Wheat Letter - October 25, 2012
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 the profitability of U.S. wheat producers and their customers.” The activities of USW are made possible by producer checkoff dollars managed by 19 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. Original articles from Wheat Letter may be reprinted without permission; source attribution is requested. Click here to subscribe or unsubscribe to Wheat Letter.
In This Issue:
1. Majority of Winter Wheat Crop in the Ground, But Slow to Emerge
2. 2012 Crop Quality Results Show Stronger HRS, Durum Crops, Mixed HRW Crop
3. Joint U.S.-Canadian Website Adds Cross-Border Seed Trade FAQs
4. Flour Fortification Initiative Celebrates 10 Years of Health Progress
5. Fall Wheat Conference Underway
6. Implementation of Free Trade Agreements Already Benefiting Buyers and Producers
7. U.S. Wheat Helps Feed Children in Bangladesh
8. Wheat Industry News
Online Edition: Wheat Letter – October 25, 2012 (http://bit.ly/RKFyxR)
PDF Edition: see attached  Wheat Letter - October 25, 2012.pdf
Crop Quality Information: USW Crop Quality Report (http://bit.ly/ACVDIp)
1. Majority of Winter Wheat Crop in the Ground, But Slow to Emerge
By Casey Chumrau, USW Market Analyst
Though the 2012/13 harvest is just winding down, U.S. winter wheat farmers are already looking ahead to the 2013/14 crop. In fact, the majority of next year’s winter wheat crop is already in the ground. However, there has been very little relief from drought conditions plaguing the U.S. plains, significantly hindering the pace of crop emergence.
During the harvest and planting seasons, U.S. Department of Agriculture’s (USDA) National Agricultural Statistic Service (NASS) releases a weekly crop progress report. As of Oct. 21, U.S. winter wheat plantings were 81 percent complete, up from 71 percent the prior week and just above the five-year average of 80 percent. Several key winter wheat states, such as Kansas and Oklahoma, are well ahead of their respective average planting paces. Other key producing states, including Montana, South Dakota and Ohio, are well behind the average planting pace.
The planting pace is of less concern this year than the crop emergence rate. Winter wheat is planted in the fall, germinates and emerges before going dormant when cold winter temperatures set in. Overall, 49 percent of the winter crop has emerged. That is just shy of 51 percent emerged at the same time last year and below the five-year average of 56 percent emerged. About one third of winter wheat states are slightly ahead of the five-year average pace, but several states are considerably below average. In South Dakota, NASS reports only 13 percent crop emergence, compared to 82 percent last year and 80 percent over the last five years. Nebraska is 33 percent below last year at 58 percent emergence and Montana’s crop is 36 percent emerged, 31 percent below the five-year average. These three states accounted for 20 percent of total hard red winter (HRW) wheat production in 2012/13. Ohio, which produces 14 percent of the country’s soft red winter (SRW) wheat, is 18 percent behind the five-year average with 22 percent of the crop emerged.
The largest single factor inhibiting crop emergence is severe lack of moisture. Persistent drought conditions throughout the U.S. plains, starting last year at this time, have hindered agricultural production in 2012. Impact on this year’s wheat crop was minimal because planting was mostly complete before conditions worsened. However, continued drought conditions now threaten next year’s wheat crop. In fact, the National Weather Service (NWS) predicts drought conditions will not only persist, but also intensify and spread between now and February. NWS expects drought conditions to develop farther west into Oregon and Washington and farther north in Montana and Idaho. Small regions in Alabama, Georgia and California are the only areas in which NWS expects the drought impact to ease.
In South Dakota, for example, NASS reported 66 percent of topsoil and 71 percent of subsoil as very short on moisture – compared to just 5 and 6 percent considered very short last year, respectively. Nebraska is facing a similar situation, 69 percent topsoil and 77 percent subsoil is very short of moisture, compared to 5 percent on average this time of year.
Wheat is a very tough, durable crop and can withstand a lot of adversity. It is much too early in the season to predict how the crop will perform in 2013/14. The current lack of moisture is something to monitor as we enter the winter months, knowing that even a little rain will go a long way to producing another excellent U.S. wheat crop.
