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U.S. Wheat Associates (USW) is the industry’s market development organization working in more than 100 countries. Its mission is to “develop, maintain and expand international markets to enhance wheat’s profitability for U.S. wheat producers and its value for their customers.” USW activities are funded by producer checkoff dollars managed by 17 state wheat commissions and USDA Forei­gn Agricultural Service cost-share programs. For more information, visit www.uswheat.org or contact your state wheat commission.

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In This Issue:
1. Sustained Demand for U.S. Wheat in a New Price Environment
2. Cold Temperatures in HRW Country Gets Attention; Dry Conditions Could Be Worse
3. “EatWheat” Campaign to Help U.S. Consumers Better Understand Farming and Wheat Foods
4. Wheat Food Trending in the Right Direction
5. The Year Ahead in Trade Policy
6. Catherine Miller Joins U.S. Wheat Associates as Programs and Planning Coordinator
7. Wheat Industry News

PDF Edition: (See attached file: Wheat Letter - January 11, 2018.pdf)


1. Sustained Demand for U.S. Wheat in a New Price Environment
By Stephanie Bryant-Erdmann, USW Market Analyst

Six months into marketing year 2017/18 (June to May), total U.S. export sales of 19.5 million metric tons (MMT) are 8 percent behind last year’s pace according to USDA Export Sales data through Jan. 4. However, the estimated total value of U.S. wheat export sales is 4 percent greater than last year on the same date at $4.72 billion, due to slightly higher export prices according to USDA Export Sales data and USW Price Report data.

A deeper analysis of USDA data shows total sales to six of the top 10 U.S. export markets in 2016/17 are ahead of last year’s pace, demonstrating strong demand for U.S. wheat. Sales of soft red winter (SRW) and soft white (SW) are both ahead of last year’s pace. USDA projects total 2017/18 exports will fall slightly to 26.5 MMT, which, if realized, would be 8 percent below 2016/17 but 1 percent above the 5-year average pace.

USDA reported hard red winter (HRW) year-to-date exports at 7.79 MMT, down 10 percent from the prior year. Still, 2017/18 export sales are 10 percent ahead of the 5-year average due to competitive prices for medium protein HRW and the good, overall quality of this year’s crop. The estimated value of year-to-date HRW export sales is 6 percent above 2016/17 due to a 14 percent increase in the average U.S. HRW free-on-board (FOB) price that is supported by the increased premiums for HRW with higher protein. Mexico is currently the number one HRW purchaser. As of Jan. 4, HRW sales to Mexico totaled 1.58 MMT, up 28 percent from last year’s pace. Sales to Indonesia are also up 28 percent year over year at 430,000 metric tons (MT). HRW purchases by Algeria total 456,000 MT, more than double last year’s sales on this date. To date, HRW sales to Venezuela totaling 120,000 MT are nearly four times great than the 2016/17 pace.

Both export sales volume and value of SRW for 2017/18 are up due to the excellent quality of this year’s crop and relatively competitive pricing. Export sales are up 7 percent year over year at 2.02 MMT, boosting estimated export sales value to $400 million, or 12 percent more so far this year. As of Jan. 4, total sales to 11 of the top 20 U.S. SRW export markets from 2016/17 are higher than last year. Sales to Colombia are 12 percent ahead of 2016/17 at 198,000 MT. Nigerian SRW purchases total 234,000 MT, up 12 percent from last year. Sales to other Central and South American countries, including Brazil, Peru, Panama, Venezuela and El Salvador, are also ahead of the 2016/17 pace.

Hard red spring (HRS) sales of 5.15 MMT are down 25 percent year over year and 7 percent below the 5-year average. Higher prices due to smaller 2017/18 production have slowed HRS exports thus far in 2017/18, but global demand for HRS is strong. Year-to-date in 2017/18, the average FOB price of HRS is $293 per metric ton ($7.97 per bushel), compared to $241 per metric ton ($6.55/bu) in 2016/17, according to USW Price Report data. As of Jan. 4, buyers in Japan purchased 878,000 MT, up 20 percent from 2016/17. Sales to Taiwan of 518,000 MT are up 17 percent from last year’s sales on the same date. The Philippines continues to import the largest volume of HRS, though at a 6 percent slower pace so far.

