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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. Timely Rains Should Help Stabilize Global Wheat Conditions
2. Wheat Quality Council Tour Sees Wide Range of Yield Potential with Disease Concerns
3. Visit to U.S. Wheat Industry Strengthens Relationships with Japanese Executive Millers
4. Trade Talks Continue While Support for TPA Builds In Congress
5. ISAAA and Cornell Offer Reliable Sources for Crop Innovation News
6. Wheat Industry News


Online Edition: Wheat Letter – May 7, 2015 (http://bit.ly/1JudR6Q)

PDF Edition: (See Attached) (See attached file: Wheat Letter - May 7, 2015.pdf)

USW Price Report: Published every Friday online at http://www.uswheat.org/prices


1. Timely Rains Should Help Stabilize Global Wheat Conditions
By Casey Chumrau, USW Market Analyst

What were serious concerns about wheat production in key growing areas around the world have eased somewhat in the last few months thanks to timely rainfall. The northern hemisphere’s winter crop is maturing and spring seeding is underway, while southern hemisphere farmers are seeding their winter crops. On May 12, USDA will release its World Agricultural Supply and Demand Estimates report with the first forecast for the 2015/16 marketing year. Several other key agricultural organizations have already made projections, providing a preview of what USDA might say next week.

Bloomberg this week reported that April rains might have saved a significant part of the 2015/16 U.S. HRW crop, especially in Texas, Oklahoma and most of Kansas. The news service quoted David Schemm, Sharon Springs, KS, farmer and NAWG officer, saying this will probably be his best crop in four years. Farmers in Pacific Northwest are concerned about how dry conditions to date will affect their soft white (SW) crop, but any rain that comes over the next several weeks would help boost yield potential for the entire 2015/16 SW crop.

As of May 3, winter wheat crop condition ratings are stable and spring planting is well ahead of average. USDA reported 75 percent of the intended spring acres as planted, well above the five-year average of just 40 percent. The crop needs additional moisture to reach its full potential. The International Grains Council (IGC) expects 2015/16 U.S. production to rebound by 7 percent to 59.0 million metric tons (MMT), which would be greater than the five-year average of 57.5 MMT.

Canadian farmers are just starting to plant spring wheat. Seeding conditions are much more favorable than the past two years when excessive moisture delayed planting. According to a survey, Canadian farmers intend to plant more wheat this year than in 2014. StatsCanada expects total planted area to reach 9.91 million hectares (24.8 million acres), up from 9.52 million hectares (23.8 million acres) last year. That includes 2.2 million hectares (5.5 million acres) of durum, which would be a 16 percent jump from last year due to high durum prices and low stocks. Winter wheat this year covers 506,000 hectares (1.27 million acres), or 5 percent of the total estimated wheat area. Winter wheat planted area is lower this year after a late soybean harvest prevented farmers from planting before cold weather set in. IGC predicts total 2015/16 Canadian wheat production will reach 30.0 MMT, which would be up from 29.3 MMT last year and the fourth largest crop on record.

The top EU wheat producing countries also saw timely rains last week, putting an end to a month-long dry spell that threatened to stress the wheat crop. In fact, the EU’s crop monitor raised its yield forecast for soft (non-durum) wheat due to good soil moisture. In its first 2015/16 projection, IGC predicted another large EU crop of 148 MMT, down 5 percent from last year’s record but still well above the five-year average. Analysts say that France, the EU’s top wheat producer, could come close to record output of 38.0 MMT. The country planted the most wheat acres in 80 years and traders expect above-average yields. Germany’s farm cooperatives expect a 4 percent decline in production in 2015/16 to 26.7 MMT, but additional rain in the next few weeks could help the country reach last year’s unusually high mark.

Recent rains also helped replenish low soil moisture in the Black Sea region and warm temperatures have allowed early spring planting. ICG predicts more total winter wheat planted area, but high input costs and lower local currency values will likely cut spring wheat seeding. Production concerns persist in the southern region of Russia, the country’s main wheat producing area, where a very dry fall season affected a significant portion of the winter crop. Ukraine’s Agrarian Policy and Food Ministry expects total winter wheat, which averages 90 percent of Ukraine’s production, to yield 22.9 MMT. IGC is less optimistic, predicting a 19 percent decline to 20.0 MMT from record yields in 2014/15.

