Wheat Letter - March 7, 2013
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. Snow Brings Welcome Moisture but HRW Crop Will Need More
2. India’s Wheat Production Policies at Crossroads
3. Crop Production Must Grow While Meeting Consumer Expectations
4. Wheat and Social Media; Making a Global Connection
5. Wheat Industry News
Online Edition: Wheat Letter – March 7, 2013 (http://bit.ly/YPCLEv)
PDF Edition: (Attached)  Wheat Letter - March 7, 2013.pdf
Crop Quality Information: USW Crop Quality Report (http://bit.ly/ACVDIp)
1. Snow Brings Welcome Moisture but HRW Crop Will Need More
By Casey Chumrau, USW Market Analyst
Record breaking snowfall in parts of the U.S. plains in the past two weeks delivered some relief from the worst drought there in more than 50 years. While hard red winter (HRW) crop conditions and soil moisture levels certainly improved, the precipitation was not nearly enough to reverse months of severe drought conditions.
The big, late-season winter storms had an immediate effect on wheat crop condition ratings. In Oklahoma, the percentage of the crop rated as good or excellent increased from 9 percent to 16 percent and the percentage of the Oklahoma crop rated as poor or very poor fell from 54 percent to 47 percent in just two weeks. Kansas’ crop ratings at the end of January were the worst of the 2012/13 marketing year. After the large snowfall at the end of February, the percentage of the crop there rated as good or excellent increased to 24 percent, while the percentage rated poor or very poor decreased to 35 percent. Texas also saw a four point swing in crop ratings with the good to excellent percentage improving to 18 percent and poor and very poor falling to 45 percent.
The precipitation also helped improve drought ratings in some areas. The latest U.S. Drought Monitor shows a big improvement in Oklahoma, the Texas panhandle and south-central Kansas. Yet, the moisture was only enough to downgrade the drought classification in those areas from exceptional to extreme, meaning significantly more precipitation is needed to return to average soil moisture levels.
Low subsoil moisture remains an area of concern for wheat farmers. Almost three years of below normal precipitation in the southern U.S. plains has severely depleted moisture reserved in the deep soil. Not enough rain or snow has fallen recently to replenish the subsoil moisture. For example, even the 12 to 24 inches of snow in parts of Oklahoma, which greatly improved topsoil moisture ratings, likely will not improve subsoil levels alone. The percentage of topsoil rated short or very short fell from 55 percent the prior week to 35 percent this week. But the percentage of subsoil rated short or very short remains at 88 percent, just 1 percent better than last week and at a very concerning level.
Kansas Wheat CEO Justin Gilpin expertly summed up the impact of the recent precipitation. While he was very happy to see it, he said the rain and snow “was enough to buy this wheat crop 30 more days.”
2. India’s Wheat Production Policies at Crossroads
By Shawn Campbell, USW Assistant Director, West Coast Office
Wheat production in India, spurred by government production incentives and supply management, has reached new record highs each year for the past five years. In addition, wheat production has outpaced wheat consumption four of the past five years. Storage for all this wheat in India is inadequate so a significant amount is stored in the open, covered only by tarpaulins, and vulnerable to bad weather and pests. Now India is poised to produce its second largest wheat crop on record at 93.0 MMT.
In 2006, India’s problems were quite different. For a decade, yields remained stagnant and planted acres steadily declined. As a result, production lagged behind consumption for five years, resulting in beginning stocks dropping from a record 23.0 metric million tons (MMT) in 2002/03, to a 40 year low of 2.0 MMT by 2006. By that time, domestic wheat prices in India had spiked to record highs and there were widespread reports of hoarding by grain dealers and market speculators.
In order to control wheat prices and help boost production, the Indian government implemented several strategies over the next two years. The government banned wheat exports and abolished the country’s applied wheat import tariff of 60 percent, effectively allowing wheat imports for the first time in five years. The government also banned wheat futures trading from 2007 to 2009 to help curb speculation, lowered the share of wheat production it bought for government stocks from 23 percent to 14 percent and raised the minimum support price the government paid for wheat 33 percent to 8,500 rupees per MT ($211 per MT).