As of Jan. 4, exports of soft white (SW) wheat are up 22 percent year over year at 4.30 MMT. That is 28 percent greater than the 5-year average. Sales to the top 10 SW customers are ahead of last year’s pace, supporting an estimated export value of $896 million, up 25 percent from the prior year. Philippine millers purchased 946,000 MT, up 16 percent compared to last year’s sales on the same date. South Korean sales are up 43 percent at 674,000 MT. U.S. SW sales to China, Thailand and Indonesia are also up. Year-to-date, Indonesia has purchased 515,000 MT, compared to total 2016/17 purchases of 270,000 MT. Thailand sales are up 18 percent year over year at 217,000 MT. Chinese purchases of 306,000 MT are already greater than 2016/17 total SW sales.

Year to date durum exports total 272,000 MT, down 32 percent from the same time last year, and below the 5-year average, with tighter supplies and resulting higher prices. The average export price for U.S. durum is up 5 percent over last year at this time according to USW Price Report data. To date, Nigeria, the European Union (EU), Algeria and Guatemala are the top durum buyers. A significant portion of the first quarter 2017/18 sales is designated as “sales to unknown designations.


2. Cold Temperatures in HRW Country Gets Attention; Dry Conditions Could Be Worse

Last week in the United States, the potential effects of severe cold over most of the U.S. hard red winter (HRW) and soft red winter (SRW) crops got the lion’s share of attention in media covering wheat production and markets.

To be sure, bitterly cold temperatures across the United States may have hurt some wheat in parts of the Plains, southern Midwest and Southeast without snow cover. A senior agricultural meteorologist was quoted saying “damage occurred in about a quarter of the hard red winter wheat belt in the Central Plains, with about 5 percent of the soft red wheat belt in the Midwest seeing impacts.”

Agronomists with Kansas State University confirmed that winter kill may be an issue in north central Kansas, where soil temperatures were sustained at potentially damaging levels for the longest time.

“It is difficult to truly assess the extent of the damage at this point,” they reported. “Provided that the crown is not damaged, the wheat will recover from this foliar damage in the spring with possibly little yield loss.”

Winter kill potential and the logistical problems with such cold did spark a brief uptick in KCBT and CBOT futures prices last week. Yet of all the threats to wheat, winter kill is not making the top of the list for farmers. What is keeping more of them up at night now is the lack of moisture.

“I think if we lose wheat, it will be from dry conditions rather than winter kill,” said Don Schieber, a Ponca City wheat farmer and a past chairman of U.S. Wheat Associates (USW). “Some of the wheat that was planted early is big, but some is hurting and turning blue. It is so dry that some farmers have stopped grazing their fields because the cattle are pulling whole wheat plants out of the ground.”

The National Agricultural Statistics Service indicates that drought conditions in Oklahoma, the Texas Panhandle and much of southwestern and central Kansas are very dry, noting that for the month of December 2017, topsoil moisture in Kansas was rated 28 percent very short, 49 short, 23 adequate, with no surplus in the state. In northeastern Colorado, dry conditions increased concerns that cold snaps without the benefit of snow cover may have hurt fall-seeded HRW wheat.

Wheat is a hearty crop and Kansas State agronomists made the point that we will only be able to assess the true extent of any damage at spring green-up. But this continues to be a challenging season for HRW in the Plains.

On Jan. 9, Kansas Wheat Marketing Director Aaron Harries shared photos of a field of stunted wheat in south-central Kansas on Twitter that, he suggested, was “one of the better-looking fields in the area.” It was 65° F when he took the photo and wrote that “48 hours from now: 50 mph north wind and single digit temps with no snow cover - #sad, #drought, #prayforrain, @KansasWheat.


