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October 16, 2014

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. USDA Surprises Wheat Market with Lower Ending Stocks Forecast
2. 2014 World Food Prize Honors Wheat Scientist
3. Focus on Reliable Partnerships in a Volatile Market at North Asian Marketing Conference
4. U.S. Wheat Associates Promotes Ian Flagg to Regional Director
5. USW Expands Trade Policy Staff
6. Wheat Industry News


Online Edition: Wheat Letter – October 16, 2014 (http://bit.ly/1nrcKhX)

PDF Edition: (See attached file: Wheat Letter - October 16, 2014.pdf)

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


1. USDA Surprises Wheat Market with Lower Ending Stocks Forecast
By Casey Chumrau, USW Market Analyst

There will not be quite as much wheat left in the world at the end of marketing year 2014/15 as previously thought. This according to revised world agricultural supply and demand estimates (WASDE) released by USDA on Oct. 10. The bullish news trumped an increase in projected global production and the WASDE proved supportive to futures markets for the first time in months. Combined with a slight decrease in beginning stocks, a 4.1 million metric ton (MMT) increase in expected global consumption accounted for the lower ending stocks estimate.

In what came as a surprise to many analysts, USDA decreased its projected ending stocks by 2 percent from the September estimate to 193 MMT. It was the surprise more than the number that helped push futures higher. If realized, ending stocks would still be 4 percent higher than last year and greater than the five-year average of 191 MMT.

For months, expectations for record global production and record supply have weighed heavily on the market. USDA increased projected production to by 1.17 MMT to 721 MMT, which would exceed last year’s record crop of 715 MMT. Final harvest reports from the Northern Hemisphere showed higher than expected yields. Yet, an 870,000 metric ton decrease in estimated beginning stocks to 186 MMT helped offset the production increase and kept the bears away from the market.

The most significant change was a 4.1 MMT increase in expected global consumption. If realized, consumption of 713 MMT would be a 3 percent increase over the record 695 MMT set last year. This month’s increase included a 2.55 MMT increase in projected feed use of 140 MMT. Despite USDA’s expectation of record corn production and relatively low corn prices, wheat used for feed will be the second highest of all time, if realized. This is a reflection of the production struggles in every major wheat-producing country in the northern hemisphere this year, resulting in a higher percentage of low-quality wheat. France, the block’s largest wheat producer, had well-documented quality issues this year and a sharp reduction in the amount of milling quality wheat. The European Union uses more than twice the amount of wheat for feed than China, the world’s second largest wheat feeder. USDA believes the EU will increase wheat used for feed by 20 percent in 2014/15 to 57.5 MMT, well above the five-year average of 53.3 MMT.

USDA also lowered expected U.S. ending stocks by 1.21 MMT to 17.8 MMT, despite a slight increase in production estimates. The pace of commercial sales has picked up in the last few weeks, prompting USDA to raise the export projection by 680,000 metric tons to 25.2 MMT. If realized, U.S. exports will still fall well below last year’s 32.0 MMT (when China and Brazil each imported more than 4 MMT of U.S. wheat) and the five-year average of 29.4 MMT. According to USDA, the higher export projection combined with higher domestic feed use will leave less wheat in the bins at the end of the marketing year.

USDA’s reduction in expected ending stocks both globally and in the United States helped push wheat futures higher in the days following the WASDE release. Considering futures had faced five consecutive weekly of losses in September and October and hit four-year lows, the markets quickly reacted to some bullish news.


2. 2014 World Food Prize Honors Wheat Scientist
By Shannon Schlecht, USW Vice President of Policy

The recipient of the 2014 World Food Prize, presented today, is renowned wheat breeder Dr. Sanjaya Rajaram. Dr. Rajaram succeeded the late Dr. Norman Borlaug at Mexico's CIMMYT wheat breeding program and developed 480 wheat varieties, which have been released on six continents in 51 countries. Each year now, farmers grow an estimated 58 million hectares of wheat linked to Dr. Rajaram's work, roughly 25 percent of total global wheat plantings.

