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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 wheat’s profitability for U.S. wheat producers and its value for their customers.” USW activities are funded by producer checkoff dollars managed by 18 state wheat commissions and USDA Foreign Agricultural Service cost-share programs. For more information, visit www.uswheat.org or contact your state wheat commission.

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In This Issue:
1. Diminishing Low Protein Premiums Add Value to Soft White Export Supplies
2. Annual Spring Wheat Tour Sees Drought Taking Toll on Yield Potential
3. Korean Wheat Crop Survey Trade Team Visits United States to Inform Purchasing Decisions
4. Profiling U.S. Wheat Sustainability: Justin Knopf, Hard Red Winter Wheat Farmer
5. U.S. Wheat Organizations Comment on NAFTA Renegotiation Objectives
6. Wheat Industry News

PDF Edition: (See attached file: Wheat Letter - July 27, 2017.pdf)

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


1. Diminishing Low Protein Premiums Add Value to Soft White Export Supplies
By Stephanie Bryant-Erdmann, USW Market Analyst

Four consecutive years of drought, which shrunk soft white (SW) production and increased average protein levels, had the market rationing demand through low protein premiums. Now, after two years of more normal weather patterns, low protein premiums are quickly disappearing providing an excellent buying opportunity for U.S. wheat customers.

In marketing year 2016/17 (June to May), the protein premium for 10.5 percent maximum protein SW shrunk to an average 60 cents per metric ton (MT), compared to the 5-year average of $10 per MT (U.S. protein is calculated on a 12 percent moisture basis). The protein premium for 9.5 maximum protein SW fell to $14 per MT. So far in 2017/18, the 10.5 maximum protein premium has increased slightly to 71 cents per MT due to the uncertainty of harvest; however, the 9.5 maximum protein premium has continued to shrink to an average $6 per MT due to expectations of “normal” protein distributions and an ample supply of SW.

According to USW Crop Quality data, the 5-year average protein for SW is 10.4 percent, which includes two higher protein years (2014/15 and 2015/16). Prior to 2014/15, the 5-year average was 9.9 percent. The expectation of “normal” protein distributions is a direct result of more normal growing conditions. Idaho, Oregon and Washington received timely and ample moisture throughout the growing season, resulting in good stands and grain-fill.

In USDA’s latest winter wheat condition report for 2017/18, winter wheat conditions across the three states averaged 78 percent good to excellent. On July 24, spring wheat conditions in Idaho and Washington were rated 63 percent and 40 percent good to excellent, respectively. Roughly 87 percent of SW is winter wheat and 13 percent is spring wheat.

In addition to good crop conditions, USDA also expects average yield to reach 65.9 bushels per acre (4.43 MT per hectare) or 3 percent above the 5-year average. If realized, that would still be 7 percent below 2016/17 yields. USDA expects large 2017/18 SW beginning stocks to offset an anticipated 11 percent decline in production. Total 2017/18 SW supply is projected to remain stable year over year at 9.77 million metric tons (MMT).

It is important to note that the decline in low protein premiums are currently being driven not by actual data, but by the expectation of normal protein distributions and decent yields at this point because the 2017 SW harvest is only just underway. As always, nothing is guaranteed until the wheat is safely in the bins, but customers can take advantage of the decline in low protein premiums to secure high quality, low-protein SW at reasonable prices.

Customers are encouraged to keep abreast of harvest conditions and to contact their local USW representative with any questions about U.S. wheat supplies and production.

To read the latest USW Weekly Harvest Report, click here.

To subscribe to USW Reports, click here.


2. Annual Spring Wheat Tour Sees Drought Taking Toll on Yield Potential
By Erica Oakley, USW Director of Programs

This week, the Wheat Quality Council hosted its annual hard red spring (HRS) and durum crop tour. Participants spent three days in North Dakota surveying this year's crop and estimating yield. The tour, which surveyed a total of 496 fields, estimated weighted average HRS yield at 38.1 bushels per acre (bu/a), significantly lower than last year’s HRS average of 45.7 bu/a because of ongoing drought conditions in western areas. The durum weighted average yield was 39.7 bu/a, down from 45.4 bu/a in 2016. Results from six HRW fields showed a weighted average of 46.6 bu/a.