Planting is just beginning for the 2015/16 crop in the southern hemisphere. Soils in Australia are slightly drier than last year. IGC expects Australian planted area to be similar to last year’s 13.9 million hectares (34.8 million acres). With average yields, production would be 14 percent greater than last year at 27.0 MMT compared to the 5-year average of 25.8 MMT. Recent rains in Argentina boosted soil moisture just in time to begin planting. However, ongoing political issues that supported large carry-over supplies and poor returns the past few years may put farmers on a detour away from planting wheat. IGC predicts a 13 percent decline in planted area to 4.6 million hectares (11.5 million acres). Again assuming average yields, production would fall 10 percent from last year to 12.5 MMT, just below the 5-year average of 13.0 MMT.

Overall, IGC expects global production to fall from a record 721 MMT set in 2014/15 to 705 MMT, which would be the third highest on record. Record wheat supplies have depressed prices throughout 2014/15 and the USDA estimates next week will help determine if that trend might continue. As the situation stands now, it appears that world wheat supplies will be abundant again in 2015/16.


2. Wheat Quality Council Tour Sees Wide Range of Yield Potential with Disease Concerns

An annual rite of spring happened this week in Kansas. Each year, participants in the “Hard Winter Wheat Evaluation Tour,” sponsored by the Wheat Quality Council, gather in Manhattan, KS, and spend the next two and a half days in small teams making random stops at 14, 15 or more fields in a full day along the same routes as in prior years. The scout teams measure yield potential, determine an average for the route and estimate a cumulative average for the day when all the scouts come together in the evening.

This year, three colleagues from USW participated in the tour: Shawn Campbell, assistant director, West Coast Office; Ben Conner, assistant director of policy; and Amanda Spoo, communications specialist.

At the end of the tour, just a few hours before USW published this issue of "Wheat Letter," the scouts estimated average yield potential of 35.9 bushels per acre (bu/ac) or about 2.55 MT per hectare for the 2015/16 Kansas crop. While that estimate is more than the 33.2 bu/ac predicted by the 2014 tour, it is less than farmers and the industry had expected. Combining seeded area with per-acre yield potential, the total production potential estimate was 288.5 million bushels or about 7.85 MMT. Last year's total production estimate was 260.6 million bushels or about 7.10 MMT.

Following are reports from the 2015 tour. Twitter users can review Tweets and photos from the tour by searching #wheattour15.

Ironically, given the drought conditions that have dominated the region for several years, the event started as heavy rains fell, leaving wet, muddy conditions as the record 92 participants, traveling in 21 vehicles made their way across the state. On Day 1, May 5, Jordan Hildebrand with Kansas Wheat reported that participants stopped at 284 locations, an increase from 271 last year. She said the generally wet fields did not translate to better wheat conditions. This year's Day 1 estimated average yield of 34.3 bushels per acre (bu/ac), which is equivalent to about 2.32 MT per hectare, was slightly lower than last year's Day 1 average of 34.7 bu/ac, despite higher expectations. This is also the lowest Day 1 average since 2001 when scouts reported an average of 32.6 bu/ac. Last year's crop was ultimately the smallest Kansas harvest in 30 years totaling 246 million bushels (6.70 MMT). Many of the scouts reported seeing similar issues statewide, which included drought stress, stripe rust, winter kill — including some abandoned fields — and pest infestations.

Hildebrand reported on May 7 that the weather and wheat were also variable on Day 2 of the tour. Another stormy day started cloudy and wet, then turned sunny and warm, followed by building thunderstorms with at least one team seeing a tornado as the teams gathered in the Wichita area. From western Kansas where yield potential estimates were mostly less than 20 bu/ac to south central Kansas where the crop looked much better (although teams expressed concern about foliar diseases), Hildebrand said the scouts stopped at 305 fields.

“I have mixed feelings about the crop; it is so variable, which makes it hard to estimate with the calculation,” said Dr. Jim Shroyer, Kansas State University extension wheat specialist emeritus. “It is one of the toughest wheat tours that I’ve been on in a while.”