2. 2012 Crop Quality Results Show Stronger HRS, Durum Crops, Mixed HRW Crop
Every year, USW and several of its partner organizations collect and analyze samples of all six classes of U.S. wheat and compile results in a single report. The USW 2012 Crop Quality Report is now available as an important reference for wheat buyers, millers and wheat food manufacturers around the world. USW representatives and many of our partners have started sharing this information with our customers at our annual series of crop quality seminars. The full report is available at www.uswheat.org/reports/cropQuality. You may also order copies of the printed report by email at info@uswheat.org.
For those who cannot attend a crop quality seminar, “Wheat Letter” provides a brief summary of 2012 results for HRW, hard red spring (HRS) and durum crops below and will share a similar summary of results for U.S. white wheat in the next issue. “Wheat Letter” covered SRW results on Aug. 2.
Hard Red Winter (HRW)
The 2012 HRW crop was diverse this year, thanks largely to weather conditions that caused variable yields (80.4 kg/hl average test weight) and a wide range of protein content (12.6% average on 12% moisture basis), but had the positive effects of limited disease and insect pressure as well as good falling numbers. A high percentage (78%) of survey samples graded No. 1 HRW. Overall average thousand kernel weight (29.0 g), however, was slightly lower than the 2011 crop and the five-year average.
While overall protein quantity was above 2011 and the five-year average, variable protein quality was evident in milling and baking tests. The alveograph W value (254) was above the five-year average and 2011 and farinograph peak time (5.3 min) was comparable to 2011 and the five-year average, but stability (11.1 min) was significantly lower than 2011. Loaf volume (789 cc) was again lower this year than the previous crop and significantly lower than the five-year average.
For the 2012 California HRW crop, yields were somewhat reduced due to a drier than normal growing season, but protein and overall quality were excellent.
Hard Red Spring (HRS) and Durum
HRS and northern-grown durum acreage rebounded this year, but were stressed late in the growing season by very hot temperatures and limited rainfall. The 2012 HRS crop has very high protein (14.7%), a high grade profile (86% of samples graded No. 1 Dark Northern Spring (DNS)) with improved kernel weights (28.9 g), near zero damaged kernels and low moisture content (11.7%). Functional quality is also somewhat improved with greater dough strength and larger loaf volumes.
For the northern durum growing area, more than a 60 percent increase in acreage from 2011 (a record low year) and slightly higher yields resulted in almost double production. More than 50 percent of 2012 northern U.S. durum samples were graded No. 1 Hard Amber Durum (HAD). Average test weight values, vitreous kernel (HVAC) content and falling number all exceeded last year. As with last year, isolated areas had higher damage and DON due to elevated disease pressures.
The 2012 Desert Durum® crop, grown in Arizona and California, had slightly below normal yields, but consistently large kernel size and low moisture, traits that contribute to achieving high extraction rates. Buyers can once again know they will receive excellent performance from this identity-preserved durum crop.
3. Joint U.S.-Canadian Website Adds Cross-Border Seed Trade FAQs
Reprinted from Canada-U.S. Grain and Seed Trade
Although there is little change in the marketing environment for seed following the implementation of the Marketing Freedom for Grain Farmers Act, some may want a better understanding of the seed regulations on both sides of the border. To help answer questions and facilitate trade, a working group of Canadian and U.S. non-profit and trade organizations has updated its website to include answers to important questions on cross-border trade for seed.
The website, http://canada-usgrainandseedtrade.info, provides a detailed frequently asked questions (FAQs) section on both cross-border seed trade and producer deliveries following the implementation of the Act on Aug. 1, 2012, in Canada. Visitors can also submit comments and additional questions through the website.
“This site will help answer questions for those who might consider selling or buying seed across the U.S.-Canada border,” said Patty Townsend, chief executive officer of the Canadian Seed Trade Association. “The two markets operate differently, but these online answers will help the seed trade identify and navigate new ways to market their seed.”
The website provides information on the regulatory requirements in both Canada and the United States for cross-border seed trade, including differences in varietal registration, labeling and phytosanitary requirements.
“Key grower and industry stakeholders joined together to provide this online resource that answers the most important questions on the changes to the regulations and their implications,” said Andy LaVigne, president and chief executive officer of the American Seed Trade Association. “We strongly encourage members of the commercial seed trade to visit the website and to contact us with their comments and questions.”
4. Flour Fortification Initiative Celebrates 10 Years of Health Progress
USW congratulates the Flour Fortification Initiative (FFI) on its 10th anniversary and celebrates the great progress it has achieved toward better health around the world. FFI was created in 2002 as a network of partners working together to make fortification standard practice in industrial mills. USW first partnered with FFI in 2003 when it co-hosted a fortification meeting held in conjunction with the International Grains Conference in London.
