February 7, 2008
U.S. Wheat Associates is the industry’s market development organization working in 90 countries on behalf of America's wheat producers. The activities of U.S. Wheat Associates are made possible by producer checkoff dollars managed by 18 state wheat commissions and through cost-share funding provided by USDA’s Foreign Agricultural Service. For more information, visit www.uswheat.org or contact your state wheat commission.
In this Issue:
1. World Wheat in Uncharted Territory
2. U.S. Wheat Industry Leaders Meet in Washington, D.C.
3. Oklahoman Don Schieber Elected USW Secretary-Treasurer
4. USW Supports Port Expansion
5. Wheat Industry News
1. World Wheat in Uncharted Territory
by Joe Sowers, USW Senior Market Analyst
[Editor’s Note: Joe Sowers recently prepared a world wheat supply and demand report for the U.S. Wheat Associates (USW) Board of Directors. This article features excerpts from that report.]
The global wheat situation enters the 2008 calendar year in uncharted territory. Global stocks are at their lowest level in 30 years, while U.S. stocks are at a 60-year low, spurring prices to new records. Despite high prices, global demand continues to rise. While strong wheat prices are expected to spur a global increase in wheat plantings, price strength across commodities are likely to limit expansion of planted area of some classes while causing others to fall. This muted supply response in the face of increased demand appears likely to support prices into the next marketing year and perhaps longer.
World Wheat Production and Use. Source: USDA
Global wheat consumption has exceeded production in seven of the past 10 years. Despite high prices, import demand is expected to fall only marginally in some countries while poor production in others spurred large increases in imports. Several countries have taken steps to protect domestic supply and prices, and the export state trading enterprises in Canada and Australia have focused on “favored” buyers.
So far in the 2007/08 marketing year, U.S. wheat exports are 61 percent ahead of last year. With more than four months left in the marketing year, sales are at 97 percent of the USDA forecast and exportable supplies are dwindling. USDA currently forecasts a 29 percent increase in all wheat exports, with hard red winter (HRW) up 82 percent, hard red spring (HRS) up 10 percent, soft red winter (SRW) up 34 percent. U.S. durum exports are forecast to stay about the same as in 2006/07 and soft white (SW) exports to fall 19 percent.
Looking ahead to the new crop, SRW and SW plantings are up. SW wheat seeded area increased by seven percent to nearly 1.7 million hectares over 2006. Planted acreage in Washington and Oregon rose 12,000 hectares each, while Idaho planted 60,000 more SW hectares. Desert durum producers in Arizona and California (seeded in the fall) took advantage of high prices by expanding production. Winter durum acreage for the 2008 harvest is estimated at 113,316 hectares, up 70 percent from 2007, with seeded area rising 24,282 hectares in Arizona and up 22,259 hectares in California. On the other hand, a one percent fall in HRW seedings and an expected drop in HRS planting could lead to further tightening of high protein supplies. See Wheat Letter, January 24, 2008, for more information on new crop expectations.
Partly as a result of tightening supplies and continued strong export demand, wheat futures prices around the world were up sharply through most of this week.
Click here to view the latest USW Supply and Demand report.
Winter Wheat Planted Area. As of Jan. 11, 2008, USDA estimates a four percent increase in U.S. winter wheat plantings, with SRW up 21 percent, SW up seven percent and HRW down one percent compared to the 2007/08 winter wheat crop.
2. U.S. Wheat Industry Leaders Meet in Washington, D.C.
Noted Texas public servant John Ben Shepperd once said “Leaders know strength and success come from fellowship and combined efforts.” That is an appropriate way to summarize the meetings this past week of the USW and National Association of Wheat Growers (NAWG) boards of directors in Washington, D.C. Both organizations are directed by wheat producers.
The boards met separately on initiatives of specific interest to each group (USW focuses on export market development while NAWG focuses on domestic development) and jointly on intersecting issues. NAWG reports separately on board actions in its Wheat Digest newsletter and on its Web site at www.wheatworld.org. Here is a summary of USW and joint board actions from this week.
Wheat Quality. The USW board approved the recommendation of the Wheat Quality Committee to survey overseas customers to determine the competitive strengths and weaknesses of all classes of U.S. wheat for export. In addition, plans are underway to bring USW Overseas Varietal Analysis program collaborators together in June to discuss quality initiatives for white wheat. Finally, the committee reported that good progress with the Federal Grain Inspection Service is being made toward developing rapid end-use functionality tests.