Beginning his work at CIMMYT in 1969, Dr. Rajaram built upon Borlaug's shuttle breeding approach, which reduced the time period to bring new varieties forward by utilizing growing seasons in the northern and southern hemisphere. Additionally, Dr. Rajaram was instrumental in improving the exchange of genetic material between wheat breeders around the world.

The World Food Prize recognizes individuals that have advanced the quality, quantity or availability of food in the world to improve global food security. Recipients share Dr. Borlaug’s mission to improve food supplies and access to that food around the world. Since wheat provides an estimated 20 percent of calories and 20 percent of protein for billions of people in the world’s developing nations, efforts to ensure its availability are critical to helping feed the world.

U.S. wheat farmers strongly believe that on-going innovation in wheat, including the introduction of traits derived from biotechnology, is needed to ensure the availability of food supplies as our population increases to over 9 billion by 2050. In addition, changes in consumer preferences call for more sustainable production using less water, fertilizer, fuel and pesticides and for improved wheat foods. U.S. farmers, in fact, devote a significant portion of their income, through 19 state wheat checkoff programs to fund programs at public research universities to develop new varieties. Additionally, private companies in the United States and in several countries around the world have substantially increased investments in wheat research since 2008.

Every Oct. 16, the United Nations Food and Agricultural Organization celebrates World Food Day. It is fitting and appropriate that the 2014 World Food Day theme, “Family Farming: Feeding the World, Caring for the Earth,” also raises the profile of family farming and smallholder farmers. It focuses world attention on the significant role of family farming in eradicating hunger and poverty, providing food security and nutrition, improving livelihoods, managing natural resources, protecting the environment, and achieving sustainable development, particularly in rural areas.

We applaud the World Food Prize for recognizing Dr. Rajaram’s work and welcome increasing public and private wheat research built in part upon his efforts so that farmers and people everywhere can enjoy the beneficial results.


3. Focus on Reliable Partnerships in a Volatile Market at North Asian Marketing Conference

There is nothing simple about operating profitably in the wheat foods industry today. Consumer tastes are changing, supply shocks seem more frequent and trade policies are uncertain. To weather the storm, we all need more information, more insight. We all need reliable partners for a volatile market.

That is why USW, several of its state wheat commission members and wheat farmers from across the United States welcomed an estimated 65 customers to the 2014 North Asia Marketing Conference in Honolulu, HI, Oct. 15 and 16.

This conference provides a unique opportunity to gain new insight and build a stronger relationship with reliable U.S. wheat industry partners. USW selected the presentations specifically to help our honored customers in Japan, Korea and Taiwan. The conference provides plenty of time to discuss this information and the challenges these customers face with their U.S. partners and with each other.

Trade servicing is a critical part of the work USW does with its customers around the world. USW conducts much of its activities locally on staff visits with customers and through teams traveling to the United States. We also publish “Wheat Letter” and websites filled with useful information, conduct short courses locally and at U.S. educational partner organizations, share annual details on crop quality and, occasionally, bring customers together at conferences like this one.

USW wishes to thank the organizations that helped make this conference possible, including USDA’s Foreign Agricultural Service, Montana Wheat and Barley Committee, North Dakota Wheat Commission, Oregon Wheat Commission and Washington Grain Commission. We also thank our reliable partners for participating in the conference.


4. U.S. Wheat Associates Promotes Ian Flagg to Regional Director

USW has promoted Ian Flagg to Regional Director for Middle East and North African countries. Flagg will supervise USW staff and direct strategic planning and export market development activities in 28 countries served by USW offices in Cairo, Egypt, and Casablanca, Morocco, where Flagg is based.

"Ian has accumulated a great deal of experience in his time with USW in our domestic wheat market and in our overseas market development work,” said USW Vice President of Overseas Operations Vince Peterson. “I am highly confident in Ian's ability to lead our regional team's work in a large and very competitive wheat market."

