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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.” 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. Stakeholders may reprint original articles from Wheat Letter with source attribution. Click here to subscribe or unsubscribe to Wheat Letter.

In This Issue:
1. U.S. Wheat Production May Be Searching for Equilibrium
2. U.S. Government Says Grain Foods are Good Foods
3. Researchers Advance Understanding of Wheat Genetic Code
4. WTO Takes a Few Steps Forward in Agricultural Trade Negotiations
5. Pacific Northwest Grain Industry Tour Reveals Source of Quality, Reliability
6. Wheat Industry News

Online Edition: Wheat Letter - January 14, 2016

USW Price Reports: http://www.uswheat.org/prices (See attached file: Wheat Letter - January 14, 2016.pdf)


1. U.S. Wheat Production May Be Seeking Equilibrium
By Stephanie Bryant-Erdmann, USW Market Analyst

One of the first principles taught in any economic class is that free markets will always search for equilibrium where supply equals demand. This principle appears to be at work in USDA’s 2016/17 winter wheat seeding report released Jan. 12, which reported U.S. farmers planted 7 percent fewer acres of winter wheat for 2016/17.

USDA estimates U.S. farmers planted 36.6 million acres (14.8 million hectares) of winter wheat with reductions for hard red winter (HRW) and soft red winter (SRW), classes that face competitive headwinds this year from an ample global wheat supply and the strongest U.S. dollar in 12 years. USDA assessed HRW planted area at 26.5 million acres (10.7 million hectares), down 9 percent from 2015. Planted area in Kansas, the number one HRW-producing state in the United States, of 8.50 million acres (3.44 million hectares), is down 8 percent from 2015, and USDA believes Nebraska farmers planted a record low amount of winter wheat at 1.28 million acres (518,000 hectares), a 14 percent decline from the prior year. Rain that delayed soybean harvest prevented some wheat seeding, but low farm gate prices also contributed to the HRW planted area decline.

U.S. farmers also planted five percent fewer SRW acres for 2016/17. Total SRW planted area of 6.72 million acres (2.72 million hectares), fell due to declines in southern states, where excessive, untimely rains at harvest hurt crop quality and resulting income from wheat the last three years. Increases in the northern SRW states of Indiana, Ohio and Wisconsin partially offset the loss.

Despite a slower than average planting pace, white wheat planted area increased to 3.43 million acres (1.39 million hectares), up one percent from 2015/16. Idaho, Oregon and Washington, which produce nearly all of the exportable white wheat, are experiencing the third year of drought conditions. USDA’s National Agricultural Statistics Service (NASS) reported heavy rains in December brought much needed precipitation to the region, though not enough to officially end the drought.

Hindered by poor weather, winter wheat seeding in other areas of the world also fell in the third and fourth quarters of calendar year 2015. In Ukraine, agricultural consultancy UkrAgroConsult estimates a 13 percent decline in planted wheat area to 14.8 million acres (5.98 million hectares) due to severe drought during the summer and fall months. This forced farmers to abandon winter wheat planting. Ukraine, on average, produces 20.4 million metric tons (MMT) and is the sixth largest wheat exporter, globally.

India, the world’s second largest wheat producer and consumer — behind China in both categories — is in the third year of drought conditions after receiving 14 percent less rainfall than average during its monsoon season. Reuters recently reported that dry fields reduced winter wheat seeding in India by 6 percent compared to the previous year, down to 69.7 million acres (28.2 million hectares). Dry conditions also affected winter wheat sowing in Russia, where farmers planted an estimated 40.3 million acres (16.3 million hectares), down three percent from the year prior.

In its January World Agricultural Supply and Demand Estimate (WASDE), USDA said it expects global wheat consumption’s steady growth to continue, reaching 716 MMT in 2015/16. With a record 735 MMT now safely in the bins, endings stocks will also reach a new record of 232 MMT, signifying the gap between world supply and demand.

Today, the world has plenty of wheat. However, as we have seen before, weather, on-farm decisions and continued consumption growth will eventually pull the market closer to equilibrium. In the meantime, the U.S. wheat store is always open and your local U.S. Wheat Associates (USW) representative stands ready to assist you.