Hard White Wheat. The USW Hard White Wheat Committee reported to the board that the U.S. supply chain remains committed to working with all stakeholders to create growth opportunities for U.S. hard white (HW) wheat. Specifically, the Kansas Wheat organization has proposed creating a public registry of HW producers that USW will support. An incentive program developed by the HW Committee is also being considered as part of congressional debate on the new U.S. Farm Bill.
SPS Issues. Sanitary and phytosanitary issues continue to be of vital concern to both U.S. producers and overseas customers. USW is monitoring discussions between officials in India and USDA’s Animal and Plant health Inspection Service (APHIS) about unreasonable quarantined weed seed requirements. APHIS has reached out on the issue and is on record being open to further negotiations. For now, the situation remains unresolved. USW is also supporting discussions on such issues as flag smut with Brazil and karnal bunt with the EU. FGIS has also informed USW that it now has the ability to conduct origin testing for ochratoxin; the next step is to work with EU authorities to ensure these origin tests satisfy EU food testing requirements for mycotoxins in wheat.
Food Aid. USW also maintains a Food Aid Working Group which reconfirmed its support for in-kind food aid donations based on the potential developmental benefits for countries eligible for food aid. USW will again have a strong presence at the USAID-sponsored Food Aid Conference in April to reach out to private voluntary and non-governmental organizations engaged in food aid.
Trade Policy. Trade policy received special attention at the meeting with a comprehensive symposium featuring government, academic and private representatives reporting on U.S. action and possible ways forward on bilateral and multilateral trade affecting the wheat industry. U.S. Secretary of Commerce Carlos Gutierrez delivered a keynote address, reiterating the Bush Administration’s strong support for swift congressional approval of pending free trade agreements (FTAs) with Colombia, Panama and Korea.
Sec. Gutierrez also expressed optimism for a successful negotiation of the World Trade Organization (WTO) Doha round, providing the U.S. can achieve reciprocal gains in market access for any proposed concessions.
“U.S. agriculture and the wheat industry have shown everyone how to export and build global business opportunities,” Sec. Gutierrez said. “Increased opportunity for agriculture is critical to the U.S. economy, so don’t step back from fighting for free and fair trade.”
Other speakers included Gregg Young, Assistant Deputy Director of the USDA/Foreign Agricultural Service’s Regional and Bilateral Negotiations and Agreements Division, who works closely with the U.S. Trade Representative’s Office in WTO negotiations, and Craig Thorn, a partner with DTB Associates, which monitors negotiations and facilitates representation in WTO talks for several U.S. commodity organizations, including USW. Bruce Babcock, a professor and director of the Center for Agricultural and Rural Development at Iowa State University, also spoke at the USW Trade Policy Symposium. Each of these individuals—and later, at the Joint Board Meeting, Ambassador Jim Murphy, Assistant U.S. Trade Representative for Agriculture—offered perspective that the U.S. is turning considerable attention in the Doha negotiations to market access and elimination of export state trading enterprises such as the Canadian Wheat Board and Australia’s AWB Ltd.
Michael Dwyer, Senior Agricultural Economist with USDA/FAS, ended the symposium by drawing a rousing picture of the rapidly expanding world market for U.S. agricultural products, including wheat.
At the USW/NAWG Joint International Trade Policy Committee after the symposium, the U.S. wheat industry again publicly expressed its strong support for approval of the U.S./Colombia FTA. It also resolved to support U.S. negotiators in Geneva and the current offer tabled on domestic support contingent upon reciprocal market access gains.
Biotechnology. USW is working in cooperation with NAWG through a Joint Biotechnology Committee to develop the potential for transgenic wheat production in the U.S. As part of that cooperative endeavor, USW is ramping up efforts to help our international customers understand that transgenic wheat is on its way to market – and why.
“World wheat harvested area continues to decline,” says USW Vice President John Oades. “Yes, traditional breeding has increased yields and the world produces more wheat every year. But the simple fact is that wheat acres are being replaced by crops that offer more profit to producers, often because of their transgenic traits.”
USW is making the point that something has to change to make wheat more competitive–and one of the leading options is transgenic technology.
“Ultimately, transgenic wheat must deliver benefits to everyone in the supply chain and customers must be able to choose between transgenic and non-transgenic wheat,” Oades says. “Everyone involved in its development must be able to clearly demonstrate those benefits to buyers, processors and consumers at home and around the world. Before that happens, we all have to work toward science-based standards for acceptable tolerances for incidental or trace amounts of biotechnology-enhanced events in raw and processed grains and oilseeds, as well as in food and feed.”
To learn more about industry positions on transgenic wheat, visit the Web at http://www.uswheat.org, http://www.wheatworld.org or http://www.growersforbiotechnology.org.