By 2008, India produced more wheat than it consumed for the first time since 2001. India’s government continued to work to boost wheat output over the next five years. From 2006 through 2012 wheat acreage increased at an annual rate of more than 445,000 hectares per year, while yields increased at a rate of 2.7 MT per hectare per year.
To keep domestic wheat prices stable, the Indian government has been forced to purchase a larger percentage of the crop each year since 2008 to keep excess supplies off the private market. Government purchases are expected to reach 47 percent in 2013. To help alleviate the growing wheat stocks problem, India lifted a ban on wheat exports and started selling wheat from government stocks in 2011.
This strategy has been somewhat successful thanks to lower production in the Black Sea Region and high world prices. Indian wheat has moved into feed markets and markets that seek lower quality wheat. The U.S. Department of Agriculture (USDA) estimates that India will export 6.5 MMT this marketing year and even more in the 2013/14 marketing year. However, analysts predict that India’s aged and unreliable infrastructure, in addition to congestion at its ports, will limit wheat exports to a maximum of 8.0 MMT. That appears to be too little to stop the continued growth in stocks.
The global wheat market has been speculating about how India’s government will face this challenge. This week, the government signaled its intention by announcing plans to offer 5 million MT of wheat at a price that traders say equates to about $314 per MT FOB. If the Indian government sells wheat for export at an export price that is below its minimum support price, the result is an export subsidy. India committed to establishing no export subsidies under its World Trade Organization agreement.
Instead of letting the market work by allowing domestic prices to go lower, the Indian government once again appears ready to artificially support cash wheat prices and purchase more wheat from its. And, sadly, the policies significantly distort the world wheat market and send an artificial signal to Indian farmers to keep growing wheat when other crops may, in fact, be more profitable, more in demand and more sustainable to produce.
3. Crop Production Must Grow While Meeting Consumer Expectations
By Steve Mercer, USW Vice President of Communications
Field to Market, the Keystone Alliance for Sustainable Agriculture, is a diverse initiative that joins producers, agribusinesses, food companies, conservation organizations and university and agency partners seeking to create sustainable outcomes for agriculture. Not long ago, Walmart joined this organization in part because of the retail giant’s very specific mission: consumer choice.
“We want to give our customers safe, affordable and sustainably produced food,” said Walmart Senior Manager of Sustainability Rob Kaplan at the recent Ag Issues Forum for U.S. farm media, sponsored by Bayer Crop Science. “That means we want to align with farmers around common outcomes.”
Through Field to Market, food retailers like Walmart have seen that corn, wheat, soybeans, cotton, rice and potatoes are produced more efficiently in the United States than 30 years ago. Producers have seen important improvements in farm safety and economic sustainability. At the same time, increased production to meet growing demand has also improved resource use by many crops.
Describing these results last year when introducing a detailed analysis, Field to Market chairman Fred Luckey said the organization’s efforts are helping organizations define and measure the common outcomes for sustainable agriculture. The report reflects significant progress as well as continued opportunities for improvement in the face of real sustainability challenges.”
Looking specifically at wheat, the Field to Market report showed that between 1980 and 2011, wheat production in the United States improved on all measures of resource “efficiency,” with decreases in per bushel land use (-18%), soil erosion (-47%), irrigation water applied (-12%), energy use (-12%) and greenhouse gas emissions (-2%). Yet, this progress was not as great as that seen in crops like corn and soybeans, crops that benefit from advances in biotechnology.
Kaplan said consumers in the United States and other countries have and will continue to demand more transparency about food production. He said they want to connect with the organizations that process it and the farmers who produce it. That is consistent with emerging support for agricultural technology that will help the world produce more and better food with less impact on the environment.
There is strong evidence that crop biotechnology is providing significant environmental benefits, including higher yields that will enable farmers everywhere to grow more crops on the same or even less land, with less water and inputs. For example, Graham Brooks and Peter Barfoot, the directors of PG Economics, have extensively researched the benefits of genetically modified organisms and have concluded that biotech crops reduced pesticide usage by 443 million kilograms of active ingredient between 1996 and 2010. They also estimate that because biotech crops have helped farmers adapt minimum- and no-tillage systems, the amount of reduction in carbon dioxide emission equals removing six million automobiles off the road for an entire year in the United States.
