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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. Competitive Factors Pressuring U.S. Wheat Export Pace
2. Soft White Farmers Face Inconsistent Conditions
3. Farmers Expect Average SRW Yields after Late Seeding and a Cool Spring
4. Wheat Growers Support Quick Passage of Bipartisan TPA Legislation
5. Kansas Farmer Testifies in Senate Ag Committee on Cuban Trade
6. Wheat Industry News


Online Edition: Wheat Letter - April 23, 2015 (http://bit.ly/1K9RPHb)

PDF Edition: (See Attached) (See attached file: Wheat Letter - April 23, 2015.pdf)

USW Supply & Demand Report: www.uswheat.org/supplyDemand


1. Competitive Factors Pressuring U.S. Wheat Export Pace
By Casey Chumrau, USW Market Analyst

In a year when record global wheat supplies depressed prices, U.S. farmers have struggled to compete in price sensitive markets. Exports of high protein U.S. classes, often the highest priced, are well ahead of last year but overall sales for all classes through April 9 were 24 percent less than a year earlier. As the 2014/15 marketing year progressed, a surge in the U.S. dollar helped further increase the competitive position of major exporters with ample supply and lower prices.

The ICE U.S. Dollar Index is hovering around a 12-year high after increasing 22 percent in an 8-month period. A strong dollar makes U.S. products more expensive to global customers. U.S. wheat exporters believe the strong dollar, in part, is contributing to a slower sales pace. USDA projects 2014/15 U.S. wheat sales will reach 24.0 million metric tons (MMT), which would be well below the five-year average of 29.4 MMT and the lowest mark since 2009/10. With just six reporting periods left in the marketing year, total known U.S. exports and commitments equaled 23.7 MMT, according to USDA.

Strong competition is also adding pressure to the export pace. There were quality issues throughout the world crop, but production volume reached a record level for the fifth time in seven years at 725 MMT. Several countries that most directly compete with the U.S. for market share are seeing strong sales. Canadian exports are benefitting from a second consecutive bumper crop and a significant easing of transportation issues compared to last year. According to Grains Canada, 2014/15* sales through April 12 were 14.7 MMT, 8 percent greater than the same date last year. USDA projects total Canadian exports will reach 23.5 MMT, which would be the most since 1991/92.

Russian exports are also well ahead of last year’s pace despite government intervention. According to SovEcon, Russian wheat exports through March were 19.5 MMT, 27 percent greater than a year earlier. The agricultural analyst firm expects total 2014/15* exports will reach 21.5 MMT, which would be just shy of the record 21.6 MMT set in 2011/12. This would be quite a feat considering the Agricultural Ministry imposed an export tax on wheat in February, intentionally slowing exports in order to limit inflation and protect the domestic market. The ministry has signaled it may lift the tax on July 1.

Last year, Brazil imported an unusually high volume of U.S. hard red winter (HRW) to help cover the insufficient supply of its Mercosur partner, Argentina. That continued into the start of 2014/15 with 1.53 MMT of HRW imports. Brazil has imported only an average volume of soft red winter (SRW) several months because improved Argentinian production in 2014/15 will allow for increased exports. USDA expects Argentina to export 5.5 MMT in 2014/15, which is nearly enough to fulfill the Brazilian import need of 5.9 MMT. According to the most recent data from the Global Trade Atlas, Argentina’s total sales through February of 1.89 MMT were nearly four times those of a year earlier. However, Argentina’s government still controls the export licenses for wheat and has yet to authorize the full 5.5 MMT.

Despite a year of reduced exports, the U.S. remains the largest single-country supplier of wheat in the world. Lower sales mean there is more wheat in the bin, ready to supply our customers at any time.

*Crop year in Canada and Russia is July-June.


2. Soft White Farmers Face Inconsistent Conditions

Those who watch soft white (SW) wheat conditions in the Pacific Northwest (PNW) are seeing inconsistent temperatures and rainfall take production on a bit of a roller coaster ride that could end with a smaller supply of this important export crop. After drought conditions limited the 2014 crop, total white wheat supply dropped to 7.73 MMT, the lowest level in seven years.