Participants on the tour always represent a wide range of the wheat industry, including millers, traders, media, farmers, researchers and government officials. There were 76 participants on this tour, who traveled along eight distinct routes covering most of the state’s wheat production. I joined my USW colleague Assistant Director of Policy Elizabeth Westendorf on the tour.

It was insightful to see the conditions on the ground after reading reports about the drought. It was also interesting to see the difference in field conditions along each of the routes over all three days.

On the first day, participants drove between Fargo and Bismarck, with two routes going farther into the western part of the state, and others covering western Minnesota and northern South Dakota. Conditions on the eastern side looked good, though there was evidence of drought stress. Reports from the west included evidence of much more severe conditions. The Day 1 weighted average yield was 38.8 bu/a, down from 42.9 bu/a in 2016. For HRS specifically, the yield was 37.9 bu/a, down from 43.1 bu/a in 2016. The scouts surveyed 207 fields on Day 1, of which 194 were HRS, 10 durum and three HRW.

On Day 2, the tour surveyed 225 fields, 188 of which were HRS; along with 34 durum and 3 HRW. The group moved from Bismarck to Devils Lake. The more western routes reported drought stress, though not as severe as the scouts saw in southwestern North Dakota on Day 1. Overall average for Day 2 was 35.7 bu/a, down from 46.5 in 2016. For HRS, the yield was 35.8 bu/a, down from 46.9.

The third day of the tour included a half day of crop surveying. The participants then all returned to North Dakota State University’s Northern Crops Institute in Fargo to compile the overall crop report. On Day 3, participants surveyed at total of 61 HRS fields and three durum fields. The Day 3 weighted average yield for HRS was 46.2 bu/a, down from 51.9 bu/a in 2016. The weighted average durum yield from just three fields was 46.2 bu/a, down from 52.1 bu/a in 2016.

The results reflect a snapshot of yield potential observed by the participants in the fields they scouted.

"There is still a question of abandonment because of the dryness,” said Dave Green, executive vice president of the Wheat Quality Council. “We do not yet know how much of the crop has been hayed — how much of it has been plowed under."

View highlights and photos from the tour by searching #wheattour17 on Facebook and Twitter. For more information and for results from previous tours, visit the Wheat Quality Council’s website at www.wheatqualitycouncil.org.


3. Korean Wheat Crop Survey Trade Team Visits United States to Inform Purchasing Decisions
By Amanda J. Spoo, USW Assistant Director of Communications

When making major purchasing decisions, there are a variety of factors to consider and balance. Global wheat buyers typically consider price, reliability, customer service and wheat quality, and USW makes it possible for overseas wheat buyers to review these factors with the people who develop, produce and sell U.S. wheat.

USW welcomed a trade team of four Korean executives from major flour milling companies to the United States July 16 to 23, 2017. USW collaborated with the Montana Wheat & Barley Committee (MWBC), Washington Grain Commission (WGC) and Oregon Wheat Commission (OWC) to organize and host this trade team. Funding also came from the USDA Foreign Agricultural Service (FAS).

“Three of the team members recently took on new responsibilities for wheat purchasing, so this experience was essential to help them learn about the U.S. quality assurance system and to better understand the wheat supply chain,” said Chang Yoon Kang, USW Country Director for Korea. “They had a firsthand look at the 2017 crop, which will help them prepare their upcoming purchasing plans.”

USDA reports that in marketing year 2016/17, South Korea imported 1.13 million metric tons (MMT) of U.S. wheat, including U.S. soft white (SW), hard red winter (HRW) and hard red spring (HRS) wheat.

Kang, who led the trade team, explained that the Korean wheat foods market is developing in a way that is similar to the U.S. market. End-product flour specifications in Korea are becoming more complicated because consumers demand quality and an increasingly wide range of products.

The team began its trip in Montana, where it immediately took a broad look at the complete supply chain with visits to: the Northern Ag Research Center; CHS Big Sky; EGT, LLC; and Columbia Grain. The team members also visited MWBC Director Randy Hinebauch’s farm and observed the HRS crop harvest.

Next, the team traveled to Washington for a focus on wheat breeding and research. During a visit to the USDA Agricultural Research Service (ARS) Western Wheat Quality Lab in Pullman, the team participated in a blind taste test for noodles produced with flour from various varieties and wheat classes, and provided their feedback.

