Bookmark and Share
U.S. Wheat Associates
THE WORLD'S MOST RELIABLE CHOICE.


HOME > NEWS & MEETINGS > WHEAT LETTER > ARCHIVE > Wheat Letter - August 30, 2012

Wheat Letter - August 30, 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.” 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. Risk Management: Supply Factors Worth Watching
2. No Evidence Gluten-Free Diet Offers Health Benefits or Promotes Weight Loss
3. Egyptian and Libyan Officials to Learn More about U.S. Wheat Quality, Reliability
4. Russia Joins WTO but U.S. Commodity Organizations Wait for PNTR
5. Wheat Industry News

Online Edition: Wheat Letter – August 30, 2012 (http://bit.ly/QF0AAr)

PDF Edition: see attached Wheat Letter - August 30, 2012.pdf

Crop Quality Information: USW Harvest Report (http://bit.ly/nf7FpE)



1. Risk Management: Supply Factors Worth Watching
By Casey Chumrau, USW Market Analyst

Wheat buyers everywhere should pay close attention now to world wheat supply to help manage their risk, even though three quarters remain in marketing year 2012/13. The Northern Hemisphere’s harvest provides some concrete supply information, but much uncertainty remains, so buyers should stay current and aware of factors affecting exportable supplies and prices.

World wheat production is the most basic, but important, factor shaping world supply. Prospects for the 2012/13 crop have deteriorated since the first estimates in May due to worsening weather conditions in several key production areas. The U.S. Department of Agriculture (USDA) currently estimates world output at 663 million metric tons (MMT), down from the May forecast of 678 MMT and below the five-year average of 666 MMT. The International Grains Council also lowered its August world production forecast to 662 MMT, down from its May estimate of 676 MMT.

The overall world production number, however, does not tell the entire story as individual outlooks for each key wheat-producing region look very different. For example, notwithstanding the publicity of a devastating drought, the United States will produce a wheat crop that is above average (reported on Aug. 16). In fact, USDA estimates production will increase 14 percent from last year to 61.7 MMT, greater than the five-year average of 59.7 MMT. Canada is also poised to have an excellent harvest. Statistics Canada expects 2012/13 Canadian wheat production to reach 27.0 MMT, up 7 percent from 2011/12 and the second highest production in 15 years.

USDA expects production in several other major wheat-producing countries to remain relatively close to last year’s output levels. When combined, the 27-country European Union is the world’s largest wheat producer. Both USDA and French-based Strategie Grains project 133 MMT for the 2012/13 EU wheat crop, just 3 percent lower than the prior year’s 137 MMT. The People’s Republic of China produces more wheat than any other single country in the world. According to USDA's projections, Chinese production will reach 118 MMT for the second consecutive year. USDA does expect a significant 8 percent (7.03 MMT) production increase in India. However, as reported here June 21, 2012, while China and India will account for more than 30 percent of total estimated world supplies in 2012/13, together they accounted for less than 1 percent of world exports on average for the past five years.

In contrast, Black Sea region wheat production will fall far below last year’s record levels and accounts for much of the drop in world production. Harvest reports indicate that minimal snow cover and extremely cold temperatures caused a lot of damage to their winter wheat. Ukrainian agricultural consultancy UkrAgroConsult reduced its 2012/13 wheat production forecast to 14.2 MMT in August, lower than USDA’s August estimate of 15.0 MMT and 36 percent below last year’s output. USDA also expects Kazakhstan’s production to fall more than 50 percent from last year to 11.0 MMT.

Russia’s production and the government’s potential response arguably bear watching the most this marketing year. While the Russian government’s official 2011/12 wheat production estimate stands at 45.0 MMT, Russian agricultural analyst SovEcon reduced its estimate today to 38.0 MMT (see chart below). If realized, production would fall short of the 2010/11 crop of 41.5 MMT, which led Russia to impose a year-long export embargo. SovEcon also reported that the country’s exportable grain surplus could run out by November if the high export pace continues. As a result, many industry participants question whether another ban is on the horizon. Russian officials have repeatedly declared that an export ban is not an option in calendar year 2012, but the speculation alone is enough to create uncertainty in the world market.

Concerns about harvest in the Southern Hemisphere and ongoing U.S. drought conditions further add to market uncertainty. Argentina’s planted wheat acreage is at a 40-year low and USDA estimates Australian production down 12 percent, with weather conditions threatening to decrease that number even further. Soil moisture conditions in the United States will also affect winter wheat planting decisions over the next two months.

