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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 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 Export Price Cycle in Buyers’ Favor
2. Wheat Farmers to Learn More About Advanced Breeding Methods
3. National Academies of Sciences, Engineering and Medicine on Genetically Engineered Crops
4. USW Ready to Help Customers Adjust to Columbia Snake River System Upgrade
5. USW Harvest Report Provides Valuable and Timely Information for Overseas Customers
6. Wheat Industry News

Online Edition: Wheat Letter – May 19, 2016

USW Price Reports:

1. U.S. Wheat Export Price Cycle in Buyers’ Favor
By Stephanie Bryant-Erdmann, USW Market Analyst

When retailers need to clear out old inventory, consumers are going to find some bargains. Right now, there is a similar opportunity for U.S. wheat importers. Looking at historical price cycles, nearby free-on-board (FOB) prices are lowest for hard red winter (HRW), soft red winter (SRW) and soft white (SW) in June before harvest is complete. Hard red spring (HRS) and durum nearby FOB prices, on average, are lowest in August in the middle of the Northern Plains harvest. However, USDA Export Sales data show that customers do not always take advantage of these pricing opportunities.

While it is difficult to pick lows, wheat markets tend to be cyclical, even this year with plentiful old crop inventory. USDA expects U.S. wheat supplies will grow to 81.3 million metric tons (MMT). That is up 6 percent from 2015/16 due to a 30 percent increase that will push beginning stocks to 26.6 MMT.

On average over the past 15 years, U.S. wheat export sales in June accounted for 7 percent of total annual sales for all U.S. wheat classes except hard white, yet June typically has the lowest nearby FOB prices for three of the five U.S. wheat classes exported. On average, June HRW nearby FOB prices were $20 per metric ton (MT) lower than the average August/September price. In spite of this, an average 22 percent of U.S. HRW export sales occur in August and September.

USDA Export Sales data shows an average 43 percent of SRW export sales happen from August through December, even though nearby FOB prices are $26 per MT more than those recorded in June, when 7 percent of SRW export sales transpire. June is also the best time to buy SW. On average, June nearby FOB prices for SW are $20 per MT lower than the highs recorded in November, December and February.

While SRW, HRW, and, to a lesser extent, SW nearby FOB prices usually increase in August, HRS and northern durum nearby FOB prices generally fall to season lows. For Gulf and Pacific Northwest (PNW) shipments of HRS, average August nearby FOB prices are $37 per MT lower than the yearly high, normally reached in February. While February and August are nearly equal in U.S. HRS export sales volumes at an average 8 percent each, 12 percent of HRS export sales take place in September when average nearby FOB prices are $16 per MT above August values. The Great Lakes has a slightly different cycle due to the late December to late March closure. August nearby FOB prices for HRS from the Lakes are lower than the average annual price, but December marks the lowest nearby FOB price, which is $39 MT lower than June’s season high.

August nearby FOB prices for northern durum from the Great Lakes are an average $68 per MT lower than the peak prices recorded in November, and Durum from the Gulf is an average $51 per MT lower. On average, 55 percent of U.S. durum export sales happen between August and December, but there is a wide range of prices within those five months.

Well-informed customers can take advantage of these cycles and lock in lower prices for high-quality U.S. wheat in the next few weeks. Your local USW representative is ready to help answer any questions about U.S. wheat pricing or the U.S. wheat marketing system. To track U.S. wheat nearby prices, subscribe to the USW Price Report here.

2. Wheat Farmers to Learn More About Advanced Breeding Methods
By Steve Mercer, USW Vice President of Communications

A few weeks ago, the U.S. wheat industry heard about a new wheat cultivar developed by a research company called Calyxt using advanced plant breeding methods. The company says the new variety is resistant to a foliar disease called powdery mildew, which is occasionally a concern in damp, cool growing conditions.

The technique Calyxt used is one of several new, highly precise seed improvement methods that allow breeders to develop new crop varieties by using a plant’s own genes to create a desired characteristic. An underlying common denominator for these methods is that they often achieve the same result that could be achieved through more traditional plant breeding methods, but in a more accurate and efficient way. In this situation, USDA’s Animal and Plant Health Inspection Service (APHIS) examined information Calyxt provided and determined that it will not require the new variety to go through a special pre-market safety review.

To learn more about these processes, USW and the National Association of Wheat Growers (NAWG) have invited Calyxt, other organizations and experts to meet with their farmer directors at future board meetings.