“The team had an extensive discussion about how quality is determined to correlate with end-users,” said Glen Squires, WGC CEO. “The lab team explained how over time, the aggregate quality of Pacific Northwest wheat has been increasing as new varieties are released.”

The team met with three breeders: Arron Carter, Washington State University (WSU) winter wheat breeder; Mike Pumphrey, WSU spring wheat breeder; and Kim Campbell, ARS club wheat breeder. They explained the breeding process and shared what they have learned from previous experiences meeting with customers and discussing end use needs, and how they have applied that knowledge to their work.

The team also stopped by some local SW and club wheat fields.

“Korea was one of the first countries I visited as a USW board member,” said Gary Bailey, USW director from the WGC and a wheat farmer from St. John, Wash. “I strongly feel it is important to listen to our buyers to better understand their needs and concerns, along with what they like. I appreciate being able to meet with these customers to discuss this year’s crop with them.”

On the last leg of their trip, the team traveled to Oregon, and in Portland met with the Wheat Marketing Center (WMC), Federal Grain Inspection Service (FGIS) and Pacific Grain Exporters Association. They also visited the Columbia Grain Export Terminal and toured some farms in the Willamette Valley.

"This trip let us see firsthand, the quality of U.S. wheat and to meet the people who grow it,” said team member Dong Bae Nam, Executive Director, Sajodongaone Company. “I came with questions about U.S. wheat production, and meeting with FGIS and learning about the wheat breeding system showed me the quality and safety of U.S. wheat. We appreciate the hospitality and opportunity to build relationships with U.S. farmers."


4. Profiling U.S. Wheat Sustainability: Justin Knopf, Hard Red Winter Wheat Farmer
By Elizabeth Westendorf, USW Assistant Director of Policy

Justin Knopf’s family has been farming land in central Kansas for five generations — starting with their original homestead in the 1860s. Now, Knopf farms 4,000 acres with his father and brother, growing HRW wheat, alfalfa, grain sorghum, soybeans and corn.

“I feel like I have been given a gift to be able to work with the land, and that comes with responsibility,” said Knopf. “What I do impacts consumers, so it is important to take time and energy to be transparent with them and share the bigger story of what is happening in our landscape.”

Knopf is the last farmer in USW’s six-part series on farmer sustainability. USW has featured farmers from each class of U.S. wheat and from all over the country to highlight how their production practices are dependent on local factors and how they each address the goal of sustainability on their farm.

To Knopf, sustainability involves stewardship of resources in three areas — environmental, economic and human. He uses tools, research and continuing farm education opportunities to implement agronomic practices to protect natural resources such as soil, water and air, while also optimizing his production per unit of resources. This is environmental sustainability. Knopf also works to make economically responsible decisions for the farm because if it cannot survive as a business, he will not have a long-term ability to positively affect the environment down the road, which is economic sustainability. And finally, Knopf feels there is a human element to the sustainability conversation. He spends time focusing on the health and happiness of his family, his town and his neighbors while also working to educate consumers, which is social sustainability. All three of these are necessary for agriculture to thrive.

“The land will go on for much longer than I will be here, and it’s a much bigger story outside of myself, so I feel a responsibility to share that bigger story of what is happening with other people as a part of our stewardship,” said Knopf.

Knopf works to share his story by being involved in consumer outreach programs and sustainability research. Two years ago, in a partnership with Kansas Farm Bureau, he hosted a family on his farm for the day to show them how wheat is produced. Last year, Knopf was featured in the book “Rancher, Farmer, Fisherman: Conservation Heroes of the American Heartland” by Miriam Horn, which talked about his focus on improving soil health on his farm. A documentary film by the same title, narrated by award-winning journalist Tom Brokaw, and directed by Emmy-winning and Oscar-nominated Susan Froemke and Emmy-winning filmmaker John Hoffman, will premiere on the Discovery Channel in late August 2016.

Knopf’s emphasis on soil quality and increasing organic matter is particularly impressive. He does this by using no-till methods, carefully calibrating his crop rotations to maximize organic matter and experimenting with cover crops. These practices have improved his soil health, increased soil moisture and improved fertility, allowing him to reduce inputs like fertilizer and fuel and ultimately increase yields. As part of this constant effort to improve, Knopf experiments with new ideas on his farm to make sure that he is being a responsible land owner and manager.