3. “EatWheat” Campaign to Help U.S. Consumers Better Understand Farming and Wheat Foods
By Marsha Boswell, Director of Communications, Kansas Wheat Commission

In an effort to increase consumer trust in the domestic wheat industry, U.S. wheat farmers have created a consumer-minded marketing campaign called “EatWheat” to increase awareness of farming and production practices as well as the practical benefits of wheat in the United States.

This campaign will allow the U.S. wheat industry to speak with one voice in an effort to reclaim the national conversation on wheat and share one primary message among numerous influencers while dismantling the false promises of diets without wheat.

Wheat foods are eaten all over the world and U.S. wheat is exported to all parts of the globe. Food is an expression of cultural identity and many favorite family memories from celebrations and holidays are often associated with wheat foods. Food is also a great unifier across cultures. And “to break bread together” is symbolic for bonding relationships.

The EatWheat campaign provides an opportunity to share the story of food culture and customs and helps foster a connection between people, including U.S. wheat and their customers. There are many popular wheat foods around the world made with U.S. wheat. Pan de muerto is a type of sweet roll traditionally baked in Mexico as part of the Dia de los Muertos observance. Agege bread is one of the most popular Nigerian breads, known for its soft, stretchy and chewy texture. In Japan, U.S. wheat is used in ramen or udon noodles, and in China it is used for Chinese wheat noodles and steamed buns. Pancit or noodles is probably one of the most well-known Filipino dishes. In Filipino vernacular, pancit simply refers to noodles. When Brazilians ask for "o pão nosso de cada dia" (our daily bread) most think of a roll with a crisp brown crust and a light-as-air crumb that fits neatly in the palm of a hand, known as pão francês. In Indonesia, traditional breads might include Bagelen bread, crocodile bread or gambang bread.

All too often, when urban consumers in the United States look down at their plate, they may not know how that food came from the farm to their table. While it may not be top of mind, many are wondering about the farmers who produce the food they consume and the processes used to grow it.

The website aims to create awareness of farm and production practices through the lens of food as an identity. And the food that we think can connect best is, of course, made with basic, simple and versatile wheat flour. And it does not matter if it is homemade for hours, or picked up at the supermarket ready-to-go — wheat food is a natural way to connect to others and yourself. EatWheat.org launched in November 2017, just in time for the holiday season.

On the site, consumers can find answers to their questions about wheat production practices, share their values with wheat farmers and engage.

Kansas wheat farmers are the driving force behind the EatWheat.org campaign and want to share the farmers’ side of the story through the website, Facebook, Instagram and Pinterest. The site features stories of family farmers including Justin Knopf, who farms with his dad, Jerry, and his brother, Jeff.

“Our farm today looks much different than when I was a kid,” said Justin, a fifth-generation farmer focused on a sustainable future. “We are farming more acres because now, instead of just one family, there are three families to support. The machinery we use is different. Just like anyone’s life or job, we are using technology so we can better understand the biology and soils. All those things point to continual improvement which is important. We’re thinking critically about how we produce, where it comes from…”

Jerry Knopf is proud of how far their family farm has come.

“I just farmed because it was what I needed to do,” said Jerry. “I thought it was pretty cool they were willing to go to college but then come back and farm, because now they knew the new way to do things and are way smarter than I ever was.”

To watch the video of Justin’s story, visit https://eatwheat.org/stories/justin-knopf/.

Finally, the site features quick and easy recipes geared toward moms on the go, using ready-to-eat wheat foods like tortillas, bread and buns, and short-cuts including refrigerated dough and pasta. The “Learn” section tackles questions such as, ‘what is gluten,’ ‘what are the different types of flour’ and ‘what are some of the tools farmers use.’ Consumers can also “Get Inspired” with family activities like salt dough handprint ornaments, gingerbread houses and wheat décor.

Please visit EatWheat.org to learn more and help amplify these messages by sharing social media posts at facebook.com/eatwheat.org, instagram.com/eatwheat/ and pinterest.com/eatwheatorg/.