These universal advantages are consistent with what a growing number of consumers are saying about food produced from crops with biotechnology traits. The International Food Informational Council conducted a survey in May 2012 that showed about 70 percent of consumers would be willing to buy products made from biotech wheat if it would provide additional nutritional or environmental benefits.
Wheat remains an essential part of the global diet with demand increasing every day, so innovation must continue to advance. Farmers and researchers in the United States, Australia and Canada are committed to increasing yields while improving the nutritional benefits and sustainability of wheat production in the years ahead. Our approach includes improved conventional breeding and development of biotechnology traits in a long-term and responsible effort with food safety and customer choice as our top priorities.
4. Wheat and Social Media; Making a Global Connection
By Brittney Fund, USW Communications Intern
As the great American folk songwriter Bob Dylan said, the times they are a’ changing. And in today’s communications environment, internet-based “social media” such as Facebook, Twitter and YouTube are revolutionizing communications by providing effective and inexpensive ways for organizations to connect with their stakeholders in online conversations.
“That ability to have virtual conversations with more customers is a huge advantage to any business or organization today,” said Steve Mercer, U.S. Wheat Associates (USW) vice president of communications. “It is also important to get started with social media because more and more people want to use these sites as their main source of information. Engaging also shows your customers that you are ready to communicate with them on their terms.”
USW, our state wheat commission members, educational partners and a growing number of wheat buyers, millers and food processors are seeing the benefits of communicating through social media. For example, with more than 700 likes on Facebook and more than 3,000 followers on Twitter, USW is reaching more of its stakeholders through these connections. In this way, we are also enhancing the proven value of working with our trade service and technical experts.
“Currently, we are reaching out through Facebook to the major industrial baking companies, pastry shops and individual bakers and chefs in Egypt and the Middle East through their online pages and fans,” said Nihal Habib, USW Cairo communications and marketing specialist. “We want to create interest in U.S. wheat by posting information that explains the attributes of the six wheat classes, services and activities which USW provide.
“We started by adding people and liking pages of manufacturers, but now we receive at least five friend requests from pastry chefs every day and many posts and shares even though we are not currently promoting it in any other media,” Habib said. The “viral” nature Habib describes is a key benefit of social media where interesting posts or comments or photos are often shared with other friends and followers.
The wheat industry uses several social media sites that focus on our industry’s specific interests. Facebook, for example is one of the largest social media hubs. Organizations communicate with stakeholders via Facebook by posting information, photos and links as well as by commenting on what others post. These wheat industry offices have chosen Facebook as a way to connect with, and better serve their audiences:
Kansas Wheat Commission Montana Wheat & Barley Committee
Nebraska Wheat Board Oklahoma Wheat Commission
Oregon Wheat Commission South Dakota Wheat Commission
Texas Wheat Producers Board Virginia Small Grains Board
Washington Association of Wheat Growers National Association of Wheat Growers
USW Cairo Wheat Foods Council
Wheat Marketing Center Northern Crops Institute
International Grains Program AIB International
Grain Foods Foundation (“Go with the Grain”)
Though tweets are limited to just 140 characters, Twitter allows users to interact with their “followers” by streaming live tweets and using “hash tags” to find and read similar tweets. The following wheat industry offices use Twitter to connect with their customers:
Kansas Wheat Commission Montana Wheat & Barley Committee
Nebraska Wheat Board Oregon Wheat Commission
Texas Wheat Producers Board Virginia Small Grains Board
Washington Association of Wheat Growers National Association of Wheat Growers
Wheat Foods Council Grain Foods Foundation (“Go with the Grain”)
When trying to connect with more than pictures and posts, YouTube offers the opportunity to communicate with video. The Montana Wheat & Barley Committee and U.S. Wheat Associates are active on YouTube.
Pinterest is like an online bulletin board. Users have the ability to share a story with a picture and short description. These pictures or “pins” link to websites with additional information. Viewers also have the option to “re-pin” pictures to their own Pinterest pages in order to share them with their own followers. The Washington Association of Wheat Growers is expanding its reach through Pinterest.
You can follow U.S. Wheat Associates at 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, additional photos at www.flickr.com/photos/uswheat, plus video stories at http://www.youtube.com/uswheatassociates.
U.S. wheat industry organizations look forward to keeping in touch with you through these important online communities. We think you will also find new ways to connect with more of the people and organizations that are important to you.