“We see our soils as a fundamentally essential natural resource that is irreplaceable — and it takes a long time to build that soil up again if you lose it,” said Knopf. “And one of the foundational ideas of our family and our farm business is to be a steward of those natural resources and do everything we can to leave them in a better shape for the next generation.”

Learn more about Knopf and his farm at www.uswheat.org/factsheets. U.S. farmers, ranchers, fishermen and foresters also share their values, sustainability experiences and conservation practices at the U.S. Sustainability Alliance.


5. U.S. Wheat Organizations Comment on NAFTA Renegotiation Objectives

On July 17, the Trump Administration released its objectives for renegotiating the North American Free Trade Agreement (NAFTA), and U.S. wheat farmers, who are facing low prices and increasingly aggressive wheat exporting competitors, are encouraged to see that the interests of agriculture are an important part of the Administration's priorities.

“Because NAFTA helped make Mexico one of the most important export markets for U.S. wheat, our main priority right now is to do no harm to wheat trade,” said David Schemm, president of the National Association of Wheat Growers (NAWG) and a wheat farmer from Sharon Springs, Kan. “We are happy to see that the objectives call for maintaining existing reciprocal duty-free market access for agricultural goods. Mexican buyers import more of the wheat my neighbors and I grow than any other country and we can’t afford to risk interrupting that positive relationship with our customers.”

Wheat farmers agree with the Administration that renegotiation can set the stage for a stronger NAFTA and new standards for trade agreements going forward. A good place to start is with the updated rules on sanitary and phytosanitary health and safety standards that the three countries already agreed to as part of the Trans-Pacific Partnership negotiation.

“The United States, Canada, and Mexico are all strong advocates of free trade and science-based regulations,” said Mike Miller, USW chairman and a wheat farmer from Ritzville, Wash. “We should go big in this negotiation and agree to align around those gold standard rules. That will ensure that all three countries can’t throw out regulations that are just flimsy excuses to restrict trade.”

NAWG and USW also want to see a change in Canada’s restrictions on cross-border trade.

“We believe wheat should be allowed to cross the border and be treated equally,” Miller said. “Today Canadian wheat can move into our handling system freely, but U.S. wheat farmers don’t have the same opportunity in Canada. NAFTA renegotiation is a good context with which to address this issue.”


6. Wheat Industry News
  • Quote of the Week: “Please continue to work hard on behalf of our mission, collaboratively with your colleagues, collegially with our customers and proudly on behalf of U.S. wheat farmers. Thank you for your ongoing efforts, for your support and for your friendship. The last, I hope, will endure." — Alan T. Tracy in a farewell message to U.S. Wheat Associates.
  • Export Market Development Benefits. “Choices,” the Agricultural & Applied Economics Association’s peer-reviewed journal recently published an article on a study of U.S. export market development programs. The article includes this conclusion: “…there can be a strong need to promote exports since agricultural and food products are becoming increasingly differentiated. Many of the United States’ core advantages are in quality and other non-price factors that serve to differentiate U.S. products from those of other global suppliers. These differences must be communicated to potential overseas buyers to ensure that these attributes are understood and valued.” Read more here and at www.agexportscount.org.
  • Wheat Summit. USW President Vince Peterson joined 19 other representatives from across the U.S. wheat value chain July 27 at a “Wheat Summit” hosted by NAWG in conjunction with the National Wheat Foundation to address and collaborate on the industry’s challenges and opportunities. More information is posted online.
  • The Evolution of Plant Breeding. The understanding of how to harness genetics continues to progress; but at the same time, we face new challenges every day including the global spread of plant diseases and pests, dwindling natural resources, climate change and skyrocketing global population growth. Helping farmers keep pace with these challenges in a safe and sustainable way continues to be the plant breeder’s goal. View and share a new video on this topic, online at: http://seedinginnovation.org/video-library/.
  • Information About Future “Wheat Letter” Distribution. Starting with the Sept. 7, 2017, issue, you will receive “Wheat Letter” using a new service, Emma Email Marketing. To help ensure that you continue receiving our newsletter using the new service, please add communications@uswheat.org to your contacts list. Look for more information in August.


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