, Nov. 11 to 14. USW President Vince Peterson presented insight into the global wheat market situation and the current U.S. political situation, while Regional Director Miguel Galdós from the USW Santiago Office spoke on current trends in industrial bread production. Multiple USW staff, USW Vice Chairman Doug Goyings and representatives from the Kansas Wheat Commission and Washington Grain Commission also attended and took the opportunity to meet in person with many U.S. wheat customers.

Mexico. In October, USW Baking Consultant Didier Rosada traveled to Mexico City, Mexico, to conduct a baking seminar with one of Mexico’s largest bakeries. With assistance from USW Technical Consultant Marcelo Mitre, Rosada introduce nice different products and instructed the bakery on different uses of pre-ferments in an industrial environment. The pair also took the opportunity to visit a few smaller, artisan bakers, to learn more about the segment and help the customers troubleshoot various challenges.

Korea. USW Food/Bakery Technologist Shin Hak (David) Oh presented at a Whole Wheat Flour Seminar, hosted by Korean Master Bakers Association (KOMBA) and Korea Flour Mills Industrial Association (KOFMIA) for bakers in the Seoul area. Oh shared results of his recent research which focused on alternate flour blend formulations for baguettes using U.S. wheat to improve product quality at a competitive price.

Taiwan. In November, members of the USW staff and Washington Grain Commission representative Mike Carstensen attended the 56th anniversary celebration for the China Grain Products Research & Development Institute (CGPRDI) in Taipei. The celebration included the dedication of a new baking training center building and the 2018 Creative Chinese Fermentative Baking Contest, co-sponsored by CGPRDI and the USW Taipei Office. USW Specialist Dr. Ting Liu was invited to speak and gave a presentation on “Sprouted Wheat – A New Trend in Grain Products.” CGPRDI is a leader in training programs for baking and Chinese traditional food products as well as grain research, technical service and analysis in Taiwan. Carstensen and the USW team participated directly in each activity.

USW Transitions. Chad Weigand recently started his new position as Assistant Regional Director in Sub-Sahara Africa, based in Cape Town. Weigand joined USW in 2009 as Market Analyst before transferring to Mexico City as Assistant Regional Director, Mexican, Central American and Caribbean Region, in 2011. He earned a bachelor’s degree in international relations and business administration from the University of San Diego and a master’s degree in international affairs from Columbia University. Weigand spent two years in the Peace Corps as an agribusiness specialist in Ecuador and completed an internship with the Office of Trade Programs at USDA’s Foreign Agricultural Service.

Current USW Market Analyst Stephanie Bryant-Erdmann will replace Weigand as Assistant Regional Director in Mexico City early in 2019. Claire Hutchins joined the export market development organization as Market Analyst Dec. 3, 2018, in the Arlington, Va. Headquarters Office.

Bryant-Erdmann joined USW as Programs Manager in 2014. She grew up working on her family’s Nebraska cattle ranch and earned a bachelor’s degree in agricultural education at the University of Nebraska-Lincoln and a master’s degree from Cornell University’s Institute for Public Affairs. She also had an internship at the U.S. Department of Commerce’s Trade Information Center where she helped create educational materials for U.S. organizations looking to export products and services.

Hutchins was raised on an irrigated wheat, soy and alfalfa farm in the high desert near Fruita, Colo. She earned bachelor’s and master’s degrees in Chinese language, history and art history from the University of Pennsylvania, worked on small farms on the East Coast and recently completed a master’s program in agricultural economics at Utah State University. Hutchins also worked as a Government Affairs Intern at Syngenta’s Washington, D.C., office.

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Wheat Industry News

Recent news and highlights from around the wheat industry.

Quote of the Week: “Everywhere I traveled with Alvaro de la Fuente, his customers always welcomed him as family. Alvaro and his lovely wife Betsy always did the same for colleagues, U.S. wheat farmers and state wheat commission representatives who were lucky enough to visit them and his team in Santiago. That personal warmth and the consistent results of his work, I think, will be Alvaro’s lasting example and legacy.”– USW President Vince Peterson in celebrating the career of now retired Regional Vice President Alvaro de la Fuente.

Disputing Grain-Free Diets. At a recent Oldways Whole Grains Council conference in the United States, several speakers provided reasons to increase whole grain intake and steer clear of grain-free diets. “There are hundreds of studies that substantiate the health benefits of whole grains,” said Kathleen Zelman, director of nutrition for WebMD. Studies have linked whole grain intake to a healtheri gut micro biome, a lower risk of stroke and a lower risk of colon cancer, she noted. Click here to read coverage of the conference by “BakingBusiness.com.”