It is important to note that the Food and Drug Administration regulates all foods derived from plants and USDA comprehensively regulates seeds. Most new agricultural plant varieties go to market without a specific pre-market safety review, given the long history of safe use of the underlying varieties used for breeding. A key feature of the plant breeding process is extensive testing and evaluation starting early in the breeding process and continuing until the final product is commercially available. These tests are based on procedures breeders have used for many decades to create new plant varieties that are safe to grow and eat.

These advanced breeding methods can result in plant varieties that do not contain any new DNA from a non-compatible species. Under our industry’s definition*, resulting plants with no new genetic material would not be considered genetically modified organisms (GMO) — a determination shared by many scientists and regulators, including in the governments of Sweden and Argentina.

U.S. wheat farmers and the organizations that represent their interests, including USW and NAWG, strongly support research using advanced breeding methods in safe and responsible ways. Application of new methods have the potential to produce new wheat varieties that address production challenges and help increase yields, improve quality, reduce inputs and carbon emissions while adapting to our changing climate.

Wheat is the world’s most important food grain and global demand is rapidly increasing with population and economic growth. Yet annual wheat planted area around the world is relatively flat and current yield increases cannot keep up with the growing demand. Farmers everywhere will have to keep growing more and better wheat, with less impact on the environment. Expanded research into wheat innovation through all means will help to ensure a more consistent and sustainable supply of wheat to meet these needs and to bring new varieties more efficiently to market than with conventional breeding.

Any variety of wheat or other crops developed with the new methods is still a long way from approval for commercial use. Public and private researchers and seed companies will have to determine whether a new variety has sufficient value and commercial acceptance. Part of that effort will include seeking the opinions of end-use customers about the benefits of the new breeding methods.

Currently regulators around the world are considering the optimal approach for new breeding methods and we are keeping abreast of the latest developments. While we cannot predict farmer and market reactions to on-going news, our commitment to meeting our customers’ needs and keeping them informed about advanced breeding methods as well as biotechnology remains strong. The years ahead give us all the time to learn more about the process and results — together.

* U.S. Wheat Industry Definition: Biotechnologically Derived (Genetically Modified Organisms). “Genetically modified organisms (commonly referred to as “transgenic”) are organisms derived from somatic cell fusion or direct insertion of a gene construct, typically but not necessarily from a sexually-incompatible species, using recombinant DNA techniques and any genetic transformation technology (e.g., bacterial vectors, particle bombardment, electroporation).”

APHIS defines genetic engineering as the genetic modification of organisms by recombinant DNA techniques.

3. National Academies of Sciences, Engineering and Medicine on Genetically Engineered Crops
By Alan Tracy, USW President

On May 18, the highly respected National Academies of Sciences, Engineering and Medicine released the results of their lengthy study on genetically engineered crops. The primary conclusion, after extensively reviewing past studies and comparing health and disease rates in Europe, where biotech crops are extremely limited, with North America, where such crop have been widely used for two decades, is that our current genetically engineered crops are safe, posing no apparent risks to human health.

The National Academies are private, nonprofit organizations set up by the U.S. Congress to provide expert scientific advice. A group of 20 scientists mostly from U.S. universities wrote the report. They also found no negative environmental impacts and made recommendations for a more flexible regulatory approach in the future that would take into account the individual risks any new types of bio-engineered crops might pose. Interestingly, they did not find any yield impacts from the use of these crops thus far.

As a former farmer, I find that last point surprising. Most of the traits introduced into these crops through bioengineering do target reducing insecticide applications or tolerating herbicides, rather than for direct yield impacts. At the least, they have reduced yield variability because the traits help the plant reach its full genetic potential. Coming traits, such as nitrogen use efficiency, will more directly improve yields.

Of course, this study, definitive as it is, will not end the controversy over genetic engineering. Consumer fears remain, labeling issues still wait to be settled, regulations need updating and trade disruptions will still occur as new traits are introduced into the marketplace. Genetic knowledge and plant breeding methods are advancing at an accelerating pace. Whether we are ready or not, genetically engineered crops are here to stay and will become more widespread each year. Let us hope that our policies, perceptions and market systems can keep pace. This study represents a valuable step in that direction.

4. USW Ready to Help Customers Adjust to Columbia Snake River System Upgrade

U.S. wheat importers are likely aware that the Columbia Snake River System (CSRS) will close for extended maintenance beginning Dec. 12, 2016, and ending March 20, 2017. This will allow the U.S. Army Corps of Engineers to make essential renovations to all the navigation locks on the Columbia River and the Snake River. No barge traffic will be able to pass during this time.

USW welcomes this investment as a critical need that will underpin the United States as the world’s most reliable wheat supplier to our customers for years to come. However, importers may be concerned about supply, cost impact and logistical options because of the closure. We take those concerns seriously and want to help you minimize any possible impact before, during and after the river system closure.

