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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. USDA Expects Improved Yields Will Offset Decline in U.S. Planted Wheat Area
2. Brazilian Flour Millers Discuss Trade Policy with USW, U.S. Officials
3. U.S. Wheat Associates Headquarters Welcomes New Fiscal Officer
4. Wheat Buyers Conference Positions U.S. Wheat as an Exceptional Value
5. World Food Prize Foundation Honors Work in Biofortication of Crops
6. Wheat Industry News

Online Edition: Wheat Letter - June 30, 2016

PDF Edition: (Attached) (See attached file: Wheat Letter - June 30, 2016.pdf)

USW Harvest Report: www.uswheat.org/harvest


1. USDA Expects Improved Yields Will Offset Decline in U.S. Planted Wheat Area
By Stephanie Bryant-Erdmann, USW Market Analyst

U.S. farmers responded to market signals and planted the fewest acres to wheat since the early 1970s according to USDA’s June 30 Acreage Report. However, the 2016/17 yield potential is high with nearly every region in the United States experiencing favorable weather conditions. USDA projects total average yields at 48.6 bu/ac or 3.3 metric tons per hectare up from 43.6 bu/ac last year and 8 percent above the 5-year average.

As of June 30, USDA estimated total area planted to wheat would reach 50.8 million acres, which is 9 percent lower than the 5-year average. USDA expects 2016/17 harvested area to drop 6 percent from both last year and the 5-year average to 44.1 million acres.

USDA estimates farmers planted 36.5 million acres of winter wheat for the 2016/17 harvest, up slightly from the March estimate. Rain last fall that delayed soybean harvest prevented some wheat seeding last fall, but low farm gate prices also contributed to the winter wheat planted area decline.

The winter wheat crop went into winter dormancy in good or above average condition but limited snow cover left the crop vulnerable to cold temperatures. However, a mild winter and early spring allowed winter wheat to emerge from dormancy in better than normal condition and beneficial spring rains further improved yield potential. As of June 27, USDA rated 62 percent of winter wheat in good or excellent condition, up from 41 percent last year at this time. USDA rated just 9 percent of the winter crop as poor or very poor, down from 23 percent in 2015.

USDA assessed hard red winter (HRW) planted area at 26.5 million acres, down 9 percent from 2015, and unchanged from the March estimate. While, a record-warm December and above average rainfall boosted yield potential significantly, heavy May rains caused flooding in parts of Texas and Oklahoma. Harvested area in top HRW-producers Texas, Oklahoma and Kansas is projected to fall 12 percent year over year. As of June 27, harvest was 58 percent complete in Kansas, ahead of 50 percent complete at this time in the 2015 harvest. Texas and Oklahoma harvest is nearly complete, and custom harvesters began test cutting along the Kansas-Nebraska border this week.

In contrast to recent years, soft red winter (SRW) harvest in the U.S. Southern Plains is progressing rapidly with good harvest conditions. As of June 27, harvest in Illinois was 76 percent complete compared to 45 percent complete last year with wheat in the largest SRW-growing state rated at 70 percent good to excellent. That is way up from 37 percent good to excellent on the same date in 2015. USDA estimates total 2016/17 SRW area at 6.58 million acres, 7 percent lower than 2015/16 and 20 percent below the 5-year average.

White wheat planted area increased slightly year over year according to USDA. White wheat planted area is forecast at 4.15 million acres. Idaho, Oregon and Washington, which produce most of the exportable U.S. white wheat were in the third year of drought during fall planting. However, December brought much needed precipitation to the region, and timely rains have continued to boost yield potential across the Pacific Northwest. With the adequate soil moisture, white wheat protein is expected to return to a more normal, lower range in 2016/17.

Hard red spring (HRS) planting finished well ahead of normal this year in most areas due to the early spring. USDA estimates farmers planted 11.4 million acres to HRS, up slightly from USDA’s March estimate but 9 percent below 2015/16 levels. As of June 27, 72 percent of the spring crop was rated good or excellent and just 5 percent was poor or very poor. In North Dakota, the largest HRS producing state, 78 percent of the crop is in good or excellent condition. According to USDA’s weekly crop progress report, 56 percent of spring wheat was headed as of June 27, compared to the 5-year average of 27 percent, indicating that the HRS crop is developing faster than normal.