Farm Bill Status. Today House and Senate Agriculture Committee leaders made the following announcement on the state of 2018 U.S. Farm Bill negotiations: “We’re pleased to announce that we’ve reached an agreement in principle on the 2018 Farm Bill. We are working to finalize legal and report language as well as CBO [Congressional Budget Office] scores, but we still have more work to do. We are committed to delivering a new farm bill to America as quickly as possible.” USW trade servicing, technical support and other activities with overseas customers are funded partially by export market development programs included in U.S. farm legislation.

2018 National Wheat Yield Contest. Earlier this month, the National Wheat Foundation (NWF) announced the national and state winners for the 2018 National Wheat Yield Contest. The contest recognizes winners in two primary competition categories: winter wheat and spring wheat, and two subcategories: dryland and irrigated. The 2018 Contest included 82 growers from 23 states. View the list of national winners here and the list of state winners here.

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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Alvaro de la Fuente: Celebrating His Career and Legacy

The highlights of Great Plains Wheat (GPW) activities promoting U.S. wheat in South America in marketing year 1976/77 included a baking seminar, equipment donations to the Chilean Milling School, translation of GPW’s “U.S. Wheat” bulletin into Spanish and the hiring of a new Grain Marketing Specialist named Alvaro de la Fuente by Regional Director Don Schultz in the Caracas, Venezuela, regional office. In 1978/79, this young Peruvian national moved to Santiago, Chile, which would be his base for the next 39 years, to serve with GPW Regional Director Robert Drynan. He was named Regional Director with the newly formed U.S. Wheat Associates (USW) by 1981.

 

Looking back on Alvaro de la Fuente’s long and successful career as he retires from USW as Regional Vice President, South America, is a study in how global wheat markets have changed. In 1977, there were no private wheat buyers in South America. Alvaro in fact came to GPW from a position with the government of Peru where he was responsible for purchases and imports of all bulk food commodities including wheat, managing an annual budget of US$380 million. Prior to that, he managed ocean freights for the same commodities.

 

That experience, along with his truly international upbringing as the child of parents in diplomatic service and his Louisiana State University bachelor’s degree in International Trade and Finance, were very valuable not only for his work with government wheat buyers, but also to successfully navigate the eventual shift to private wheat purchases in South America.

 

“That transition happened over the first 10 to 15 years of Alvaro’s career with U.S. Wheat Associates,” said USW President Vince Peterson. “The millers who had relied on the government now had to evaluate wheat quality, tender for the specifications they needed, arrange financing and shipping. Alvaro’s knowledge was ideal for the time and helped build a strong base of demand for U.S. wheat.”

 

Early on, most South American flour mills were relatively small and family owned, and Alvaro’s work was most welcome. But grain marketing skills were only one part of Alvaro’s success in the region. The value of his professional partnership along with his friendly, generous nature helped build beneficial customer relationships that endure to this day.

 

Alvaro can count among his many achievements helping to organize ALIM, the Latin American Industrial Millers Association in 1980. ALIM eventually granted Alvaro honorary membership in recognition of his founding efforts and contributions to the region’s milling industry. Over the years, he hired and helped train many of the colleagues who are now capably carrying on his work in the South American region and around the world.

 

“Everywhere I traveled with Alvaro, his customers always welcomed him as family,” Peterson said. “Alvaro and his lovely wife Betsy always did the same for colleagues, U.S. wheat farmers and state wheat commission representatives who were lucky enough to visit them and his team in Santiago. That personal warmth and the consistent results of his work, I think, will be Alvaro’s lasting example and legacy.”

 

All of us at U.S. Wheat Associates thank Alvaro for his work and friendship and wish him and his family a long and happy retirement.

 

Muchas gracias, Don Álvaro!

 

 

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IGC Data Shows U.S. Wheat Prices in a Rare Position

By Stephanie Bryant-Erdmann, USW Market Analyst

 

The expected turn to U.S. wheat supplies appears to be underway.

 

U.S. wheat exports to price sensitive markets and to typically self-sustaining markets are on the rise due to increased price competitiveness. Fueling this demand for U.S. wheat is, in part, shrinking wheat supplies, especially of high-quality milling wheat following decreased production in half of the world’s major wheat exporters — including Australia, the European Union (EU), Russia and Ukraine. The shrinking supplies in these countries have lifted their domestic and export wheat prices significantly over the past few months. At the same time, a large, high-quality crop pressured U.S. wheat prices lower, resulting in a convergence not seen for several years.