Such extended closures are unusual, but as our overseas customers learned during the last extended closure in 2010/11, the entire PNW system is fully capable of ensuring an uninterrupted supply of wheat to export terminals.

USW believes the industry will consider every logistical option to keep wheat — especially SW wheat — flowing to export elevators. Significant changes will help make this closure more manageable. For example, total export terminal storage capacity on the Columbia River has grown substantially since 2011. The addition of a brand new terminal, plus the construction of new storage at several others, has increased storage capacity from 564,000 MT to 866,000 MT today. The PNW’s total up-country grain storage capacity has also grown to 17.3 MMT from 16.4 MMT.

Rail shipments made up 54 percent of SW wheat sourced by rail during the outage in 2010/11. Rail shipping will likely make up most of the barge capacity shortfall during this closure as well. PNW exporters already source an estimated 80 percent of their HRW and 90 percent of their HRS supplies by rail. For SW to move west, rail sourcing will have to increase as much as 25 percent (see chart below). Fortunately, railroads have been investing in capacity, and there are now four shuttle train-loading terminals in eastern Washington, compared to two that were operational in 2010/11. The system is even better prepared to meet demand in 2016/17.


How U.S. Wheat Normally Moves to PNW Export Terminals

Wheat Class Barge Delivery Rail Delivery
SW/Club 75% 25%
HRW 20% 80%
HRS 10% 90%

Source: USDA


Given advanced notice of the closure, exporters, grain originators, barge operators, railroads and trucking lines are already planning to minimize interruptions and costs. Alternatives include:
· Pre-positioning the maximum number of barges to load SW before the closing (the Bonneville Lock and Dam should re-open after 8 weeks, which would open facilities up river to The Dalles, about 307 km east of Portland);
· Moving more rail cars and locomotives into the region to handle increased demand from rail-loading interior elevators;
· Coordinating truck and rail delivery from the Willamette Valley, south of Portland.

Buyers can help themselves by preparing for the maintenance period. USW believes there will be sufficient volume of all U.S. wheat classes normally available from the PNW. Buyers can also help lower the risk of interruption and minimize potential costs by taking a longer view of their purchase needs.

USW advises its customers to consider:
· Consulting with PNW exporters as early as possible to help give exporters more time to respond to your needs and to manage their logistical challenges.
· Scheduling a meeting soon with the local USW representative to identify buying strategies that fit specific needs and capabilities;
· Analyzing inventory needs and logistical capabilities;
· Increasing SW purchases now through harvest (export prices generally are at their lowest in June; see U.S. Wheat Export Price Cycle in Buyers’ Favor above)
· Increasing SW wheat and/or flour storage;
· Deferring as an offset some HRW and HRS shipments from the immediate post-harvest period into the maintenance period.

As an objective voice for U.S. wheat producers, USW greatly values the trust customers have in our products and service. Our focus remains fixed on helping buyers, millers and wheat food processors learn how to grow their enterprises using our wheat. Working together, we believe we can help ease any concerns related to the closure and even strengthen our partnership. We look forward to assisting you now, as always.

About the Columbia Snake River System. The CSRS is a vital transportation link for wheat producers in the states of Idaho, Montana, Oregon and Washington. The economies of these four states rely heavily on the commerce that flows up and down this system. The CSRS is the #1 U.S. wheat export gateway. The deep draft channel supports 46 million tons of cargo each year, valued at $20 billion. The inland system supports more than 9 million tons of cargo.

For more information, visit the Pacific Northwest Waterways Association online at

5. USW Harvest Report Provides Valuable and Timely Information for Overseas Customers
By Amanda J. Spoo, USW Communications Specialist

When a farmer pulls up to the local gas station for his second cup of morning coffee and sees his neighboring farmer, chances are they are going to chat about how their crops are doing. It is a regular topic on farm radio stations, at county elevators and between grain traders. Following the wheat harvest is a beloved tradition in the United States, but our friends and customers overseas are watching closely, too.

Between May and October, USW publishes a Harvest Report every Friday afternoon with updates and comments on harvest progress, crop conditions and current crop quality for HRW, SRW, HRS, SW and durum wheat.

USW’s 15 overseas offices share the report with their market contacts and use it as a key resource for answering inquiries and meeting with customers. USW also publishes the report in Spanish in “Trigonoticias,” distributed to Latin American wheat buyers and millers.