Durum acreage increased again this year as farmers responded to higher prices. Northern durum is grown primarily in two regions of North Dakota and Montana. Desert Durum ® harvest is underway in Arizona and California. As of June 27, wheat harvest in Arizona was 96 percent complete compared to the 5-year average of 88 percent complete on the same date. California harvest is also ahead of schedule with USDA reporting 88 percent completion compared to 71 percent complete this time last year. USDA estimates 2.14 million acres were planted to durum, up 11 percent from 2015/16 but still 5 percent below the 5-year average of 2.26 million acres.

The industry will next turn toward USDA for its first by-class production estimates on July 12.


2. Brazilian Flour Millers Discuss Trade Policy with USW, U.S. Officials
By Dalton Henry, USW Director of Policy

An old adage suggests that two of the biggest influences on a market are weather and governments. Though there is not much that USW can do about the weather, government policies are one key area where we can work with our customers to help achieve beneficial outcomes for both. A leading example of that cooperative work was on display last week as two Brazilian flour millers joined USW staff in a series of meetings in Washington, DC, in hopes of securing more favorable access to U.S. wheat supplies.

Brazil is an agricultural powerhouse, and one of the world’s largest exporters of agricultural commodities. In addition to well-known production success in corn and soybeans, Brazilian farmers also produce between five and six million tons of wheat annually — about half of the 10 million metric tons (MMT) of wheat the Brazilian people consume each year. That leaves Brazilian flour mills in need of significant wheat imports each year.

The relationship between the U.S. wheat and Brazilian milling industries goes back several decades. In the 1980s, Brazil was a regular and large customer of U.S. supplies, purchasing between two and three MMT annually. The 1990s brought the formation of the Southern Common Market or Mercosur trading bloc, allowing wheat from Argentina to enter Brazil duty-free and leading to a subsequent decline in imports from the United States. During that time, Brazil agreed to a 750,000 metric tons (MT) zero-duty tariff rate quota (TRQ), allowing Brazilian millers access to a dedicated amount of wheat from the United States, Canada and other world suppliers on an even basis with Argentine wheat. Unfortunately, Brazil never implemented that TRQ and negotiations on a replacement for it remain open today.

Resolution of the outstanding TRQ could prove to be a win-win scenario for U.S. wheat producers and their Brazilian customers. Current discussions focus on applying a TRQ that will provide Brazilian millers more favorable access to world wheat supplies, while not directly displacing Brazilian wheat production.

The long-outstanding Brazilian wheat TRQ is a prime example that for markets to work we must have the right policies in place and we must collaborate with our customers around the world to influence those policies. USW will continue to seek the best possible outcomes when government policies hinder access to U.S. wheat supplies.


3. U.S. Wheat Associates Headquarters Welcomes New Fiscal Officer

USW welcomes Kurt Coppens to its Arlington, VA, headquarters office staff as fiscal officer effective July 5, 2016. In that position, Coppens will consolidate expenses for USW’s 15 foreign offices for USDA claims, perform internal auditing, prepare reconciliations and many other financial reporting tasks.

He will report to Kevin McGarry, USW vice president of finance.

“Kurt has a wide breadth of accounting experience and significant international exposure over more than 10 years. I think Kurt will add great value to USW and I am excited to have him join the finance team,” said McGarry.

Most recently, Coppens was employed as an accounting manager at Agora, Inc., a specialty publishing house in Baltimore, MD. Prior to that, Coppens was an accounting manager at Agora’s office in Paris, France, from 2009 to 2011. In both positions, he managed company accounting practices, revised accounting systems and served as a liaison between the Baltimore headquarters and the French and Swiss offices.

Prior to 2009, Coppens worked for such international companies as BridgeStreet Corporate Housing Worldwide, Intelsat Global Service Corporation, NeuStar, Inc, and FaciliCom International.

Coppens holds a bachelor’s degree in business administration from George Washington University in Washington, DC, where he majored in finance and international business. He is fluent in French, and proficient in Dutch and German.


4. Wheat Buyers Conference Positions U.S. Wheat as an Exceptional Value

USW and nine state wheat commissions hosted 75 flour millers and other buyers at a Latin American and Caribbean Buyers Conference June 21 to 24, 2016, in Portland, OR. USW President Alan Tracy said the information at the conference was specifically selected and timed to emphasize the excellent value of U.S. wheat for these buyers from 16 countries.