 

According to International Grains Council (IGC) data, free-on-board (fob) French wheat prices rose 11 percent or $23 per metric ton (MT) from the start of the 2018/19 marketing year (beginning on June 1). Russian 4th Grade fob wheat prices have increased $15 per MT, and Australian fob wheat prices have increased an average $13 per MT. IGC data shows U.S. fob wheat prices slipping an average 8 percent due to the large, high-quality crop.

 

As of Nov. 22, IGC data shows U.S. wheat is now at a better value than all the major competitor pairings. U.S. soft red winter (SRW) is the best value milling wheat in the world at $216 per MT, $10 per MT below Russian 4th Grade wheat. U.S. 11.5 percent protein (12 percent moisture basis) hard red winter (HRW) is valued at an average $3 per MT below French wheat. U.S. 14 percent protein (12 percent moisture basis) hard red spring (HRS) from the Pacific Northwest (PNW) is an average $258 per MT, $4 per MT below Canadian CWRS from Vancouver; and U.S. SW from the PNW is an average $47 per MT less than Australian wheat, which is now the most expensive wheat in the world due to the devastating drought they have suffered.

 

The convergence in prices has resulted in increased sales of U.S. wheat as customers seek to secure supplies. Notably, on Nov. 26, USDA reported U.S. export sales of 120,000 MT of SRW to Egypt. The announcement followed an earlier General Authority for Supply Commodities (GASC) public tender where U.S. wheat was the lowest offer. Coupled with earlier sales, U.S. wheat export sales to Egypt now total 220,000 MT, almost double last year’s and the highest level since 2013/14. The United States has also shipped 64,000 MT of HRW to Saudi Arabia, with trade experts expecting additional demand from the country’s recent optional origin tender.

U.S. durum sales are also benefiting from increased price competitiveness. IGC data shows French durum and U.S. durum from the Great Lakes are now at parity at $240 per MT after French durum production was hurt by poor growing conditions. U.S. durum export sales are up 54 percent year over year at 400,000 MT with the EU being the largest buyer, followed by Algeria and Nigeria.

 

Despite the increased demand for U.S. wheat, U.S. wheat futures remain at or near marketing year lows, pressured by excellent winter wheat crop conditions and good soil moisture in the U.S. Northern Plains.

It is rare for U.S. wheat prices to be in such a competitive position, which represents an excellent opportunity for customers to lock-in their wheat futures price at these excellent levels.

 

To track U.S. wheat prices, subscribe to the USW Weekly Price Report.

 

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Diverse Group of U.S. Farmers Visit Cuban Farms, Discuss Future Relationships

U.S. Wheat Associates (USW) is very pleased to see that the grass roots effort to build a lasting, open trading relationship between Cuba is still going strong.

Delegates from the U.S. wheat, soybean, corn, poultry, potato, rice, sorghum and barley industries recently traveled to Cuba to meet with Cuban government officials and farmers. Kansas wheat farmers Doug and Terry Jo Keesling and Kansas Wheat Director of Communications Marsha Boswell represented the wheat industry at the Cuba-U.S. Agriculture Business Conference sponsored by the U.S. Agricultural Coalition for Cuba. The coalition believes that the improvement of agricultural trade between the U.S. and Cuba is the foundation for building successful and enduring relations between both countries.

“The reason I’m here is not to sell potatoes,” said participant Carl Hoverson, CEO of Hoverson Farms, Larimore, N.D., “but to help people live better.”

Boswell reports* that the traditional Cuban diet is made up of rice, black beans, chicken, bread and locally-produced fruits and root vegetables. Much of the food must be imported including an estimated 30 million bushels of wheat the Cuban government currently imports from the EU and Canada. U.S. hard red winter (HRW) wheat is an ideal source for Cuba’s needs, but political choices on both sides related to the long-standing U.S. embargo (known in Cuba as el bloqueo, “the blockade”), prevent that trade.

Under the embargo, Cuba can buy certain U.S. products and may finance the purchases until the products arrive in Cuba, with one exception. Food purchases, which have been allowed since 2000, must be paid in cash up front, before the ships set sail.

Boswell said U.S. Congressman Rick Crawford of Arkansas, spoke to the group about pending legislation that would allow extension of credit terms from U.S. entities to Cuba to purchase food.  Half of the U.S. rice production is grown in his district.

