|Where is U.S. wheat produced?|
The agricultural areas of the United States differ dramatically in topography, soils, and climate. Because of these differences, the United States produces a wide variety of crops, each suited to its own locale. Wheat is a typical example. Wheat is grown in most of the 50 states of the United States. The kind of wheat grown and the quantity vary widely from one region to another. Thus, an importer or domestic miller can be readily assured of obtaining the type of wheat they need by selecting the proper class with proper specifications.
The many varieties of winter and spring wheat are grouped into six official classes. The class is determined by its hardness, the color of its kernels and by its planting time. Each class of wheat has its own characteristics related to milling, baking or other food use.
When is U.S. wheat planted and harvested?
Who supplies U.S. wheat?
In addition to your local representatives from U.S. Wheat Associates (USW), here are other resources available to buyers who seek quotations from companies that routinely originate and export wheat around the world:
- One source of information on U.S. grain suppliers is the U.S. agricultural attaché located in the American Embassy or in the Agricultural Trade Offices in many countries. The agricultural attaché can help importers with a broad range of services, including information on supplies and government assistance programs. Find contact information on the USDA Foreign Agricultural Services Web site.
- Many companies and cooperatives that supply U.S. wheat belong to the North American Export Grain Association (NAEGA), which provides a Web site where prospective buyers can ask to be put into contact with suppliers.
- A list of registered exporters is maintained at the USDA Federal Grain Inspection Service Web site.
- Exporters also have representatives located throughout the world, so it might also make sense to inquire within the region's importing community to identify existing agents of U.S.-based exporting companies.
How is U.S. wheat purchased?
Buying wheat is a serious enterprise, especially since there is a high financial risk due to the large volumes of the commodity traded. Thus, in order for an inquiry to be considered by a reputable exporter, a buyer should be prepared to provide the following information:
- Quantity and loading tolerance
- Quality (be very specific and provide the clients tender specifications if available)
- Shipment period
- Vessel size and restrictions
- Vessel load and discharge rate guarantees
- Vessel demurrage and dispatch rate
- Loading and discharge range
- Number of allowable berths
- Phytosanitary certification requirements
- Aflatoxin requirements
- Proposed method of payment
- Copy of the letter of credit (if this is the proposed method of payment)
- Financial references of your company
- Statement from the buying principal that your firm is the sole and exclusive agent
- Statement from the buying principal that the exporter will not be held liable for brokerages, finders fees, commissions, etc.
- A brief company history, including the names of the officers
An importer who is ready to buy will typically seek offers from exporters through either direct negotiations with specific suppliers or through an invitation for bids. Buyers who negotiate directly usually watch the U.S. cash market for advantageous times to make their purchase and then negotiate private transactions. Those issuing an invitation operate through a public or private tender system.
How is transportation arranged?
The U.S. has the most extensive storage and transportation infrastructure in the world. With wheat shipping from the Pacific coast, the Atlantic coast, the Gulf of Mexico and the Great Lakes / St. Lawrence Seaway, the purchase and sale of grain is only part of the importing process. There are three types of contracts under the U.S. marketing system: C&F, CIF, and FOB:
- C&F (Cost and Freight): Seller provides the cargo, covers the loading costs and charters the ocean vessel for a specific destination. The buyer must pay for insurance and for discharge of the grain from the vessel. Buyer specifies shipment period.
- CIF (Cost, Insurance, Freight): Seller provides the cargo, covers the loading costs and charters the ocean vessel, plus insures the cargo until it reaches its destination. Seller determines the final loaded quantity within the contract quantity tolerance; the buyer pays for discharge. Buyer specifies shipment period.
- FOB (Free on Board): Seller is responsible for placing grain at the end of the loading spout. Buyer is responsible for providing the ocean vessel, and for all other costs after the grain is delivered on board, including stowing and trimming the cargo in the holds. Buyer determines the final loaded quantity within the contract quantity tolerance. Buyers specify delivery period.
Bulk grain is usually sold on an FOB basis. Buyers of less-than-shipload quantities or those wishing to avoid the complications of chartering vessels may prefer to buy grain on C&F or CIF terms.
How is wheat quality assured?
U.S. wheat customers can depend on consistent qualities and reliable delivery. Since the passage of the Grain Standards Act in 1916, the U.S. has been the pioneer in providing quality assurance to grain buyers. In their contracts, buyers can specify the traits they need, at prices they can afford, to get the most value. Those contracts are backed up by the most professional and objective inspection system in the world. The U.S. Department of Agriculture's Federal Grain Inspection Service (FGIS) oversees impartial inspectors who sample, weigh, inspect, and certify nearly every single wheat shipment exported from the U.S.