2. U.S. Government Says Grain Foods are Good Foods

The U.S. Grain Chain, a grains industry coalition from farm to table, is pleased that USDA and the U.S. Department of Health and Human Services (HHS) included positive recommendations for grain foods in its “2015 Dietary Guidelines for Americans.” Furthermore, the recommendation for the average healthy adult to consume six ounces (about 170 grams) of grain foods daily with half of those servings coming from whole grains and the remainder from enriched grains is consistent with recommendations from major leading health organizations.

A 1990 law requires USDA and HHS to publish nutritional and dietary guidelines for the public every five years. Members of the U.S. Grain Chain worked hard to provide information to the agencies as they developed the 2015 Dietary Guidelines and helped ensure that recommendations on grain foods consumption would reflect the overwhelming body of current science.

“U.S. wheat farmers are pleased the USDA and HHS recognize whole grains as a vital part of a healthy American diet,” said National Association of Wheat Growers (NAWG) CEO Jim Palmer. “We appreciate efforts by our U.S. Grain Chain partners in educating consumers and the government about wheat’s health benefits.”

American Bakers Association President and CEO Robb MacKie said the recommendations emphasize the vital role of bread and other grain foods at every meal in improving health and combating obesity.
Bakers continue to offer innovative, healthy grain products to meet consumer needs, he said, including an ever-growing variety of whole grain and enriched products.

Carol Freysinger, Executive Director of the National Pasta Association, noted that whole grain or enriched grain foods, including pasta, provide an ideal foundation for healthy and satisfying meals. She added that people often eat pasta with nutrient-dense vegetables and beans, monounsaturated oils and heart-healthy fish, antioxidant-rich tomato sauce and protein-packed cheese, poultry and lean meats.

The 2015 guidelines described whole grains as a source of dietary fiber, iron, zinc, manganese, folate, magnesium, copper, thiamin, niacin, vitamin B6, phosphorus, selenium, riboflavin and vitamin A. The report noted that most refined grains are enriched, a process that adds back iron and four B vitamins (thiamin, riboflavin, niacin and folic acid).

For additional information about the nutritional value of wheat foods, USW recommends visiting the Wheat Foods Council, the Grain Foods Foundation, the National Pasta Association and the International Pasta Organization.


3. Researchers Advance Understanding of Wheat’s Genetic Code

An international research team has produced a whole genome assembly of a hard wheat variety that they believe represents a major step in the effort to break the grain’s complicated genetic code. With a genome assembly, it becomes easier to determine the location and function of important genes within each chromosome. That could now happen within two years, the team said, which will help wheat breeders develop superior varieties more quickly.

The International Wheat Genome Sequencing Consortium (IWGSC) coordinated the project led by researchers in Germany, Canada and the United States, including Kansas State University (KSU) wheat geneticist Dr. Jesse Poland. Project participants also include researchers from Illumina, Inc., NRGene in Israel and the United States (which developed critical software for the project), Tel Aviv University in Israel and the French National Institute for Agricultural Research (INRA). Funding came from KSU through the U.S. National Science Foundation, several Canadian research organizations and Illumina, Inc.

This announcement is very good news for wheat farmers, millers and wheat food processors,” said Justin Gilpin, executive director of Kansas Wheat.

In announcing Dr. Poland’s role in the project, KSU noted that to understand the significance, it is important to understand why sequencing the wheat genome continues to be such a massive undertaking. The wheat genome itself is huge, with 16 billion total base pairs of DNA — far more than other significant staple crops like rice and corn. Building a full reference sequence with that many pieces has traditionally been virtually impossible.

“Having the whole genome sequence is like providing an instructional manual for building better plants,” Poland said. “Until now, the pages in the manual were out of order and 40 percent of them were missing. Having a complete manual, with everything in the right order, will allow us quickly identify genes responsible for traits such as pest resistance, yield and quality. With this genomic information we could potentially make the breeding cycle two to three times faster and bring better varieties to farmers in a fraction of the time.”