“The weekly Harvest Report is a key component of USW’s international technical and marketing programs,” said Mitch Skalicky, USW regional vice president for Mexico, Central America and the Caribbean. “It is a consistent and timely tool that buyers use to analyze U.S. wheat conditions and it leads them to other helpful resources on the USW website.”

“It is a resource that helps customers understand how the crop situation may be having an impact on basis values and premiums, or discounts that might affect the FOB values,” said Matt Weimar, USW regional vice president for South Asia.

A preliminary 2016/17 Harvest Report on May 13 indicated that the 2016 HRW wheat harvest has started in parts of Texas, but precipitation has already delayed the harvest in other areas for an estimated additional week. Rain also hampered HRW wheat seeding last fall, and most producers had to plant over multiple weeks — if they were able to plant at all. The early-planted wheat is currently mature and ready to harvest, but the wheat planted later is still 2 to 3 weeks from maturity. Virtually all HRW production areas experienced above average temperatures during the winter, which pushed the crop about four weeks ahead of normal plant development in March. Moderate temperatures and rain in April and May, however, slowed crop development to near normal.

According to USDA’s latest
National Agricultural Statistics Service (NASS) report on May 16, all winter wheat (HRW, SRW and SW) is in better condition than the 2015/16 crop on this date last year. NASS rated 62 percent of this year’s winter wheat crop as good or excellent compared to 45 percent last year. It also rated only 8 percent of this crop as poor or very poor, compared to 19 percent on this date last year.

Looking ahead, NASS reported that by May 15, 60 percent of the 2016/17 U.S. spring wheat crop was up and growing. This is in step with last year’s progress by this date and ahead of the 5-year average by nearly 30 percent. Planting is 89 percent complete. NASS expects to release the first spring wheat condition report on May 23.

“These reports keep our USW overseas staff well up-to-date on the progress of the U.S. wheat crop, its quality characteristics and how it relates to the previous year,” said Alvaro de la Fuente, USW regional vice president in South America. “We rely on that information in our trade servicing meetings with buyers and millers.”

You can follow the progress of the 2016/17 crop through the USW Harvest Report every Friday afternoon at To get insight directly from the custom harvest crews as the combines roll north, visit “High Plains Journal” and its “All Aboard Wheat Harvest” blog at

6. Wheat Industry News
  • Congratulations to Ben Conner and His Family on their newest addition. A baby girl, Eva Cecilia, was born Monday, May 9, 2016. Ben is the Deputy Director of Policy in the USW Headquarters Office in Arlington, VA.
  • ITC Report Shows TPP Would Help U.S. Farmers and Ranchers. This week, the International Trade Commission (ITC) released its highly anticipated report on the economic impacts expected to accrue from the adoption of the Trans-Pacific Partnership (TPP). The U.S. Congress required the report, which is widely seen as an official “scorecard” of the trade agreement. For the entire U.S. agriculture and food sector, the report forecasts a $7.2 billion increase in exports or a growth of about 2.6% by 2032 compared to the same timeframe without TPP. Read the report online at
  • Seeking Stakeholder Input on the National Wheat Action Plan. The National Association of Wheat Growers (NAWG) and the National Wheat Foundation (NWF) are developing a National Wheat Action Plan to serve as the catalyst to increase public and private wheat research and to improve wheat productivity and farmer profitability. The organizations believe increased engagement by farmers is critical to moving forward on a new path to revitalizing the wheat industry. They are seeking input and feedback from stakeholders through an online survey at For more information, FAQs and a list of industry partners, please visit
  • U.S. Sustainability Alliance Updates Website. USW is a partner with USSA, a group of U.S. farm, fishery and forestry producers that have come together to explore and share their values about sustainability and conservation. The updated website features additional resources, including new reports, video and infographics. To view the site and learn more, visit
  • WQC Seeks New Leadership. The Wheat Quality Council (WQC) is searching for an individual with a passion for the wheat industry and proven industry leadership experience. Please email a letter of application and resume by May 31, 2016 to Ben Handcock at or call 303-558-0101 for more information. The position starts in November 2016. Read the full job description here.
  • IGP Institute Risk Management Short Course. This course, scheduled for Aug. 1 to 5, 2016, at the IGP Institute Conference Center in Manhattan, KS, focuses on principles of risk management and commodity price control. The course includes basic and advanced sections on why, when and how to trade commodity futures and options. For more information and registration, visit
  • Subscribe to USW Reports. USW has added a “Subscribe” menu at where visitors may subscribe to this newsletter, the weekly Price Report and the weekly Harvest Report (available May to October.) Click here to subscribe.
  • Follow USW Online. Visit our page at for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter at, additional photos at, plus video stories at

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