“Wichita Eagle” reporter Dan Voorhis filed a story noting the average yield was 34.7 bu/ac. “That is up from the 32.8 bu/ac estimate in 2014, when Kansas had the worst harvest in 25 years,” he wrote. “But it is still the second-worst average since 2007.”

Reuters reported that U.S. wheat futures surged 2.7 percent on May 6, bouncing back from near five-year lows on disappointing results from the tour and a crumbling U.S. dollar according to traders. An announcement the same day that Iraq had committed to purchase 50,000 MT of HRW added fuel to futures prices.

Day 3 of the tour is short and the teams battled rain to make 70 field observations. As expected, the estimated yield potential for wheat in eastern Kansas was significantly higher at 48.9 bu/ac. However, seeded wheat area in that part of the state is much lower than the central and western region.

“Many of the farmers on the tour said they are still optimistic in spite of the increased variability in conditions and disease this year,” Amanda Spoo reported. “Or they are at least content with what they will end up with, all things considered. Scott Van Allen who farms in Sumner County told me his wheat crop ‘was on the devil’s doorstep,’ but with recent rains he now expects average or a bit above average yields.”

Spoo said being on the tour walking fields, asking questions and exchanging thoughts about the crop was a fruitful experience.

“It is the people that make the wheat tour a unique, one-of-a-kind experience,” she said. “This year’s group was extremely diverse and the opportunity to see the challenges through their perspectives gives me some ownership in how this year’s crop turns out. I think the industry is in good hands, especially when you see firsthand how experienced scouts share that wealth of knowledge and sense of responsibility across sectors and down to each new generation of wheat tour participants. This annual event testifies that the dedication of the agriculture, food and environmental industries stretch far beyond this state. We may have been trekking through Kansas wheat fields, but the conversation always focused on the crop’s global impact.”

The Wheat Quality Council also sponsors a spring wheat tour in the Northern Plains in July. For more information, visit the Council’s Web site at http://www.wheatqualitycouncil.org.


3. Visit to U.S. Wheat Industry Strengthens Relationships with Japanese Executive Millers

Building mutual trust and long-term business relationships takes time and commitment. As a part of its market development activities, one important activity U.S. Wheat Associates (USW) employs to create stronger partnerships with overseas customers is to invite them to have a firsthand look at the U.S. wheat crop. That is what a team of six flour milling executives from Japan’s leading milling companies is doing through May 8, 2015.

“Japan imports large amounts of U.S. wheat so it is important for the Japanese flour milling industry to regularly exchange views and information with U.S. wheat organizations and businesses,” said Mr. Masaaki Kadota, executive director of Japan’s Flour Millers Association. “We really appreciate your efforts to support our needs as your customers.”

USW collaborated with the Montana Wheat and Barley Committee, Oregon Wheat Commission and Washington Grain Commission to organize and host this trade team.

The Oregon Wheat Growers League (OWGL) established the first overseas U.S. wheat export office in Tokyo in 1956 and in that same year, the first Japanese millers team visited the United States to learn about its markets. After it was established, USW continued the tradition and for well over a decade, this particular activity has become an annual trip for Japanese executive millers. According to Kadota — who has accompanied this team for many years — there is always something new to learn and discuss.

“There is nothing better than strengthening the mutual trust I have with those whom I meet each year,” said Kadota.

The team is making stops in Oregon, Washington and Montana. During meetings with wheat farmers, grain industry representatives and university researchers, the team will discuss the U.S. wheat supply and demand picture, including potential quality, availability and price. The team will also discuss current views on competitive markets, dietary trends and the role innovations in wheat breeding will have in balancing future world food supply demands with the need for less impact on the environment.

“This exchange of dialogue and information is essential to U.S. trade with Japan,” said USW West Coast Office Assistant Director Shawn Campbell. “When questions and concerns arise, we rely on the trust built during these activities to guide us toward decisions that have a positive impact for both U.S. wheat farmers and the Japanese milling industry.”


4. Trade Talks Continue While Support for TPA Builds In Congress
By Elizabeth Westendorf, USW Policy Specialist

If it seems as if you have heard the acronyms TPA, TTIP and TPP forever, it is probably because trade negotiations by their very nature tend to be a drawn out process. However, this past month, these trade items gained positive momentum. That is important because TPA, TPP, and TTIP can add real value for U.S. wheat farmers and their customers abroad.