“Getting this genome assembled is very important because it helps enables breeders to use innovative technologies like gene editing,” said Steve Joehl, Research and Technology Director with NAWG.

Even though the world enjoys an abundant supply at this moment, demand for wheat continues to grow year after year. Yet wheat is always vulnerable to weather extremes. Other crops offer greater profit margins for farmers who have precious little new land available. Consumers insist that farmers produce more with less impact on the environment. To meet these increasing challenges, researchers must improve the productivity of wheat. Ultimately, genetic wheat research will lead to new varieties with crop traits to help increase yield potential, protect the plant from stresses like disease and drought, or even help improve milling and baking qualities.


4. WTO Takes a Few Steps Forward in Agricultural Trade Negotiations
By Dalton Henry, USW Director of Policy

While achieving progress in multilateral trade negotiations among World Trade Organization (WTO) members is often frustrating, USW sees some steps in the right direction in the recent agreement at the WTO Nairobi Ministerial meeting held in mid-December — despite some setbacks.

USW is particularly pleased to see the elimination of export subsidies, which rank high among the most trade-distorting forms of support. The agreement immediately eliminates such subsidies for developed countries and calls for a phase-out for developing countries. Though the world’s largest traditional user of agricultural export subsidies – the European Union – has moved away from the subsidies, agreeing to eliminate them is no small matter.

USW welcomes the recognition in Nairobi that the United States can keep offering food aid and development programs without change, which underpins this country’s leadership in the world. Wheat produced by U.S. farmers is a cornerstone grain for food aid that is affordable, nutritious and fits monetization projects that encourage in-country development.

The Nairobi agreement also addressed export credit and financing rules that reflect reforms the United States has already made. USW believes there should be no further restrictions on the GSM-102 program, which is a reliable, practical financial tool used by several U.S. wheat importing countries.

Despite these gains, USW is disappointed that the Ministerial reauthorized the use of transportation, marketing and processing subsidies for agricultural products for developing countries. This exception could provide cover to bad actors who have violated past agreements to the detriment of producers around the world. USW will continue working with the Office of the U.S. Trade Representative (USTR) to ensure developing country members do not abuse this exception.

The Ministerial reflected differing views on future WTO negotiation priorities. At least the agreement recognizes that work would continue on Doha’s remaining issues in agricultural trade. This includes public stockholding programs, which India uses to subsidize its farmers, and a “special safeguard mechanism,” which would allow countries to “snap-back” tariffs on products in the face of rising imports. The continuation of these negotiations is especially concerning given some countries’ insistence on using these negotiations to roll back progress at the WTO.

USW congratulates and thanks our negotiators at USTR for their hard work. We look forward to sharing the U.S. wheat farmer’s voice in future negotiations. We must also ensure that WTO members hold firm on past agreements, allow no more backpedaling on domestic subsidies and return their focus to the original goal: liberalizing trade policies to promote economic growth for all participants.


Pacific Northwest Grain Industry Tour Reveals Source of Quality, Reliability
By Amanda J. Spoo, USW Communications Specialist

It takes a lot of people and hard work to move a commodity like wheat from a farmer’s field to an export position. Taking a step back to learn and follow the journey can be very revealing.

This week I joined the Idaho Wheat Commission (IWC) on its annual Pacific Northwest (PNW) Wheat Marketing Tour in Portland, OR, to do just that. Every year for over two decades, the IWC shows Idaho wheat farmers and industry representatives the critical links in the PNW supply chain that efficiently position U.S. HRW, HRS and white wheat for buyers in Asia, Latin America, the Middle East and other destinations. Traveling with me on this year’s tour were 15 farmers — including USW directors Joe Anderson and Clark Hamilton — two agriculture industry representatives and two members of IWC’s staff.

