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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 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. Northern Hemisphere Wheat Crop Has Big Yield Potential
2. Satisfaction with U.S. Wheat Starts at the Source
3. Growing Latin American Wheat Markets Demonstrate Benefits of Free Trade
4. Five Influential Sources that Question the Gluten-Free Fad
5. Jonathan Ruff Selected to Serve Internship at USW West Coast Office
6. Wheat Industry News


Online Edition: Wheat Letter – June 26, 2014 (http://bit.ly/1yS2YYU)

PDF Edition: (See attached file: Wheat Letter - June 26, 2014.pdf)

USW Harvest Report: http://www.uswheat.org/harvest


1. Northern Hemisphere Wheat Crop Has Big Yield Potential
By USW Market Analyst Casey Chumrau

The beginning of summer in the northern hemisphere also marks the start of wheat harvest. While there is still a long time before the entire crop is in the bin, the conditions at this point in the season provide a clearer picture of the harvest potential.

Conditions in the United States are as varied as the geography of the growing regions. Early harvest of hard red winter (HRW) wheat in the southern plains shows signs of the stress from the severe drought that plagued the area throughout the growing season. But in the northern plains, conditions are excellent and hold promise for much higher yields and output. For example, USDA rates 62 percent of the winter wheat in Kansas as poor or very poor and only 11 percent as good or excellent. By contrast, USDA rates winter wheat conditions in the northern state of Montana (still weeks away from harvest) at 62 percent good to excellent and just 9 percent poor or very poor.

Spring wheat prospects are very good thanks to the excellent conditions in the northern plains. Excessive moisture in May significantly delayed spring planting but farmers were able to make up lost time when drier conditions prevailed. USDA rates overall spring conditions as 71 percent good or excellent and only 4 percent as poor. In contrast, conditions in the Pacific Northwest have started to deteriorate in the last few weeks due to a severe lack of moisture and rising temperatures. The majority of wheat grown in the region is white wheat, both winter and spring varieties. In Washington, the percentage of winter wheat rated good or excellent fell 8 percent in just one month to 30 percent on June 22, according to USDA.

Wet conditions and unseasonably cold weather delayed spring plantings in Canada and prevented the planting of some acres altogether. In some areas, farmers rushing to finish seeding before the June 20 crop insurance deadline were unsuccessful. Agriculture and Agri-Food Canada (AAFC) expects spring-seeded area to fall 6 percent, but it could be even lower. Additionally, recent reports indicate winterkill was worse than expected in some areas so re-seeding will likely exceed AAFC’s March estimate of 8 percent. AAFC expects reduced seeded area and more average yields will lead to production of 24.6 MMT, down 21 percent from record production in 2013/14.

The wheat world now watches the Black Sea region with great interest because its production, or often lack of production, moves the market. For the second consecutive year, favorable weather provided good growing conditions that should support above average production. Low winterkill rates following a mild winter combined with timely spring rains should help boost yield potential and overcome reduced planted area. The region’s winter crops are in particularly good condition and harvest has started in the southern areas. USDA forecasts combined output from Russia, Ukraine and Kazakhstan to reach 87.5 MMT, down from 88.3 MMT last year but above the five-year average of 84.1 MMT.

Crop conditions and production prospects are generally good throughout Europe. Excellent growing conditions have put crop development ahead of normal in many areas and yields should equal or exceed average, if conditions persist. The favorable outlook led analyst Strategie Grains to increase its June estimate of 2014/15 production by 2.0 MMT to 139 MMT, which would exceed last year by 4.0 MMT. In France, the EU’s largest wheat producer, overall conditions are good. The European Commission’s Monitoring Agricultural Resources Unit expects yields to be slightly higher than average. However, dry conditions could limit yields in the eastern half of the country. Strategie Grains expects UK wheat production to rebound 30 percent to 15.5 MMT in 2014/15 following two disastrous crops in a row.

Current conditions in the Northern Hemisphere point to another abundant global wheat crop in 2014/15. Yet wheat buyers will not know the final measure of production until the last kernel is in from the fields. Nor will they know, as one U.S. market analyst pointed out this week, the volume of high-quality supplies for all classes of wheat. Global wheat demand will be lower than last year but most of the decline is in feed use, due to a rebound in corn supplies. Strong demand for high quality milling wheat remains near record levels. Despite last year’s record world crop, and projections that production will exceed 700 MMT for only the second time in 2014/15, record demand for the second consecutive year will likely keep supplies tight.


2. Satisfaction with U.S. Wheat Starts at the Source

As the U.S. wheat industry’s export market development organization, U.S. Wheat Associates (USW) focuses on building productive relationships with our customers. We report to them about the quality and processing properties of all six U.S. wheat classes every year. We help customers understand how to use the U.S. inspection system to their advantage. We share information about risk management. And we emphasize the value of supply reliability.