In 2009, Flagg accepted a position as Assistant Director for the Middle East, East and North Africa Region and relocated with his wife Serena to Cairo. Flagg also served as Market Analyst in the Arlington, VA, Headquarters Office and was Assistant Director of the West Coast Office in Portland, OR, where he was responsible for liaison work with the grain export trade and constituent state-level wheat commissions, hosting visiting foreign trade delegations, as well as servicing the needs of 16 overseas offices.

Prior to joining USW in 2005, Flagg worked as a Research Assistant at North Dakota State University. Flagg holds a bachelor’s degree in economics from Moorhead State University and a master’s degree in agribusiness and applied economics from North Dakota State University.


5. USW Expands Trade Policy Staff

Elizabeth Westendorf will join U.S. Wheat Associates (USW) in a new Policy Specialist position on Oct. 20, 2014 to support USW’s efforts to work collaboratively with wheat farmers and international customers to create a fair and competitive trade environment.

“From trade agreements to food aid to biotechnology, the global wheat market is increasingly complex and dependent on trade policy,” said USW President Alan Tracy. “USW is increasing our staff resources to capitalize on opportunities and address challenges to U.S. wheat export demand that are affected by international trade policies.”

“Elizabeth’s experiences, domestic and abroad, as well as her focus on international economies fits well with USW’s mission,” said USW Vice President of Policy Shannon Schlecht. “She will be a valuable addition to our organization and to our efforts to level the playing field for U.S. farmers in wheat markets around the world.”

Westendorf graduated from Georgetown University’s Undergraduate School of Foreign Service in May 2014, earning a bachelor’s degree in Foreign Service/International Political Economy. During her studies, she worked as summer intern at the U.S. Embassy in Phnom Penh, Cambodia, as a Wallace Carver Fellow with the USDA Economic Research Service and World Food Prize, and with the Georgetown Rural Entrepreneurship Initiative. She also studied abroad at the London School of Economics. Most recently, she worked at Winrock International on the Pasture Project, focusing on developing project evaluations and communications.


6. Wheat Industry News
  • Happy World Bread Day! October 16 is World Bread Day, a special global event that promotes the exchange of ideas between all bakers of the world, as well as the symbolic humanitarian act of sharing bread across the globe. Celebrate BREAD everyday!
  • IGP Institute Flour Milling Distance Course. Kansas State University's IGP Institute is hosting a specialized 5-week, online course that will highlight the quality control and quality assurance aspects of the flour milling process. Quality Control and Quality Assurance in Flour Milling, is set for Nov. 10 to Dec. 12, 2014. To learn more or to register, visit www.igpevents.grains.ksu.edu.
  • October is GMO Month. Check out these items from people who really want everyone to learn more about new technology in agriculture: Oregon State College of Agricultural Sciences has developed a biotechnology in agriculture website dedicated to sharing unbiased information on biotech and genetic engineering. Visit http://agbiotech.oregonstate.edu/ to learn more. New Chairman of the USW/NAWG Joint Biotechnology Committee and Idaho wheat farmer Robert Blair posted this on his Facebook page about this TV moment: http://www.huffingtonpost.com/2014/10/09/jimmy-kimmel-gmo_n_5958264.html; “This is funny but sad at the same time. These people vote and are the ones used in surveys that are dictating what tools farmers can use.” For more, visit http://gmoanswers.com/.
  • World Pasta Day. October is National Pasta Month and “World Pasta Day” is Oct. 24. World Pasta Day 2014 celebrations and the International Pasta Organization (IPO) Annual General Assembly will be hosted by UIFRA (Unión Industrial de Fideeros de la República Argentina) in Buenos Aires, Argentina. Together, the theme of these events is "Pasta: Added Value for Family Nutrition” (“Pasta: Valor Agregado Para la Nutrición Familiar”). For more information about the event, please visit the official World Pasta Day 2014 website at www.worldpastaday2014.org.


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