Fortification adds vitamins and minerals to flour as it is milled. Most countries with fortification requirements include both iron and folic acid in wheat flour. Many countries include zinc plus other B vitamins; some also include vitamin A and vitamin D. In the past decade, the number of countries requiring wheat flour fortification with at least iron or folic acid has more than doubled to 75, reaching more than 2 billion people. FFI estimates that 30 percent of industrially milled flour is now fortified.
The results are impressive, especially among women and children. By 2008, it was estimated that flour fortified with folic acid was preventing 22,000 neural tube defects like spina bifida and anencephaly every year. Eight sub-national studies show a 46 percent reduction in neural tube birth defects after fortification began. In addition, studies show fortification has markedly reduced iron deficiency among specific populations in China, Iran, Venezuela, Fiji and Oman.
FFI has historically focused on wheat flour and starts its second decade with an emphasis on expanding fortification to maize and rice. Its leaders note that expanding fortification to the three most commonly consumed grains worldwide represents tremendous opportunities to improve global health.
For more information, visit http://bit.ly/T8Uq7n or http://bit.ly/UxX8cM.
5. Fall Wheat Conference Underway
The boards of directors of USW and the National Association of Wheat Growers (NAWG) are meeting this week at the 2012 Fall Wheat Conference in Houston, TX. The conference features committee meetings, a joint USW/NAWG board session and board meetings for both organizations. USW and NAWG leaders meet together twice each year.
Guest speakers at the joint board meeting include Wheat Foods Council President Judi Adams and recently retired U.S. House Committee on Agriculture Minority Economist Dr. Craig Jagger. At the USW meeting, our board of directors – wheat farmers representing our 19 state wheat commission members – will also hear about technical assistance activities in Mexico, Central America and the Caribbean from Regional Vice President Mitch Skalicky and milling consultant Andrea Saturno.
6. Implementation of Free Trade Agreements Already Benefiting Buyers and Producers
This month marked one year since the U.S. Congress approved and President Barack Obama signed into law free trade agreements (FTAs) with Colombia, South Korea and Panama. The first two FTAs entered into force earlier in 2012 and, it was announced Monday, the FTA with Panama will enter into force Oct. 31.
This is welcome news for U.S. wheat producers and our customers in Panama. U.S. wheat already enjoys duty free access to Panama, but as we have seen before with other FTAs and trade liberalization agreements such as the World Trade Organization Uruguay Round, permanently reducing tariffs and other barriers to trade will make imports cheaper for consumers of U.S. wheat and, in turn, help make all parties more competitive.
Take the two most recent U.S. FTA partners for example. All wheat sales to South Korea are up 40 percent year-on-year, with increases in sales for every class except SRW this year. For Colombia, sales of SRW are up 20 percent compared to the same time last year, with overall sales to date still down slightly.
With the Panama, Colombia and Korea FTAs in force, we also look forward to completing ongoing negotiations with Asia-Pacific trading partners and the potential beginning of trade talks with the European Union and other countries. We are confident that market opportunities stemming from high-standard, 21st century agreements will benefit all wheat buyers and producers.
7. U.S. Wheat Helps Feed Children in Bangladesh
U.S. wheat producers take pride in the role they are able to play in feeding the world’s neediest people. Several U.S. government food aid programs utilize U.S. wheat, including the McGovern-Dole school feeding program, Food for Peace and Food for Progress. In fiscal year 2011, 132,000 MT of U.S. wheat was shipped to countries in need for either direct feeding or to be monetized to fund important development projects. USDA recently highlighted the positive impact U.S. wheat donation can have in the following story about a McGovern-Dole project in Bangladesh, reprinted from USDA Blog on Oct. 16:
Approximately 350,000 school children in Bangladesh now have access to a daily snack after the U.S. government recently donated more than 10,000 MT of wheat to the country through the Foreign Agricultural Service’s (FAS) McGovern-Dole Food for Education Program.
The program – aligned with President Barack Obama’s Feed the Future initiative – helps support education, child development and food security for school children in low-income, food-deficit countries committed to universal education.
The shipment of wheat was delivered to the World Food Programme, a McGovern-Dole program participant that works to provide food assistance in more than 73 countries. The wheat will be used to produce nutritious biscuits for children in about 2,000 schools in the poorest areas of Bangladesh.