3. Oklahoman Don Schieber Elected USW Secretary-Treasurer
Wheat grower Don Schieber of Ponca City, Okla., was elected Secretary-Treasurer of U.S. Wheat Associates (USW) at the USW Winter Board Meeting in Washington, D.C., Monday, Feb. 4, 2008. Vice Chairman Michael Edgar, Yuma, Ariz., was elected Chairman of the Board. Secretary-Treasurer, Janice Mattson, Chester, Mont., was elected Vice Chairman, while Chairman Ron Suppes, Dighton, Kan. will move to Past Chairman and USW Budget Committee Chair. New USW officers officially begin their one-year terms at the organization's Summer Board Meeting, to be held July 26 to 28, 2008, in Kansas City, Mo.
“We are very pleased Don has made this commitment,” Suppes said. “He made a point to let us know he wants to give back to the wheat industry and we’re glad he decided to do that through U.S. Wheat Associates.”
“Wheat has been my life and the next few years are going to be of utmost importance for the industry” says Schieber, who is a commissioner with the Oklahoma Wheat Commission. “Over the years, I’ve been impressed with U.S. Wheat Associates and I am excited to be part of the work ahead.”
Schieber Farms processes 250 to 300 thousand bushels of seed wheat every year. “I developed a love for producing seed wheat when I was the superintendent of the North Central Oklahoma Agronomy Research Station in Lahoma,” Schieber says. “We have good customers in western Oklahoma, the Texas Panhandle and New Mexico.”
Schieber is a former president of the Oklahoma Wheat Growers Association, and has served on the Board of the Newkirk Farmers Co-op and the Ark-Kay Soil Conservation District. He was a member of the first class of the Oklahoma Agricultural Leadership Program and still serves on its advisory council. He is a charter member and Secretary-Treasurer of Oklahoma Genetics, Inc., which is licensed to market new hard red winter wheat varieties developed and released by Oklahoma State University. Schieber has also been a noted high school football official in Oklahoma, a “hobby” he started 38 years ago, the same year he married his wife Cecelia.
Newly Elected Officers of U.S. Wheat Associates (USW) gather at the organization's recent board meeting in Washington, D.C. Their new duties start at the USW Summer Board Meeting in July. Left to right: Secretary-Treasurer Janice Mattson, Chester, Mont., who was elected Vice Chairman; USW President Alan Tracy; Chairman Ron Suppes, Dighton, Kan., who will move to Past Chairman; Vice Chairman Michael Edgar, Yuma, Ariz. who was elected Chairman; and Don Schieber, Ponca City, Okla., who was elected Secretary-Treasurer.
4. USW Supports Port Expansion
Container shipment of U.S. wheat exports is one of the fastest growing segments of the U.S. agricultural market and is opening new opportunities around the world for wheat buyers and producers alike. USW has expressed its strong support for the expansion of the Port of Lewiston’s container dock. This port in Lewiston, Idaho, is the most inland port in the western U.S., serving farm families in Idaho, Washington, Montana, the Dakotas and Wyoming. It is a leading containerized grain port and expanding the dock will double barge capacity and help allow containerized wheat shipments to keep growing.
5. Wheat Industry News
- Appointed. Several wheat industry representatives have been appointed to the U.S. Secretary of Agriculture’s Agricultural Technical Advisory Committee for Trade (ATAC) and Agricultural Policy Advisory Committee for Trade (APAC). Rebecca Bratter, USW Policy Director, Neal Fisher, Administrator of the North Dakota Wheat Commission, and Jennifer Spurgat, NAWG Director of Government Affairs, Farm Policy, were appointed to ATAC. Harlen Klein, a wheat producer and a USW Director from Elgin, N.D., was appointed to APAC.
- Scheduled. USW’s semi-annual Latin American Buyers Conference has been scheduled for June 18-21, 2008, in Austin, Texas. For more information, contact your local USW office.
- Adios. Good luck to Bonnie Fernandez, who is leaving her long-time position as Executive Director of the California Wheat Commission to pursue new opportunities.
- Congratulations to Stacy Taylor, USW Administrative/Convention Assistant, on the birth of her fifth grandchild, Jaylon Taylor, on Dec. 19, 2007. Jaylon is the third child of Stacy’s son Andrew and his wife Tammy.
- Thanks to Roy Chung, USW’s world-renowned Bakery Consultant based in Singapore, who celebrated his 30th anniversary with the organization on Jan. 1, 2008. Congratulations to Roy for being such a professional and enthusiastic ambassador for U.S. wheat and the farm families who produce it.
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