The tour began at the Wheat Marketing Center (WMC) with an introduction to the Idaho wheat industry from IWC Executive Director Blaine Jacobsen. I appreciated the opportunity to learn that wheat is the second largest crop after potatoes in Idaho where its farmers grow five of the six U.S. wheat classes. Idaho is also the number one supplier of U.S. hard white wheat. With WMC employees, we discussed how wheat and flour quality affect finished food products and how wheat breeders work together with growers to deliver that quality and important milling characteristics. They demonstrated the different processes used to test wheat and flour quality and performance. We also had fun making and taste-testing wheat flour tortillas, Tandoor oven flat bread, Arabic hearth flat bread, crackers and both Asian steamed bread and noodles.

We continued to hear from each part of the supply chain, including an update on soft white (SW) wheat markets from Ryan Statz of Columbia Grain. A group from the Nebraska Wheat Commission, in Portland for a similar tour, joined us for a wheat forum featuring presentations from Gregory Guthrie, BNSF Railway Transportation, Heather Stebbings, Pacific Northwest Waterways Association, and Steve Wirsching, USW.

The following day the tour focused on transportation and certification, with stops at Shaver Transportation and Federal Grain Inspection Service (FGIS) facilities at the TEMCO export elevator. We rounded out the tour with visits to the large, commercial Franz Bakery and the small, artisan Pearl Bakery in Portland. At both bakeries, we learned about production and consumer trends — with each discussion reiterating the importance of wheat and flour quality and consistency.

Growing up in Eastern Oregon, I watched many tugboats and barges pass by on the Columbia River, so the highlight of the tour for me was the opportunity to ride with Shaver Transportation on a tugboat pushing a barge for a short trip up the Willamette River. It was an experience that summed up why Idaho and other state wheat organizations sponsor these tours: to gain greater appreciation for the importance of the river system and its infrastructure, as well as the commitment of all those who add reliability and value to U.S. wheat as part of the most efficient grain supply chain in the world.


6. Wheat Industry News
  • Best Wishes to Julia Stoskopf Debes, who is taking a full time position as Communications Director for the National Sorghum Producers effective Jan. 19. Julia joined USW in 2010 and, after moving back to Hoisington, KS, with her husband and daughter to farm and raise cattle with her family, continued to work with USW as a communications consultant. Best of luck in your new position, Julia!
  • Calyxt Signs Agreement for Trait Development in Wheat, Rice, Corn. Calyxt, Inc., a Minnesota-based company, announced that it has signed a research collaboration and option to exclusive licenses with Plant Bioscience Limited (PBL) for new crops developed using gene editing by the Institute of Genetics and Developmental Biology (IGDB) of the Chinese Academy of Sciences in Beijing. Read the full announcement here.
  • Wheat Growers’ Innovation Center Open for Business. The new 36,000 square foot center opened on Dec. 18, 2015, and will focus on four areas of technological advancements including an innovation showroom; a demonstration theater; an equipment modification shop and a Wheat Growers parts store. Read the full announcement here.
  • The IGP Institute Welcomes Kelly Hannigan as program services coordinator. As Hannigan was earning her agricultural communications and journalism degree from KSU, she spent two years as the IGP communications intern. As the program services coordinator, Hannigan will provide support in marketing and participant relations.
  • Our Condolences. Joe Berry, wheat farmer from Lenora, KS, passed away on Jan. 3, 2016, at the age of 85. Berry was a member of the Kansas Wheat Commission and served as USW Chairman in 1997. President Alan Tracy, who joined USW while Berry was chair, said, “Joe was a strong chairman and a steadfast supporter of USW, a real leader who helped shepherd the industry through some difficult times.” Our thoughts are with the Berry family at this time. Read the full obituary here.
  • IGP Grain Purchasing Short Course. This course, scheduled for April 4 to 15, 2016, will benefit individuals who are responsible for buying U.S. food and feed grains. The course focuses on the mechanics of purchasing raw materials and features detailed discussions of cash and futures markets, financing and ocean transportation. The registration deadline is March 16. For more information and to register visit www.igpevents.grains.ksu.edu.
  • Subscribe to USW Reports. USW has added a “Subscribe” menu at www.uswheat.org where visitors may subscribe to this newsletter, the weekly Price Report and the weekly Harvest Report (available May to October.) Click here to subscribe.


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