Tracy noted that several speakers at the conference focused on how current world market dynamics make U.S. wheat an attractive choice for importers. That is an important message for Latin American buyers who import 40 percent of all U.S. wheat exports and are working to serve the increasing demands for new and better wheat food products in the region. He said these markets increasingly buy on the basis of the quality characteristics U.S. wheat farmers produce every year to help meet the growing demand.

As just one example from the conference, Kansas Wheat CEO Justin Gilpin gave an inside look at HRW and the increasing investment in innovation that farmers are leading. He told the buyers that farmers across the United States are leading the call for increased investment in wheat yield and functional quality. Gilpin cited work at Heartland Plant Innovations, funded mostly by Kansas farmers, which is already paying off for flour millers in new varieties with higher extraction rates.

Representing the Latin American marketing group from CHS Inc., Dan Barnard discussed how the current market gives HRW exceptional value. Referring to a 75 cents-per-bushel premium in mid-2017 futures prices, he told the buyers that they will have the best access to HRW at the least cost over the next three to four months. Speakers covering white wheat, HRS, SRW and durum shared very similar information.

According to USW Vice President of Operations Vince Peterson, there are more timeless reasons why a large conference like this is worth the investment and effort.

“USW has held a Latin American conference every other year for nearly 25 years. With these buyers all in one place, the industry can talk in person about the markets and about how U.S. wheat fits into their businesses and that builds trusting relationships,” Peterson said.

German Zapata, a procurement manager with Servicios Nutresa in Colombia, agreed that traveling to the conference gave him and his colleagues the opportunity to consider U.S. wheat in a very different way. Standing on an Oregon farm after the conference, Zapata said it was amazing to experience the whole process of wheat production and marketing, seeing the land and the technology farmers have, and how they work to produce the best quality wheat.

To see presentation slides from all the speakers at the Latin American and Caribbean Buyers Conference, visit the USW website at http://bit.ly/295mVY8.

USW wants to thank these conference sponsors: Colorado Wheat Administrative Committee, Maryland Small Grains Utilization Board, Montana Wheat and Barley Committee, Nebraska Wheat Board, North Dakota Wheat Commission, Oregon Wheat Commission Texas Wheat Producers Board, Washington Grain Commission and the Foreign Agricultural Service of USDA. In addition, the Wheat Marketing Center, Columbia Grain, United Grain, Oregon Wheat Commission, Mid-Columbia Producers and the Padget Family hosted tours before and after the event.


5. World Food Prize Foundation Honors Work in Biofortication of Crops

The 2016 World Food Prize, the most prominent global award for individuals whose breakthrough achievements alleviate hunger and promote global food security, was awarded to Drs. Maria Andrade, Robert Mwanga, Jan Low and Howarth Bouis for their vital work in biofortification of crops. This year's $250,000 prize will be divided equally between the four recipients.

"These four extraordinary World Food Prize Laureates have proven that science matters, and that when matched with dedication, it can change people's lives," said U.S. Agency for International Development (USAID) Administrator Gayle Smith. "USAID and our Feed the Future partners are proud to join with renowned research organizations to support critical advances in global food security and nutrition."

Awarded by the World Food Prize Foundation, the $250,000 prize honors the Laureates' unparalleled achievement in countering world hunger and malnutrition through biofortification, the process of breeding critical vitamins and micronutrients into staple crops.

Drs. Andrade, Mwanga and Low of the International Potato Center (CIP), are being honored for developing the single most successful example of biofortification: the orange-fleshed sweet potato (OFSP). Dr. Andrade and Dr. Mwanga, plant scientists in Mozambique and Uganda, bred the Vitamin A-enriched OFSP using genetic material from CIP and other sources, while Dr. Low structured the nutrition studies and programs that convinced almost two million households in 10 separate African countries to break away from tradition and plant, purchase and consume this nutritionally fortified food.

Dr. Bouis, the founder of HarvestPlus at the International Food Policy Research Institute (IFPRI), pioneered the implementation of a multi-institutional approach to biofortification as a global plant breeding strategy over a 25-year period. Because of his leadership, crops such as iron- and zinc-fortified wheat, beans, rice, and pearl millet, along with Vitamin A-enriched cassava, maize and OFSP are being tested or released in over 40 countries.

Thanks to the combined efforts of the four Laureates, biofortified crops are positively affecting over 10 million people, with the potential of several hundred million more in the coming decades.

In announcing the names of the 2016 Laureates, Ambassador Kenneth M. Quinn, president of the World Food Prize, noted, "They are truly worthy to be named as the recipients of the award that Dr. Norman E. Borlaug created to be seen as the Nobel Prize for Food and Agriculture.” This year is the 30th anniversary of the World Food Prize.