TPA, or Trade Promotion Authority, is vitally important to finishing trade agreements and ensuring that negotiators can make the best deals possible. The U.S. Senate could soon take up a pending bill to re-establish TPA. This may have already had a positive effect on negotiations on the Trans-Pacific Partnership (TPP). That is because TPA would give countries the confidence that amendments in the U.S. Congress could not undermine the negotiated agreement. At an informal round in April, TPP negotiators did not close any chapters, but they did report progress on intellectual property, rules of origin and market access.

President Obama and Japan’s Prime Minister Abe met the last week of April, and expressed confidence negotiators will conclude TPP, though there were no major announcements on agricultural market access. Abe did reiterate his commitment to agricultural reform in Japan, telling a joint session of Congress, “Japan’s agriculture is at a crossroads. In order for it to survive, it has to change now.” Reform to Japan’s wheat trade policies could help lower the cost of imported wheat.

TPP could bring improved market access into Japan and lower wheat prices for millers. Other opportunities for improved wheat market access in TPP negotiations include Vietnam, which currently places a 5 percent tariff on U.S. wheat imports. In 2016, however, Australia will have duty-free access to Vietnam’s wheat market. Additionally, getting an initial agreement done would set the stage for Indonesia, Taiwan, the Philippines and other countries to join TPP in the future.

In comparison, there has been less movement on the Transatlantic Trade and Investment Partnership (TTIP) in discussions between the United States and the European Union (EU). TTIP is a prime opportunity to address existing issues with the EU’s Margin of Preference policies that may limit member countries’ ability to import durum duty-free. A completed TTIP could help keep U.S. wheat, including durum, as a competitive choice relative to Canadian wheat for EU flour millers. Under its bilateral trade agreement with the EU, Canada’s duties on low-protein wheat will drop to zero over the next seven years. USW attended a TTIP stakeholder forum in New York last week that focused primarily on services and industrial sectors.

European Commissioner for Trade Cecilia Malmstrom emphasized last week that TPA approval would help spark TTIP negotiations. While this view likely ignores some large hurdles in TTIP, it is important to note that our international trading partners place large value on TPA.

The next TTIP round should be in July, followed by a political stocktaking session in early fall to assess progress and determine next steps.

Trade negotiations, especially for agreements as large as TPP and TTIP, do seem to take time but in the past few months, we have seen notable movement on all three of these trade fronts. Trade agreements can offer importers improved and more consistent access to U.S. wheat, while giving U.S. exporters access to new markets. These are rare opportunities for improving access to U.S. wheat supplies on a broad scale, and we believe it is worth the wait for that kind of progress.


5. ISAAA and Cornell Offer Reliable Sources for Crop Innovation News

Wheat farmer organizations from the United States, Canada and Australia “support and encourage the use of innovation to help solve pressing problems to address global food security needs.” To that end, USW tries to stay up to date on innovations in crop breeding that may be relevant for the U.S. wheat farmers we represent and for our overseas customers. The non-profit “International Service for the Acquisition of Agri-biotech Applications” (ISAAA) and the “Cornell (University) Alliance for Science” (funded by the Bill and Melinda Gates Foundation) are very good sources of science-based information about crop innovations, including the following news items reported recently. You can subscribe to “Crop Biotech Update” online at http://www.isaaa.org/kc/cropbiotechupdate/ and join the Cornell Alliance for Science at http://allianceforscience.cornell.edu/.

Nigeria Implements National Biosafety Act. USW joins many other organizations in support of science-based regulatory systems that provide a sensible framework and predictable approval process needed to bring new technology to the marketplace. Nigeria’s government said its new law would provide ways to engage science to identify, develop and regulate modern technological solutions to local agricultural challenges and to evaluate imported genetically modified (GM) crops. Biosafety regulation has rapidly gained momentum as more countries in Africa approve the use of GM crops.