Local efforts help demonstrate the value of the wheat our farmers produce to their customers. But when we measure satisfaction, the feedback is clear: it is not always enough to tell our customers about the benefits of buying and processing U.S. wheat.

That is why we often bring customers to the United States. Here they can meet the farmers who produce abundant supplies and they can talk to elevator operators, traders and grain inspectors about how they deliver quality wheat to the export elevators. Trade team visits to get a “farm-to-port” experience are a vital part of building trust in the U.S. wheat production and marketing system.

Buyers from Japan, Brazil and South Africa have visited the United States since late April 2014 as part of the 11 trade teams planned for 2014. This week, eight senior managers from Nigeria’s milling and noodle/pasta manufacturing industries started a visit to Colorado, Nebraska and Kansas to examine the current HRW crop.

“Thanks to the relationships built with millers in Nigeria and between those millers and the farmers, U.S. wheat found a home in Nigeria,” said USW Regional Assistant Director, Sub-Saharan Africa, Gerald Theus. “And we are working to keep it that way.”

Another team of six Japanese flour milling executives is also here this week to meet with all sectors of the west coast grain trade from wheat breeders to farmers to exporters.

“Visits like this give milling executives the chance to discuss other important factors like our logistical and quality assurance systems face-to-face with the managers responsible for them.” said USW Country Director, Japan, Wataru Utsunomiya.

Looking ahead, flour miller teams from Taiwan and Korea will visit the United States in July, while separate teams from Europe and the Philippines are due in August. Another team from Japan — this one including mid-level flour milling managers — will arrive in September hopefully in time for the U.S. northern spring wheat harvest.

USW is proud to work with its state wheat commissions, educational partners and USDA to sponsor these important trade team events each year.


3. Growing Latin American Wheat Markets Demonstrate Benefits of Free Trade
By USW Policy Intern Kamile Bougdira and USW Vice President of Policy Shannon Schlecht

Of the 20 free trade agreements (FTAs) negotiated by the United States now in force, over 50 percent are with countries in the Western Hemisphere. Of the U.S. FTAs currently in force with Latin American countries1, 11 eliminated import tariffs on wheat. In those countries, average U.S. wheat market share is about 65 percent compared to an average of less than 20 percent in Latin American countries with no trade agreement with the United States.

While proximity and other factors do help boost U.S. wheat market share, duty-free access negotiated in FTAs clearly has a positive impact on the trade. Consider Brazil, Argentina and the Mercosur agreement: the United States used to supply most of Brazil’s wheat; now duty-free Argentinian wheat dominates the market (when its supplies are sufficient).

The comparison between the implementation of the Canada-Colombia FTA and the U.S.-Colombia FTA provides a similar example. Canadian wheat could enter Colombia duty free under their agreement implemented in 2011, putting U.S. wheat supplies at a trade disadvantage. The market began shifting to Canada — just as the Brazilian market shifted to Argentina under the Mercosur agreement.

However, U.S. wheat market share has nearly doubled since the U.S-Colombia FTA entered into force in May 2012, increasing from 27.5 percent in 2011/12 to more than 50 percent in 2013/14. Putting U.S. and Canadian wheat exports back on a level playing field also put U.S. market share back to more historical levels (see Chart A).

Chart A: U.S. Market Share in Colombia

Source: USDA PS&D Database

USW believes that the growth in U.S. wheat export volume and market share to Latin American countries over the past decade at least partly reflects the effect of free trade. Sales of about 5.5 MMT and a market share of about 33 percent in 2000/01 was more than 8.2 MMT and a 37 percent share by 2012/13 (see Chart B).The significant jump in U.S. exports in 2013/14 reflects Argentina’s inability to meet Brazil’s wheat import demand. However, the Brazilian government did suspend the 10 percent applied tariff on U.S. wheat for several months in 2013 — another trade policy that affected the market to the relief of Brazilian millers. This week, in fact, the Brazilian government announced it was suspending the applied tariff again through August 15 for up to 1.0 MMT of wheat from non-Mercosur sources. USW expects this market-opening policy will once again lead to increased U.S. wheat sales to Brazil.

Chart B: U.S. Wheat Exports and Market Share in Latin America

Source: USDA PS&D Database


Latin America is a wheat deficit region where production only meets about two-thirds to three-quarters of its overall consumption needs of around 36.0 MMT. Regional production gains have not kept pace with consumption growth and the gap exceeded 14.0 MMT in 2012/13 and 13.0 MMT in 2013/14 (see Chart C).

Chart C: Latin America Wheat Deficit

Source: USDA PS&D Database

In Latin American countries with and without free trade agreements with the United States, USW has always provided the information, service and technical expertise to help our customers. That will not change. Yet USW also believes increasing market access in the region will benefit Latin American millers, processors and consumers as well as U.S. wheat farmers. The evidence is clear why we should all support comprehensive trade policies that set markets free.