The honorees will receive the World Food Prize at a ceremony in the Iowa state capitol in Des Moines, Oct. 13, 2016. The event is the centerpiece of the Borlaug Dialogue, a three-day international symposium that regularly draws over 1,200 people from 60 countries to discuss cutting-edge issues in global food security. The Borlaug Dialogue tackles the complex interplay of areas that affect global food security efforts, from policy and trade to science and infrastructure.

Conservation agriculture, biotechnology, advanced breeding and open, consistent trade flows are all necessary to fight the constant threat of food insecurity. U.S. wheat farmers know that all of these topics will need attention if we are to sustainably feed the world population for generations to come. The World Food Prize, more than any other meeting or organization, celebrates this vital collaboration and recognizes pioneers and leaders in all of these fields. USW congratulates this year’s World Food Prize Laureates and thanks the World Food Prize for its continued devotion to recognizing leaders in the fight against hunger. As Dr. Borlaug said, “If you desire peace, cultivate justice, but at the same time, cultivate the fields to produce more bread; otherwise there will be no peace.”

Visit http://www.worldfoodprize.org for more information.


6. Wheat Industry News
  • Condolences. USW was saddened to learn that Fleur Noeth’s husband, Jim, recently lost his battle with lung cancer. Fleur was with USW for 46 years and Jim will be remembered by many USW staff as friendly and a joy to be with. A memorial video has been prepared by their son and can be viewed here. Our thoughts are with Fleur and her family.
  • California Wheat Commission Selects Claudia Carter as its New Executive Director. Carter, originally from Manta, Ecuador, officially stepped into her role as the CWC’s executive director on June 20, 2016. Carter spent the past two years as the CWC’s lab director, focused on research, consulting and on-site training. “Claudia has been doing a great job and we are pleased that she has accepted the position as the new Executive Director,” said Roy Motter, CWC chairman. “We are looking forward to her providing strong leadership for the wheat industry, with emphasis on market development, research and development of new and improved wheat varieties.”
  • PPO Traits May Become Common in Bread Wheat Varieties. Polyphenol oxidase (PPO) is an enzyme found in all plants that does not make food spoil, but simply diminishes its appeal. The Montana Wheat and Barley Committee has been working with Montana State University and the Agricultural Research Service’s Grain, Forage, and Bioenergy Research Unit in Lincoln, NE, for four years to pinpoint the major genes responsible for PPO activity in wheat and, ultimately, lessen or eliminate them. Researchers have now found null alleles that have no PPO activity, and show negligible wheat kernel PPO levels when combined. Read the full article here.
  • 107 Nobel Laureates Sign Letter Blasting Greenpeace Over GMOs. More than 100 Nobel laureates have signed a letter urging Greenpeace to end its opposition to genetically modified organisms (GMOs). The letter asks Greenpeace to cease its efforts to block introduction of a genetically engineered strain of rice that supporters say could reduce Vitamin A deficiencies causing blindness and death in children in the developing world. Read the full article here.
  • Using Genomics to Predict Bread Quality and Accelerate Wheat Variety Development. A team of breeders and geneticists at Kansas State University and the International Maize and Wheat Improvement Center (CIMMYT), has come up with a new approach to determine if new varieties of bread wheat will have what it takes to make better bread. With funding from the USAID Feed the Future Initiative, the team is using DNA markers to predict important quality traits for bread wheat, such as dough strength and loaf volume. Their work, "Genomic Selection for Processing and End-Use Quality Traits in the CIMMYT Spring Bread Wheat Breeding Program," was recently published in the journal “Plant Genome.” Read the full article here.
  • IGP Institute to Host Buhler-KSU Spanish Executive Milling Course. This course, scheduled for Aug. 22 to 26, 2016, at the IGP Institute Conference Center in Manhattan, KS, is designed as an introduction to flour milling and flour quality, grain cleaning and functionality. Course instructor, Jason Watt says the course is an asset for those wanting to broaden their knowledge of the flour milling industry. For more information and registration, visit www.grains.k-state.edu/igp/.
  • 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.
  • Follow USW Online. Visit our page at www.facebook.com/uswheat for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter at www.twitter.com/uswheatassoc, additional photos at www.flickr.com/photos/uswheat, plus video stories at www.youtube.com/uswheatassociates.

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