This overview of U.S. wheat inspection provides information on U.S. wheat standards, inspection methods and certification procedures. It is a compilation of FGIS sampling, weighing and inspection handbooks. Updated September-2007.
Cette brochure Aperçu sur l’agréage officiel du Blé Américain est une compilation des manuels du Ministère Américain de l’Agriculture (USDA) et du Service fédéral de contrôle des grains (FGIS) relatifs à l’échantillonnage, au pesage et au contrôle et aux procédures de certification officiels employés par le FGIS pour les blés américains à l’exportation. Cette publication constitue une référence concise et pratique destinée aux importateurs et utilisateurs finaux de blé américain, qui pourront ainsi mieux appréhender les standards et les méthodes et procédures de contrôle du blé américain et établir plus facilement des contrats pour la qualité de blé américain qu’ils souhaitent.
The U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration (GIPSA) annually issue a report on the quality of U.S. grain exports. GIPSA's "2005 U.S. Grain Exports: Quality Report" is the twenty-second edition of this summary of export grain quality. It is based on data collected during the official inspection of export grain shipments in calendar year 2005. The GIPSA report on wheat is available electronically.
How is a contract written?
Once the seller and buyer reach agreement on issues like price, grain quality, payment, credit, transportation and delivery, the agreement is usually written up by the seller in a sales agreement or contract of sale form that varies with the type of transaction. For example, the North American Export Grain Association has a widely used four page, standard use contract for FOB purchases of bulk grain and oilseeds called the NAEGA standard contract No. 2. It has 26 separate clauses delineating the various aspects of grain purchase.
Other forms have been developed such as the Grain and Feed Trade Association of London (GAFTA) contract for C&F and CIF grain transactions, and the FOSFA standardized contract for CIF and C&F sales of soybeans.
Elements of a good contract
- Parties (buyer and seller)
- Quality and grade
- Price and method of payment
- Time, place and method of delivery
- Shipping documents required for payment (L/C)
- Default factors
- Remedies for injured parties
- Forum for disputes
Click here to access NAEGA contracts.
Click here to access more than 80 GAFTA contracts covering CIF, FOB and delivered terms.
How do buyers finance and pay for wheat?
Traditionally, payment is made in U.S. dollars and letter of credit (LC) is the most common form of payment. Under a Letter of Credit, the buyer's bank first establishes a letter of credit in favor of the seller. When the grain is shipped and documentation is presented, the seller's bank makes payment to the seller, then the buyer's bank makes payment to the seller's bank. A letter of credit greatly reduces commercial risk for the seller, but involves higher bank service charges.
Variations on the letter of credit include specifying a time for payment or deferred payment. Buyers and sellers with a long-standing relationship can save transaction costs by trading on an open account where the buyer pays the seller directly upon delivery of the grain.
In addition to price risk, a buyer that is purchasing on commercial extended credit may wish to consider covering the foreign exchange risk that can occur with an international transaction.
If buyers are unable to obtain commercial credit for their importing needs, they may be able to obtain financing assistance from various U.S. government programs. In many countries, U.S. Department of Agriculture Export Credit Guarantee Programs can help make commercial financing available for imports of U.S. food and agricultural products on deferred payment terms. The GSM-102 program guarantees payment from approved foreign banks, normally to U.S. financial institutions that extend credit to them to finance imports of U.S. agricultural commodities.
USDA provides answers to commonly asked questions about how to participate in the GSM-102 Export Credit Guarantee Program.
2012 U.S. Crop Quality Report
Every year, USW and its partnering organizations collect and analyze samples of all six classes of U.S. wheat, with all results compiled together in a single report. The 2012 Crop Quality Report is now ready as an important reference for wheat buyers, millers and wheat food manufacturers around the world. Find information by class and by regions within class.
Read the latest report...
How Much Wheat is Available
The latest USDA WASDE report lowered U.S. wheat exports on slow sales pace and increased foreign competition. Global wheat supplies projected lower on higher EU feed use and lower Chinese production. Global wheat production lowered, primarily on dry Australian weather. Exports raised for Ukraine, EU, Russia and India and lowered for the U.S. and Australia. Global wheat feeding lowered. At the projected 174.2 million tons, global stocks remain 46.0 million tons above the recent low in 2007/08.