5. Wheat Industry News
· Condolences to the family and friends of North Dakota farmer James Ole Sampson, 91, who passed away Feb. 25. Sampson played a major role in the merger of Great Plains Wheat (GPW) and Western Wheat Associates to establish USW in 1980 and was elected as the new organization’s first Chairman (visit the Online Edition of “Wheat Letter” to see a photograph of Mr. Sampson as USW Chairman). He served 24 years on the North Dakota Wheat Commission and represented his state as a GPW director first in 1963, going on to serve as GPW vice president and president. Read more about Sampson’s life and service here.
Photo from "Kernels and Chaff. A History of Wheat Marketing Development." Marx Koehnke
· USW Trade Policy Priorities Posted. U.S. wheat producers and their customers face a number of trade policy challenges. Trade barriers harm not just U.S. farmers but also their customers by impeding their product choices or raising the price of products they want. The U.S. wheat industry’s policy priorities for 2013 are now posted on the USW website.
· Americans' Views on Foreign Trade are Much More Positive this year, departing from their more skeptical position of the last several years according to Gallup's Feb. 7 to 10 “World Affairs” poll. Americans are now about as positive toward foreign trade as they were during the better economic times of the 1990s and early 2000s. Read more here.
· CME Group Reduces Grain Futures Trading Hours. Based on feedback from industry participants, CME will cut trading hours in CBOT grain and oilseed and KCBT markets, including the soft red winter (SRW) and HRW wheat contracts, both on the floor and via its electronic trading platform Monday, April 8, 2013, pending Commodity Futures Trading Commission approval. Electronic and floor trading hours for all related CBOT and KCBT futures, options, calendar spread options and inter-commodity spread options will be amended as follows: electronic trading Sunday to Friday from 7:00 p.m. to 7:45 a.m. CT; break in electronic trading Monday to Friday from 7:45 a.m. to 8:30 a.m. CT; and floor and CME Globex trading Monday to Friday from 8:30 a.m. to 1:15 p.m. CT. Read more here.
· ConAgra Foods, Cargill and CHS Combine North American Flour Milling to Form Ardent Mills. ConAgra is a leading buyer and miller of U.S. hard white (HW) wheat. A news release stated that Ardent Mills products will be backed by an extensive network of wheat sourcing capabilities and flour milling and bakery mix facilities across North America. Suppliers, including the farmers and cooperatives that provide wheat to ConAgra Mills and Horizon Milling, are expected to benefit from more opportunities to make more connections to consumers. To learn more about Ardent Mills, visit www.ardentmills.com.
· Senay Simsek Receives Young Scientist Research Award. Senay Simsek, assistant professor in hard red spring wheat end quality at North Dakota State University, is the recipient of the 2013 American Association of Cereal Chemists (AACC) International Young Scientist Research Award. The award is "presented to an individual for outstanding contributions in basic and applied research to cereal science with the expectation that contributions will continue." Dr. Simsek earned her Ph.D. in food science from Purdue University in 2006 and has been working as an assistant professor at North Dakota State University since 2007. Dr. Simsek recently participated in USW’s North Asian Wheat Marketing Conference and in its 2012 Crop Quality Seminars in Asia. Read more about Senay Simsek here.
· Von Bergen Installed as NAWG President. Montana wheat and barley farmer Bing Von Bergen was elected and installed as the new president of the National Association of Wheat Growers (NAWG) at the association’s board of directors meeting last week. Von Bergen is a native of the central Montana town of Moccasin. Prior to becoming a NAWG officer, he served in the officer corps of the Montana Grain Growers Association for five years and on the NAWG Board, chairing the Domestic and Trade Policy Committee in 2008 and 2009. Read more here.
· Congratulations to Ronald Lu, USW country director for Taiwan, who celebrates a significant anniversary with USW this month. Lu has been based in Taipei with USW for 30 years and we thank him for his dedication to U.S. wheat and the farmers who grow it.
· Follow USW Online. Check out our page at 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, additional photos at www.flickr.com/photos/uswheat, plus video stories at http://www.youtube.com/uswheatassociates.
Nondiscrimination and Alternate Means of Communications
USW prohibits discrimination in all its programs and activities on the basis of 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. |