USW continues to support trade policies that are comprehensive and that liberalize markets. We hope that new trade initiatives underway with Asian and European governments meet these criteria and help achieve the same successful outcome producers and customers have seen in Latin America.

1. Argentina, Bolivia, Brazil, Chile, Columbia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela


4. Five Influential Sources that Question the Gluten-Free Fad

In the United States and a few other countries, “celebrities, athletes, talk show hosts and nearly 30 percent of people say they are turning to gluten-free diets to solve health issues from ‘foggy mind’ to bloating and obesity,” according to a recent article titled “The Truth About Gluten” by the Wheat Foods Council (WFC). Yet, as the article points out, it is “important to consider that nutrition experts do not advocate a gluten-free diet for most people.” In fact more and more influential, popular resources are pushing back at the shockingly extensible gluten-free trend.

WFC’s article respectfully refutes several anti-gluten positions raised by the diet’s proponents. And just this week, the “Wall Street Journal,” “Time” magazine, NBC News’ “Today Show Health” and “U.S. News and World Report” ran articles echoing the same strong point made by Dr. Stephano Guandalini, founder and director of the Center for Celiac Disease at the University of Chicago: “There is a popular belief that gluten is bad for everyone. This is not the case,” he said. “There is no evidence to show that anyone who does not suffer from celiac disease or non-celiac gluten sensitivity benefits from following a gluten-free diet.”

“Wheat Letter” shares excerpts from the articles and links to the sources here.

The Truth About Gluten – Wheat Foods Council, May 20, 2014

“Eliminating wheat products (bread, rolls, cereals, pasta, tortillas, cakes, cookies, crackers) will result in fewer calories, but important nutrients like B-vitamins (thiamin, riboflavin, niacin and folic acid), and iron and fiber will also be lost,” said Pam Cureton with Boston’s Center for Celiac Research and chair of the Academy of Nutrition and Dietetics’ sub-practice group, Dietitians in Gluten Intolerance Diseases (DIGID). “Grains provide 43 percent of the fiber in the U.S. diet and wheat is approximately three-quarters of the grains eaten in the U.S. Nutritionally, many gluten-free products are not equal replacements for their wheat-containing counterparts.”

“Wheat, like all other food plants we eat, has undergone farmer selection and traditional breeding over the years,” states Brett Carver, PhD, wheat genetics chair in Agriculture at Oklahoma State University. “The hybridization that led to bread wheat occurred 8,000 to 10,000 years ago. All cultivated wheat varieties, both modern and heirloom varieties, have these hybridization events in common, so the kinds of protein (and gluten) present in today’s varieties reflect the proteins present throughout the domestication process of wheat.”

The Gluten-Free Craze: Is it Healthy? – “Wall Street Journal,” June 23, 2014

Americans have become preoccupied with what they eat on a whole new level, focusing on scouting out healthy foods while packing eating into ever more hectic schedules. The desire to eat better, combined with food companies pursuing new chances for growth, has created a cycle of influence that is increasingly hypercharged by the Internet. The result is a cacophony of competing claims and convictions about how we eat that can bewilder consumers as much as it liberates them.

For now, interest [in the United States] in gluten-free remains strong — though there are signs that may have peaked. The share of survey respondents saying they are trying to avoid gluten was 29.4 percent in May, according to market research firm NPD Group Inc. That is down from a peak of more than 30 percent late last year, but higher than the 25.5 percent measured four years ago.

Eat More Gluten: The Diet Fad Must Die – “Time” Magazine, June 23, 2014

Gluten is to this decade what carbohydrates were to the last one and fat was to the ’80s and ’90s: the bête noir, the bad boy, the cause of all that ails you—and the elimination of which can heal you. As has been clear for a long time … a whole lot of that is flat-out hooey, a result of trendiness, smart marketing, Internet gossip and too many people who know too little about nutrition saying too many silly things.

So, crunch the numbers and what do we get? Perhaps 1 percent of Americans definitely need to be gluten-free and another 5.7 percent ought to be careful. As for the other 93.3 percent of us … break out the Parker House rolls.

5 Things You Didn’t Know about Gluten-free Diets – “Today Health,” NBC News, June 24, 2014

In 2010, Americans spent more than $2.6 billion on gluten-free items. By the end of next year, that number will reach $5 billion, according to the National Foundation for Celiac Awareness. These sales aren’t due to an inordinate number of people with Celiac disease … but rather because of people hoping that by kicking the gluten habit, they’ll see smaller waistlines … the science is still out about whether the gluten-free fad translates into real health benefits for the rest of us.

Products that boast they are free of something, whether fat-free, sugar-free or gluten-free, often have extras added to make them more palatable. “I don’t know if that is specific to gluten-free companies. There are a lot of foods on the market that are loaded with sugar and salt,” says Kristin Kirkpatrick, manager of wellness nutrition services at Cleveland Clinic’s Wellness Institute.