At this early stage in the marketing year, we must wait to see how these supply factors will turn out and influence the overall wheat market. The current level of uncertainty leads to price fluctuations and represents risk for world wheat buyers. For this reason, it is important to stay vigilant. USW representatives around the world stand ready to discuss market issues and opportunities for U.S. wheat customers.




2. No Evidence Gluten-Free Diet Offers Health Benefits or Promotes Weight Loss
Note: This information was released by the Grain Foods Foundation on Aug. 29.

Research published in the latest issue of the Journal of the Academy of Nutrition and Dietetics indicates there is no benefit for the average healthy adult to follow the gluten-free diet. It also debunks the perception that going gluten-free is an effective way to lose weight. The paper, "Gluten-Free Diet: Imprudent Dietary Advice for the General Population?" authored by Arizona State University professor and researcher, Glenn Gaesser, PhD, addresses common misperceptions about the gluten-free diet and explores the scientific support for following it.

The term gluten refers to protein found in the grains wheat, rye and barley. People affected by celiac disease and gluten sensitivity must avoid all foods containing gluten; currently, the gluten-free diet is the only treatment for these conditions. Approximately 1 percent of Americans have celiac disease and another 6 percent are estimated to suffer from gluten sensitivity, yet many others believe going gluten-free leads to good health.

Despite purported health claims often seen in the media, Dr. Gaesser found there is no evidence that the gluten-free diet provides benefits to the general population and that gluten itself may, in fact, provide important benefits, such as supporting heart, gut and immune system health. Likewise, he explored the perception that the gluten-free diet is effective for weight loss. After reviewing the existing research on gluten, Dr. Gaesser concluded the gluten-free diet is not an effective weight-loss method. In fact, it frequently leads to weight gain because many gluten-free products contain more added fats and sugars than their gluten-containing counterparts.

"This paper is one of the first to look at the other side of the gluten craze. While the gluten-free diet is an important medical treatment for people with celiac disease and gluten sensitivity, far too many Americans are following the diet for reasons that simply do not make sense," stated Dr. Gaesser. "Even though it has been endorsed by celebrities for weight loss, let's face it – they are not the experts on nutrition and health. It's time to listen to the science."

These findings run counter to a recent Harris survey of more than 2,000 adults polled about their perceptions and use of the gluten-free diet. Of those participants who followed the diet, half reported doing it to "feel better" and 26 percent as a "diet for losing weight." Furthermore, according to a 2011 report from Packaged Facts, the gluten-free product market grew by a rate of 30 percent each year between 2006 and 2010; reasons for this rapid growth include more accurate testing methods for celiac disease and gluten sensitivity, the perception gluten-free products are healthier in addition to endorsements from celebrities.

This disconnect illustrates the need for stronger efforts to educate the public about reasons for following the gluten-free diet.

Following are resources available to U.S. wheat customers on expert nutrition advice gluten in the diet.


3. Egyptian and Libyan Officials to Learn More about U.S. Wheat Quality, Reliability

Government officials and executives with trading and flour milling companies from Egypt and Libya are traveling in the United States Sept. 5 to 14 to learn about the U.S. wheat production and marketing system and to strengthen commercial relationships with the U.S. wheat industry. The visit is sponsored by U.S. Wheat Associates (USW), USDA’s Foreign Agricultural Service (FAS) and the Kansas Wheat Commission.

“Because each country must import wheat, both Egypt and Libya make it a policy to provide bread for their people at a very low cost,” said Hesham Hassanein, regional marketing and special projects manager with the USW regional office in Cairo, Egypt. “We want to help prove to both government officials and private buyers that they can rely on the United States as a wheat supplier by demonstrating firsthand the distinctive qualities of U.S. wheat and by building trust in the U.S. supply chain and inspection procedures.”

Although Egypt is the world's largest wheat importer, the amount of U.S. wheat purchased each year can vary greatly. The landed cost of U.S. wheat is often higher than wheat from the nearby Black Sea region but Hassanein said quality is also important to both private and government importers. In Libya, the complicated public-private wheat acquisition and subsidy system present similar challenges and opportunities. Libya has only purchased significant quantities of U.S. wheat in two of the past 10 years, but the interim government is trying to stabilize the country and feeding its people is a priority. The key to competing in these important markets, Hassanein said, is to constantly emphasize the value elements associated with U.S. wheat and the unique features of the U.S. grain marketing, inspection and quality assurance systems.