He said, “It’s not about rice; it’s not about wheat; it’s not about chicken. It’s about U.S. ag commodities and market access to areas that have really been difficult for us, and this is a market that I would certainly like to see us participate in.”

After hearing from Cuban government officials who expressed interest in easing trade restrictions with the United States, participants visited a farmer’s market in Havana and toured two farmer cooperatives.

“We are far from reaching our potential. We need technology, modern equipment and timely inputs,” said the president of the first cooperative. For example, Boswell said he noted they know tilling the soil is bad for the land, but that the cooperative does not have the equipment needed to reduce tillage.

While planting genetically modified crops is not yet allowed in Cuba, there is research being done in laboratories. Boswell said Ambassador Juan Jose Leon Vega, Cuban Ministry of Agriculture, International Affairs Division, told the group, “It would be a benefit to the world if it was demonstrated that GMO was safe and could be planted to end hunger. There are 77 million hungry in Latin America.”

Amb. Vega also summarized the position of the Cuban government on trade.

“Farmers in the U.S. and Cuba can have better relationships,” he told Boswell and the other participants. “There is a strong distinction in Cuba between the American government and the American people. We want people to be able to do business together.”

Texas wheat farmer and Vice President of the National Association of Wheat Growers Ben Scholz makes a similar point.

“After visiting Cuba, it is clear that a consistent market for U.S. wheat can be developed in the country,” he said. “With global competition growing rapidly, ending the embargo and easing current regulations that restrict trade with Cuba could provide a much-needed boost for U.S. farmers.”

To read more about USW’s position on trade with Cuba, visit our website at https://www.uswheat.org/policy/trade-barriers/.

*Marsha Boswell’s report on the conference and a list of U.S. participants is posted here: https://kswheat.com/news/2018/11/16/us-farmers-visit-cuban-farms-discuss-future-relationships.

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USW Joins in Support of International Statement Plant Breeding Innovation

On Oct. 30, 2018, an International Statement on “Agricultural Applications of Precision Biotechnology” was released at the World Trade Organization (WTO) Committee on the Application of Sanitary and Phytosanitary Measures. That statement reiterates an international commitment to the fair, science-based treatment of evolving plant breeding methods, like gene editing, around the world. To date, Argentina, which led this effort, Australia, Brazil, Canada, Colombia, the Dominican Republic, Guatemala, Honduras, Jordan, Paraguay, the United States, Uruguay, Vietnam and the Secretariat of the Economic Community of West African States have endorsed the statement.

U.S. Wheat Associates (USW) recently joined 17 other national organizations representing agriculture and science communities in commending the governments that initiated and supported the statement “as a positive step toward improved international coordination. This is crucial to the ability of breeders to utilize new and innovative methods, to increasing choice for farmers and to maintaining trade in agricultural products.”

The groups believe the statement appropriately recognizes that “precision biotechnology products have the potential to play a critical role in addressing the challenges facing agricultural production…” and that “cooperative work by governments to minimize unnecessary barriers to trade related to the regulatory oversight of products of precision biotechnology, including the exploration of opportunities for regulatory and policy alignment, should be pursued where possible.”

“This is a strong showing of support by governments around the world in recognition of the necessity of continued evolution in plant breeding, and the critical role that it will play in ensuring a more sustainable and secure global food production system,” said American Seed Trade Association President & CEO Andrew LaVigne.

View the full statement and list of signing organizations here.

USW supports finding new ways to improve wheat quality and increase production with less impact on the environment. New research in biotechnology and plant breeding innovation, including gene editing, will help make this possible. To learn more, visit our website at https://www.uswheat.org/policy/innovation-and-sustainability/.

 

Kansas State University wheat geneticist and pathologist Eduard Akhunov works recently in the university’s greenhouse. K-State researchers and colleagues from two U.S. universities have identified close to 1 million markers in the genome of 2400 wheat lines, work that will lead to faster and more efficient improvements in wheat varieties.

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Wheat Industry News

Recent news and highlights from around the wheat industry.

Quote of the Week: “Farming is a challenging occupation, and I want to thank all of you and the thousands of farmers that you represent for staying the course.” – Chris Kolstad, USW Chairman and Montana wheat farmer

Thanksgiving. The USW Headquarters Office in Arlington, Va., and West Coast Office in Portland, Ore., will be closed Nov. 22 to 23 for the Thanksgiving holiday.

Congratulations to Milling and Baking Technologist Tarik Gahi and his wife Sabrine who gave birth to a baby girl named Ayda on Nov. 2. We are very happy for our colleague and his family based in Casablanca, Morocco!