4. Wheat Food Trending in the Right Direction

The New Year always brings out trade and consumer media coverage of best products and trends from the previous year and the year ahead. As 2018 dawned, some pundits put wheat foods in a prominent place.

The media company Bloomberg, for example, named bread as its “Dish of the Year for 2017.”

“Restaurants and bakeries have shown what can truly be done to make bread a culinary wonder,” they wrote.

Freshly ground, whole wheat flour gets a lot of credit for the trend (obviously a narrow slice of the U.S. market), but Bloomberg took a longer view, also.

“One of the biggest cookbooks in 2017 had bread as its focus. ‘Modernist Bread,’ a sprawling, five-volume work, provides a revolutionary new understanding of one of the most important staples of the human diet, bread,” Bloomberg noted. “The collection offers comprehensive information on the subject of bread, from its history, to its science and physics, to techniques and recipes that will astound bread enthusiasts.”

The U.S.-based National Restaurant Association raised the humble doughnut to celebrity status in its “What’s Hot – 2018 Culinary Forecast,” a survey of 700 professional chefs on “hot trends on restaurant menus in the year ahead.”

Specifically, the list suggests restaurants will make more doughnuts with “non-traditional” fillings.

“When we think of doughnuts, we tend to conjure up images of glazed treats filled with vanilla cream,” the association noted. “But in 2018, more creative options abound. How does a cheesecake-stuffed doughnut, topped with raspberry jam, sound? … that’s what we’re talking about.”

“Fortune” magazine’s food trends for 2018 suggested an “era of permissibility” is afoot with a fusion of different foods including sushi croissants to pasta donuts.

“The salmon roll wrapped inside croissant dough, sometimes called the “croissushi,” debuted this year at Mr. Holmes Bakehouse in Los Angeles,” editors exclaimed. “The spaghetti donut hails from the East Coast, made from pasta, eggs, and cheese fried into a donut shape for hand-held ease.”

We suspect the farmers USW represents, flour millers and wheat food companies around the world like the direction this is headed.


5. The Year Ahead in Trade Policy
By Ben Conner, USW Director of Policy

USW prioritizes trade policies that support reducing the cost of getting wheat from U.S. farmers to their customers around the world. A time-tested method for doing that is through trade negotiations and agreements. USW will be looking for a more forward-looking trade negotiating agenda from the United States in the coming year, while holding our ground when we believe certain actions might raise the costs of wheat trade.

The biggest item on the trade policy agenda remains the negotiations to modernize the North American Free Trade Agreement (NAFTA). There are some notable improvements that can be made to the agreement through a modernization process, but the absolute priority for USW and most of U.S. agriculture is to prevent dissolution of the agreement – a potentially devastating blow to the U.S. farm sector and potentially to their customers in Mexico and Canada.

The agreement with South Korea (KORUS) is also on the agenda, but it is expected that the scope will be much more limited than the NAFTA negotiations. Hopefully the modification process for KORUS will help stave off a concerning push by some to withdraw entirely.

A serious problem to date is the lack of new bilateral trade agreement negotiations with potential trade agreement partners. KORUS was the last completed trade agreement the United States negotiated, and it was first signed in 2007. The United States continues to fall behind in trade negotiations with competitors in the European Union, Canada and elsewhere. Emphasizing this challenge will be an important priority of USW in 2018.

At the World Trade Organization (WTO), there will be continued fallout from the United States’ successful efforts to prevent a severe weakening of WTO rules in agriculture, which had the predictable but unfortunate effect of shutting down virtually all positive negotiations in this forum. In our view, this was a necessary development if the WTO can ever return to being a dynamic forum for trade negotiations. There will also be progress on the dispute settlement cases against some of China’s policies restricting wheat trade.

If nothing else, 2018 is shaping up to be another roller coaster year for trade policy. In addition to weighing in on the high-profile negotiations discussed above, USW will continue to work on a number of issues with individual markets on behalf of wheat farmers and buyers.