EU Approves GM Products for Import. The European Commission recently authorized 10 new biotech products for food or feed use, seven renewals of existing authorizations and authorized the importation of two GM cut flowers. A European Food Safety Authority (EFSA) review determined these products are safe to join 58 other GM products authorized in the EU for food and feed uses, including corn, cotton, soybeans, oilseeds and sugar beets. U.S. Grains Council, which represents U.S. corn, sorghum and barley growers in international markets, also noted that “the approval of the long-stalled events followed closely on the announcement that the European Commission was moving forward with proposed legislation allowing individual EU members to opt-out of imports of food and feed containing EU-approved biotech traits. While the opt-out had been under discussion for some time, the Commission has now made a formal proposal that the European Parliament and the Council of Ministers must still consider. European associations representing the feed, commodity trading and oil crushing industries have all announced opposition to the opt-out proposal because of its potential to disrupt the European common market.”

Golden Rice Project Wins Patents for Humanity Award 2015. The U.S. government gives this award to patent owners working to bring life-saving technologies to the underserved people of the world. UNICEF estimates that 1.15 million children die every year and 500,000 children in developing countries go blind every year because of vitamin A (â-carotene) deficiency. Golden Rice co-inventors Ingo Potrykus and Peter Beyer genetically modified rice to produce and accumulate vitamin A and their patent application enables smallholder farmers to benefit from Golden Rice.

GM Sweet Potato Occurs Naturally. Sweet potatoes from all over the world naturally contain DNA sequences of Agrobacterium according to researchers from the University of Ghent and the International Potato Institute (CIP) who were searching sweet potato genome for viral diseases. Because this "foreign" DNA is an “active” part of the sweet potato genome, the researchers said it could be seen as a "natural GMO," with positive characteristics for which farmers selected during domestication.

The Tide is Turning in Favor of Science and Sound Evidence in the U.S. Media. From the rising scrutiny of anti-biotech messengers “Dr. Oz” and the “Food Babe,” to the Daily Show’s comic look at GM-critic Jeffrey Smith that featured Cornell’s own Walter DeJong, an evidence-driven potato breeder, as protagonist, the month was encouraging for allies of science. As the month closed, there was overwhelming criticism of fast food chain Chipotle’s announcement they were no longer serving GMO food. Critics of Chipotle’s attempt to use unfounded fear of GMOs to bolster their sales came from as diverse sources as the environmental magazine, Mother Jones, to reputable dailies like the Washington Post, and heralded bloggers such as NPR’s Dan Charles. The conversation is changing in favor of science and evidence.

Other Resources include the Open Forum on Agricultural Biotechnology in Africa at http://www.ofabafrica.org/, The International Food Policy Research Institute at http://ifpri.org/ and The Global Food Security Project at http://csis.org/program/food.


6. Wheat Industry News
  • OK, CO Yield Potential. This week, the Colorado Wheat Research Foundation estimated that state’s 2015/16 average HRW yield potential at 38.0 bushels per acre (bu/ac), which is about 2.65 MT per hectare, compared to 38.1 bu/ac last year. The Oklahoma Grain and Feed Association also projected that state’s 2015/16 HRW yield potential at 29.4 bu/ac (about 2 MT per hectare), up significantly from last year but still below average.
  • Longer Term Relief for Dry Wheat Country. A meteorologist writing for U.S. crop marketing organization ProFarmer noted that more rain in the forecast this week correlates with a sudden increase in sea surface temperatures indicating “an exceptionally strong El Nino signal.” The central United States typically receives heavy rainfall with El Nino in effect, the meteorologist wrote. A wetter pattern could help future crops by recharging sub-soil moisture.
  • IGP Milling Practices Course. Kansas State University's IGP Institute is calling milling engineers, operation managers, production managers, head millers and shift managers to enroll in its Milling Practices to Improve Flour Quality course, June 9-12, 2015. For more information or to register, visit www.grains.ksu.edu/igp.
  • NCI Rheology of Wheat and Flour Quality Course. Registration closes July 1, 2015, for this short course at the Northern Crops Institute July 21 to 23 in Fargo, ND. The course will focus on wheat and flour quality, and effective analysis of rheological results. For more information or to register, visit www.northern-crops.com/courses2/.
  • Wheat Marketing Center Whole Grain Summit Pre-Meeting Workshop. June 22 to 23 at WMC in Portland, OR, the whole grain product workshop offers a hands-on experience to produce different types of popular products with whole-grain raw materials and functional ingredients. For more information or to register, visit http://wholegrainsummit2015.com/pre-meeting-workshop/.


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