Commitment to Science-Based Regulations. The American Seed Trade Association (ASTA) recently welcomed the proactive, coordinated action by 13 countries, including the United States, in signing onto the International Statement on Agricultural Applications of Precision Biotechnology. The statement reiterates an international commitment to the fair, science-based treatment of evolving plant breeding methods, like gene editing, around the world. “This is a strong showing of support by governments around the world in recognition of the necessity of continued evolution in plant breeding, and the critical role that it will play in ensuring a more sustainable and secure global food production system,” said ASTA President & CEO Andrew LaVigne. The statement was released Nov. 2 in Geneva at the World Trade Organization (WTO) Committee on the Application of Sanitary and Phytosanitary Measures.

Scholarship Awarded. The 2018 National Wheat Foundation (NFW) and U.S. Wheat Associates Scholarship was awarded to Matthew Winterholler, a senior majoring in agricultural communications at Texas Tech University, during the National Association of Farm Broadcasting (NAFB) convention Nov. 7. The scholarship is one of several awarded by the NAFB Foundation. NFW and USW donated funds for the scholarship to recognize the 75th anniversary of NAFB and U.S. farm broadcasters serving wheat growers around the country.

Washington Grower Breaks 200 Bushels Per Acre. Last week the National Wheat announced the winners of its 2018 National Wheat Yield Contest. Washington State wheat grower Phillip Gross topped the 200 bu/ac level for the first time ever in the contest and took top yield honors for the third year in a row. The contest recognizes winners in two primary competition categories: winter wheat and spring wheat, and two subcategories: dryland and irrigated with entries required to meet standard or better grade factors. Read more by clicking here.

A Project to Extend the Shelf Life and Improve the Flavor of whole wheat products was announced Nov. 6 as part of a new collaboration between U.S.-based Ardent Mills and Arcadia Biosciences Inc. The project relies on Arcadia’s patented “extended shelf life” wheat trait technology developed through traditional plant breeding. According to Arcadia and Ardent Mills, flour milled from that wheat oxidizes more slowly, extending its storage life, reducing waste and improving the taste by minimizing the bitterness some consumers associate with whole wheat products. Read more by clicking here.

National Wheat Foundation Scholarship. The National Wheat Foundation’s Jerry Minore Scholarship honors high school and college students pursuing an agricultural career. “The purpose of the Jerry Minore Scholarship is to help students who are passionate about agriculture at school and at home,” said National Wheat Foundation Chairman Wayne Hurst. “Our students are the future. They will go on to educate the next generation about wheat, agriculture and their role in society.” The application deadline is Dec. 1, 2018. Click here to learn more and apply.

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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A Message to the Farmer Directors of U.S. Wheat Associates

By Chris Kolstad, USW Chairman and a Wheat Farmer from Ledger, MT, at the USW Board of Directors Meeting, Nov. 2, 2018

When I was in Rio de Janeiro in August for the USW Latin American Buyers Conference, I gave a presentation on farm economics. One of the things I told the customers there was that farming in the United States was a very stressful job.

There are so many things out of our control that can affect whether we are financially successful or not. Obviously, the weather comes at the top of that list. We face temperatures that are either too hot or too cold and rain that never comes or comes so fast and so hard that it causes severe flooding. Hail, wind, frost and numerous other factors come into play. Add to that local, state and federal governments that set rules and regulations that affect the way we farm. From environmental regulations to trade policy, decisions made by our President or Congress can create big swings in our markets.

The American farmer faces rising input costs, rising equipment costs, crop protection products that no longer work, labor shortages and prices that don’t seem to meet our cost of production. We work from sun-up to sun-down and some work around the clock to harvest crops or simply to get caught up.

Farming is a challenging occupation, and I want to thank all of you and the thousands of farmers that you represent for staying the course. I truly believe that better times are coming; part of the reason I believe that is that organizations like U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) are working hard on our behalf to help get new trade agreements signed and to get a fair and practical Farm Bill passed.

Vince Peterson and his USW team around the world have gone above and beyond the call of duty. Vice President of Planning and Programs Jennifer Sydney and our overseas representatives have put together a proposal for the Agricultural Trade Promotion program that includes more than 100 new projects that, if implemented, will help us market our wheat. We obviously don’t know at this time how successful we will be, but we do know whatever amount we are awarded will be used to reassure our customers that the United States continues to be the world’s most reliable supplier of quality wheat.