The team will start its visit with a briefing by USW staff and representatives from local wheat industry organizations at the USW Headquarters Office in Arlington, VA. After private meetings at the Egyptian and Libyan embassies, the team will learn about world wheat supply and demand and USDA’s Federal Grain Inspection Service (FGIS). Meetings with private wheat exporters at the North American Export Grain Association rounds out the team’s Washington, DC, visit.

The team then travels to New Orleans, LA, to observe grain inspection and ship loading at an export elevator. In Kansas City, MO, the officials will see how U.S. wheat prices are discovered at the Kansas City Board of Trade and learn more about the integrity of U.S. wheat inspection at the FGIS Technical Center. In Manhattan, KS, the team will get more information on wheat production and uses from the Kansas Wheat Commission, Kansas State University’s International Grains Program and AIB International.

4. Russia Joins WTO but U.S. Commodity Organizations Wait for PNTR

Russia officially joined the World Trade Organization last week, ending its accession negotiations that date back to 1993. Despite this achievement, the United States has yet to grant the country permanent normal trade relations (PNTR) status, a designation that WTO membership mandates.

Russia’s WTO accession will give the U.S. and other WTO members improved market access to the world’s ninth largest economy and mechanisms to enforce the country’s commitments to domestic supports, export subsidies and state trading enterprise disciplines. As part of their accession “package,” Russia agreed to limit the amount of market-distorting domestic support and to eliminate export subsidies. As noted in the August 16 issue of Wheat Letter, limiting trade-distorting subsidies ensures that production and prices are determined by market forces instead of administrative caveat. These commitments, on a major wheat exporter, will benefit world wheat buyers and producers.

Before Russia joined the WTO last week, there were limited tools to challenge any trade distorting policies. Now, however, if Russia does not play by the rules, other WTO member countries may bring a dispute case.

The United States has granted Russia normal trading relations status on an annual basis since the early 1990s, but cannot take full advantage of WTO membership, including enforcing its WTO commitments, until this designation is made permanent. The Joint USW and National Association of Wheat Growers (NAWG) International Trade Policy Committee, which recommends trade policy to the boards of directors for both organizations, recently approved a resolution that supports granting PNTR to Russia. In July, U.S. congressional committees approved such measures, but the full membership of the House and the Senate have not yet voted on the measures.


5. Wheat Industry News
  • Storm Interrupts Supply Chain with Needed Inland Rain Ahead. Barge traffic and export elevator operations from Baton Rouge, LA, to the U.S. Gulf remain suspended today in the aftermath of Hurricane Isaac. Industry sources said the facilities could be back up and running soon. The storm system is expected to bring much-needed rain to parts of the HRW and SRW production regions.
  • New USDA Wheat Labs Website. USDA’s Agricultural Research Service has a new website for its four wheat quality laboratories, which highlights their capabilities and accomplishments. Visit it at http://1.usa.gov/PMpyMX.
  • TPP Negotiations. The next negotiating round for the Trans-Pacific Partnership agreement will take place Sept. 6 to 15 in Leesburg, VA.
  • NCI Grain Procurement Short Course. The Northern Crops Institute (NCI) in Fargo, ND, will hold its Grain Procurement Management for Importers Course Sept. 17 to 26. For more information or to register, visit http://www.northern-crops.com.
  • 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/.
  • Hard White Variety Tops Kansas Yield Contest. Three Kansas wheat farmers have earned cash awards in the 2012 Kansas Wheat Yield Contest. The top yield submitted in the contest was 84.65 bushels per acre, harvested from a field in Western Kansas seeded with Snowmass, a hard white (HW) wheat variety.
  • Condolences to Pamela Ann Leckie-Weise, administrative assistant/language specialist in the USW Cape Town Office, on the death of her mother, Joyce.
  • Condolences to Ann Murchison, office manager in the USW West Coast Office, on the death of her husband Dick.
  • Condolences to the family of William Richard (W.R.) Moore, Jr., who died Aug. 26 in Munday, TX. Moore was a founding member and a past chairman of the Texas Wheat Producers Board and served on the USW and NAWG boards of directors. For more information, visit http://bit.ly/O5QcgF.


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.