6. Catherine Miller Joins USW as Programs and Planning Coordinator

USW welcomes Catherine Miller to its Arlington, Va., headquarters office staff as Programs and Planning Coordinator effective Jan. 2, 2018. In this role, Miller will support programs by coordinating trade teams and short course programs with USW’s overseas offices and state wheat commissions. She will also support planning with its annual Unified Export Strategy review process. She will report to Vice President of Programs and Planning Jennifer Sydney.

“Catherine’s enthusiasm for the agricultural industry will be an asset to our work at USW,” said Sydney.

Miller joins USW after graduating cum laude from Auburn University May 2017, earning a bachelor’s degree in agriculture business and economics. A native of Virginia, she gained valuable experience as a Pathways intern for the USDA at the National Institute of Food and Agriculture (NIFA), where she developed reports for USDA supported activities in Food Safety and Climate Change and worked with the Expanded Food and Nutrition Education Program. Miller was also an active member of the Agriculture Economics Club at Auburn University and is currently a sustaining member of the National Charity League, having volunteered more than 150 hours.


7. Wheat Industry News
  • Quote of the Week: “We know more about grains now, we have better technology (equipment) to make great bread than ever before, and more and more people are interested in not just eating good bread but how to make it.” - Nathan Myhrvold, co-author of Modernist Bread. Read the full article here.
  • Congratulations to USW Staff on Recent Work Anniversaries. We are so fortunate to have such devoted, loyal colleagues at USW. Baking Consultant Roy Chung, based in the USW Singapore Office is celebrating 40 years this month, and Director of Information Systems Terry Herman, based in the USW Headquarters Office in Arlington, Va., is celebrating 25 years this month. Thank you to Roy and Terry for their service to our organization, to U.S. wheat farmers and to our customers around the world.
  • Greenhouse Expansion Provides Home to Additional Researchers. The Kansas Wheat Innovation Center (KWIC) in Manhattan, Kan., is growing with a new four-bay 12,750 square-foot greenhouse expansion that will be used for public-private collaborative wheat research. Molecular and genetic research done in the KWIC laboratories will be supported by the greenhouses and a more control environment will both enhance and accelerate results. Read the full announcement here.
  • Wheat Disease Breakthrough. Research targeting stem rust through DNA testing results has resulted in a breakthrough in the wheat field. Now, suspect samples could be analyzed within hours instead of weeks. This shortened window of time has the potential to save crops from being decimated by stem rust, historically the most dangerous pathogen to wheat. Stem rust has recently reemerged in parts of the world, where it has devastated crops due to its ability to evolve – reversing much of the work that happened during the Green Revolution. Now, scientists have isolated the very first rust pathogen gene that wheat plants detect to ‘switch on’ resistance. The collaboration includes the University of Sydney, Commonwealth Scientific Industrial Research Organization (CSIRO), UK’s Rothamsted Research, the University of Minnesota, and the United States Department of Agriculture (USDA). The new findings are being published in the journal, Science. Read the full article here.
  • EPA Rules No Human Health Risk with Glyphosate. In December, the Environmental Protection Agency (EPA) release a draft on human health and ecological risk assessments for glyphosate, which concludes that glyphosate is “not likely to be carcinogenic to humans.” The assessment found no other meaningful risks to human health when the product is used according to the label, findings that are consistent with the science reviews by many other countries, as well as the 2017 National Institute of Health Agricultural Health Survey. Click here for the full announcement and to read the draft risk assessments and supporting documents.


Nondiscrimination and Alternate Means of Communications
USW prohibits discrimination in all its programs and activities based on race, color, religion, national origin, gender, marital or family status, age, disability, political beliefs or sexual orientation. Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USW at 202-463-0999 (TDD/TTY - 800-877-8339, or from outside the U.S., 605-331-4923). To file a complaint of discrimination, write to Vice President of Finance, USW, 3103 10th Street, North, Arlington, VA 22201, or call 202-463-0999. USW is an equal opportunity provider and employer.
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