During a ceremonial handover of the wheat in Chittagong, Bangladesh, U.S. Ambassador to Bangladesh Dan W. Mozena said the United States’ support for Bangladesh’s school feeding program supplements the two nation’s partnership to build greater food security.
“Our celebration today is about more than a mountain of donated wheat from America. What we celebrate today is partnership between America and Bangladesh to nurture the children of Bangladesh physically and mentally and to build the nation’s citizens of tomorrow,” he said. Mozena also noted nourished school children in Bangladesh are more likely to remain in school, study, learn and ensure a brighter future for the nation.
The McGovern-Dole program has partnered with the World Food Programme in Bangladesh over the past decade to provide basic nutrition and to encourage parents to keep their children in primary school.
Currently, FAS funds 37 active McGovern-Dole Food for Education agreements with 16 cooperating sponsors in 26 countries, assisting more than five million beneficiaries. To date, the program has provided meals to more than 28 million children.
8. Wheat Industry News
- Ukraine Confirms Wheat Export Ban. Ukraine's Farm Minister Mykola Prysyazhnyuk said Wednesday that Ukraine would ban wheat exports from Nov. 15 after a weather-damaged harvest. The announcement was not unexpected but did have a slight initial effect on global wheat markets. For more information, visit http://reut.rs/RYtPuZ.
- USDA Modifies Guarantee Fees Rates for the GSM-102 Program. USDA announced pending new guarantee fee rates for coverage under the Commodity Credit Corporation’s Export Credit Guarantee Program (GSM-102). These new guarantee fee rates will apply to applications for payment guarantees and amendment requests received on or after May 4, 2012. For more information on the new rates, visit http://1.usa.gov/RvmuTX.
- CME Group to Acquire Kansas City Board of Trade. CME Group will acquire the Kansas City Board of Trade (KCBT) in a $126 million deal, the companies announced this week. CME said will continue to maintain a committee of KCBT market participants to advise on HRW contract terms and conditions for at least three years. CME will also maintain the KCBT trading floor for at least six months. For more information, visit http://bit.ly/SmJfcP.
- New Collaborative Effort to Develop Heat-Tolerant Wheat. Arcadia Biosciences, Inc., the International Maize and Wheat Improvement Center (CIMMYT) and the U.S. Agency for International Development (USAID) have signed an agreement to develop heat-tolerant wheat varieties. Under the agreement, CIMMYT will receive non-exclusive rights in developing countries to Arcadia’s heat-tolerance technology while Arcadia will retain exclusive commercial rights in the developed world. For more information, visit http://bit.ly/VzBPsN.
- Beachell-Borlaug Winners Announced. In celebration of the 2012 Borlaug Dialogue, the Monsanto Beachell-Borlaug International Scholars Program announced its 14 scholarship recipients for this year for research projects in either rice of wheat breeding. Monsanto funds the program, which is administered by Texas AgriLife Research. For more on the recipients and their research projects, visit http://bit.ly/Uxf5Z6.
- 2012 World Food Prize Laureate Named. Dr. Daniel Hillel was named the 2012 World Food Prize Laureate earlier this month. Dr. Hillel is an Israeli scientist who pioneered water management concepts for bringing water to crops in arid and dry-land regions. His nomination included letters of support from individuals and organizations in Jordan, Egypt and the United Arab Emirates. For more information, visit http://bit.ly/WGdsJo.
- WMC Whole Grain Products Short Course. The Wheat Marketing Center (WMC) in Portland, OR, will hold its Whole Grain Products Short Course Dec. 10 to 14. For more information or to register, visit http://www.wmcinc.org.
- IGP Buhler Milling Courses. The International Grains Program (IGP) in Manhattan, KS, will hold its Buhler-KSU Executive Milling Course in English Nov. 5 to 9. For more information or to register, visit http://www.grains.ksu.edu/igp/.
- Setting the Record Straight. The Best Food Facts blog’s examined the claims circulating in the media that wheat is “a perfect chronic poison.” In the post, university experts in human nutrition and plant science weigh in to set the record straight and put the genetic history of wheat in a context that is easy for a lay person to understand. Read the post at http://bit.ly/XP5Z8O.
- Congratulations to Joe Sowers, assistant regional director in the USW Manila Office, and his wife Erin on the birth of their daughter, Violet Therese, on Oct. 12.
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