Separating the Wheat (Gluten) From the Chaff U.S. News and World Report Health & Wellness,” June 24, 2014

As we observe the rise of celiac disease in our population — both as the result of increased prevalence as well as through better diagnosis — many find it tempting to demonize gluten as “toxic” and to scapegoat wheat as the cause of all that ills our society — from obesity and lethargy to depression and diabetes. But gluten is not an inherent “toxin,” nor does it cause celiac disease — at least, no more so than, say, peanuts cause food allergy or could be considered “toxic” just because a minority of people have a life-threatening food allergy to them.


5. Jonathan Ruff Selected to Serve Internship at USW West Coast Office

USW welcomes Jonathan Ruff to an internship in its West Coast Office in Portland, OR. Ruff is a graduate student in international management at Portland State University. He will assist USW with trade team visits to the West Coast Office and conduct research on wheat supply logistics.

“We are very pleased to have someone with Jon’s solid international experience work with us this summer,” said USW Vice President and West Coast Office Director Steve Wirsching. “I am confident that his internship will benefit the wheat farmers we represent in overseas markets.”

“I appreciate the opportunity to apply my skills and training for an organization that is engaged in the world wheat market,” said Ruff. “I know it will provide very relevant experience for my career.”

Ruff’s graduate work focusing on global supply chain management matches well with USW’s work demonstrating the quality, reliability and value of U.S. wheat. Ruff is also studying Mandarin Chinese and recently returned from a field study of several factories in China, Japan and Vietnam as part of his graduate studies.

Ruff studied Spanish in Cuernavaca, Mexico, during his undergraduate international management studies at the University of Oregon. He joined the Peace Corps and worked in Costa Rica for two years as a business coach for a micro-lending institution. He then moved back to his native Portland to work in sales and management at Transcore DAT, a national transportation technology company.


6. Wheat Industry News
  • Wirsching Named to FGIS Advisory Committee. Agriculture Secretary Tom Vilsack announced seven new members to the USDA Grain Inspection Advisory Team, including USW Vice President and Director of the USW West Coast Office Steve Wirsching. California Wheat Commission Executive Director Janice Cooper also serves on the committee which advices USDA on establishment of programs and services under the United States Grain Standards Act.
  • Merci et Adieu to Kamile Bougdira, whose trade policy internship at USW Headquarters in Arlington, VA, ends June 27, 2014. Bougdira helped USW staff investigate policies related to biotechnology and, separately, the Moroccan grain trade. He will soon return to his native France to complete studies in law and economics at the Institute of Political Studies in Strasbourg.
  • Wheat Breeder Named as World Food Prize Winner. The World Food Prize has named Dr. Sanjaya Rajaram as a 2014 World Food Prize Laureate. Rajaram succeeded Dr. Norman Borlaug at CIMMYT’s wheat breeding program and developed 480 wheat varieties released in 51 countries on six continents — work credited with increasing world wheat production by 200 MMT. Rajaram will be honored at the official World Food Prize ceremony in October 2014. For more information, visit http://bit.ly/2014worldfoodprize.
  • Syngenta Acquires European Winter Wheat Business. Syngenta announced it would acquire the German and Polish winter wheat and winter oilseed breeding and business operations of Lantmännen, a Swedish food, energy and agriculture group. As part of the transaction, Syngenta and Lantmännen will collaborate in wheat research and Lantmännen will distribute Syngenta cereals and WOSR seeds in Sweden. For more information, visit http://bit.ly/syngenta061614.
  • WMC Whole Grain Products Short Course. The Wheat Marketing Center in Portland, OR, will hold its Whole Grain Products Short Course July 28 to Aug. 1, 2014. For more information or to register, visit http://www.wmcinc.org.
  • IGP Milling Courses. The International Grains Program in Manhattan, KS, will have its Buhler-KSU Executive Milling Course in English July 7 to 11, 2014 and its Spanish version Aug. 11 to 15, 2014. For more information or to register, visit http://www.grains.ksu.edu/igp/.
  • NCI Rheology of Wheat and Flour Quality Course. The Northern Crops Institute in Fargo, ND, will hold its Rheology of Wheat and Flour Quality short course July 15 to 17, 2014. For more information or to register, visit http://www.northern-crops.com/.
  • IFIC Updates Website. The International Food Information Council Foundation (IFIC) revised its website http://www.foodinsight.org/ to improve navigation, enhance search capabilities and add social media functions and other features.
  • Thank you to Sam Huang, who will retire June 30 after serving as director of California Wheat Commission’s Milling and Baking Quality Laboratory since 1986. Welcome to Claudia E. Carter, who will join the California Wheat Commission as the new lab director.

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.


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