Let’s face it, some of the rhetoric coming from our government officials has offended some of our customers and, quite frankly, we need to get out there and mend some fences. This money will help us do that. We also heard from Ambassador Gregg Doud, the Chief Negotiator with the U.S. Trade Representative that trade negotiations are starting with Japan, the UK and the EU. Amb. Doud once served as Assistant Director, West Coast Office, and Market Analyst with USW – what a great friend he is to the American farmer.

I also believe there are some things that are in our control, and that all our leaders and associates and many, many others are working on those challenges and creating new opportunities. Knowing that, I feel a little less stressed, and I hope that you do, too.

USW Chairman Chris Kolstad, Ledger, Montana

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Human Wheat Consumption Sets New Record

By Stephanie Bryant-Erdmann, USW Market Analyst

USDA expects global wheat consumption to remain at record high levels in 2018/19 due to increased human consumption. Human wheat consumption is expected to reach a record high 602 million metric tons (MMT), 4 percent above the 5-year average. Over the past ten years, global human wheat consumption has increased 90 MMT, while feed wheat usage has increased 16 MMT.

However, the global supply of milling wheat is expected to fall this year due to challenging growing and harvesting conditions that hurt both quality and yields in many of the major wheat exporting countries. USDA expects global wheat production to fall to the lowest level in 5 years at 734 MMT, down 4 percent from the record high of 763 MMT in 2017/18. If realized, it would be 1 percent below the 5-year average and the first-time global wheat consumption has exceed global wheat production since 2012/13.

The decline in global wheat production is due to decreased production in half of the major wheat exporting countries including the European Union (EU), Russia, Australia and Ukraine. If realized, Russian wheat production would still the third highest on record, but Australian wheat production is expected to fall its lowest level since 2007/08.

Australian wheat production is expected to fall 18 percent year over year to 17.5 MMT due to consecutive years of devastating drought in New South Wales and Queensland where Australian Prime Hard (APH) and Australia Hard (AH) production is centralized. Increased wheat production in Western Australia is expected to partially offset the decrease from the rest of the country. Australian wheat harvest typically occurs in December. USDA expects Australian exports to decrease to 11.5 MMT, 35 percent below the 5-year average and also the lowest level since 2007/08.

With exportable wheat supplies (production plus beginning stocks minus domestic consumption) decreasing in half of the world’s major exporters, USDA expects the United States to have the largest exportable supply of wheat in the world in 2018/19 at 49.9 MMT.

As a consequence, USDA expects 2018/19 U.S. wheat exports to reach 27.9 MMT, up 14 percent from 2017/18 and 7 percent above the 5-year average, if realized. Still, U.S. wheat export sales pace will need to increase to meet this goal, as year-to-date U.S. wheat export sales total just 13.8 MMT or 49 percent of USDA’s anticipated total.

To learn more about 2018 U.S. wheat quality, visit the USW Crop Quality page.

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Twenty-Three Pages You Just Cannot Miss

By Ben Conner, USW Vice President of Policy

 

Longtime readers of “Wheat Letter” know that there is a certain time of year when the “Wheat Letter” must be opened. When its content must be consumed with abandon. When one must read an article so important that – despite all the other wonderful “Wheat Letter” content provided throughout the year – this alone would justify the subscription.

 

Ladies and gentlemen, that time is now. This is the “Wheat Letter” post you have been waiting for. This is the one where we spin the tale of the “National Trade Estimate” report.

 

You ask, what is it about the National Trade Estimate that is so important? Why do you spend hours (days!) every year scouring the world to develop one long submission of trade policy issues to present to the U.S. Trade Representative (USTR)?

 

I am glad you asked. The straightforward answer is that USTR also asked. In 2019, for the 34th time, USTR will release a report on trade barriers around the world. In preparation, the agency published a “Federal Register” notice asking organizations like ours to catalogue all the policy challenges that disrupt U.S. exports.

 

While we aimed for brevity, globally dispersed conspirators had other plans. Twenty-three pages later and spanning a dozen countries, we have documented some of the most consequential policies affecting U.S. wheat exports today. These are limited to the policies that we believe to be inconsistent with each country’s World Trade Organization obligations and for various reasons the list is not exhaustive. We talk about domestic support, export subsidies, tariff barriers, non-tariff barriers, phytosanitary problems, and more.

 

Go ahead, take a look. If you love trade policy as much as me, you may still be bored but it could be helpful. After all, the point of listing these trade barriers is eliminating them. Without attention on barriers, governments will never work to solve them. And solving impediments to trade between U.S. farmers and their overseas customers is what we are all about here on the U.S. Wheat Associates trade policy team.

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