The most recent USDA National Agricultural Statistics Service (NASS) Prospective Plantings report estimated that white wheat seeded area is up 3 percent from last year to 4.33 million acres (1.73 million hectares) and is greater than the 5-year average of 4.18 million acres. Assuming average yields can rebound from just 3.84 metric tons (MT) per hectare in 2014/15 — the lowest since 2002/03 — production could eclipse the 7.73 MMT of white wheat produced last year. Washington Grain Commission (WGC) Director of Communications and Public Relations Scott Yates put this into perspective.

“I was talking to an elevator manager a summer ago and he said bad crops usually come in pairs because the conditions that set up the poor first crop linger and influence the next one,” said Yates. “Keeping in mind how early it is in the year, our estimate for the current SW crop in Washington is a little better than last year, but still off our five-year average by about 10 percent.”

The April 20 NASS Crop Progress and Condition report covering Washington, Oregon and Idaho noted that inconsistent temperatures and strong winds depleted soil moisture and affected spring planting. NASS rated topsoil moisture in Washington at 20 percent short and 80 percent adequate, while Idaho is rated 24 percent short and 71 percent adequate. Ratings in Oregon were the lowest in the PNW at 44 percent short and 52 percent adequate.

According to Yates, crop conditions in Washington this year have been anything but consistent.

“We had sporadic but fairly severe winter kill in November and I have heard estimates that 25 percent of fall seeded wheat was replanted,” said Yates. “We will take all the precipitation we can get, but timing of the rain is also important. Poor planting conditions last fall and a dry winter have led to thinner stands and moisture now cannot make new plants grow.”

“A warm, dry spell in February had us wondering if we were going to be putting in spring crops so when it finally started to rain, we got busy putting in spring wheat. I have had 5.5 inches of rain over the last month,” added Randy Suess, who grows SW in Eastern Washington. “While we still have above average temperatures, if we get timely rains in June we should have a good crop.”

Across the border in Oregon, farmers are worried about what impact a low snow pack will have on availability of water for irrigation.

“Farmers say the crop looks good across most of the state with the exception of planting delays in a few of the spring production areas,” said Oregon Wheat Commission Associate Administrator Tana Simpson. “The snow pack and reservoir levels are low so irrigated and spring wheat is of particular concern. We are going to need additional moisture and mild temperatures to avoid significantly reduced yields.”

Dale Case, a SW grower in northeast Oregon agrees.

“Despite a near normal rainfall, we have had no snow pack this past winter in the area. The spring has been very dry and some fields are starting to show stress,” said Case. “The growers with irrigation from wells should be OK but if they get irrigation water from the river, they may run short for spring wheat or later crops.”

Reports from Idaho round out the impact that an early spring has had on the PNW.

“The water outlook for the Snake River Plain is at about 80 percent of what it is normally, but our early spring meant we had to start irrigating early, so it is anyone's guess if the water will hold until crops have finished out,” said Idaho Wheat Commission Member Gordon Gallup.

Timely and adequate moisture through the rest of the season will be essential to make a consistently good crop, which becomes even more important when SW market watchers note that the ratio of U.S. white wheat stocks to use is likely to be down for the third straight year at the end of 2014/15. USW will continue to update customers on conditions. Additional updates are available from the USDA Weekly Weather and Crop Bulletin at http://bit.ly/YqaABl.


3. Farmers Expect Average SRW Yields after Late Seeding and a Cool Spring

Soft red winter (SRW) wheat supply and demand has settled back to a more familiar place after Chinese buyers took advantage of good quality at an attractive price to import more than 4 MMT of U.S. SRW wheat in marketing year 2013/14. In 2015/16, supply should remain strong and prices attractive even though farmers planted significantly less SRW last fall.

SRW is a versatile, weak-gluten wheat with excellent milling and baking characteristics for cookies, crackers, pretzels, pastries and flat breads. Farmers east of the Mississippi River as well as in Missouri, Arkansas, Louisiana and east Texas grow SRW in rotation with other crops or as a second crop following soybeans. Over the past five years, average SRW production is about 13.3 MMT and average exports (without counting the outlying year in which China dominated the market) are 3.7 MMT. Production in 2013/14 was well above average so, at an average export pace, USDA expects 2014/15 ending stocks on May 31, 2015, to be 5 MMT, about 19 percent more than the 5-year average.

Looking at the SRW outlook for 2015/16, USW Market Analyst Casey Chumrau reported in the last issue of “Wheat Letter” that USDA estimated SRW planted area was less than any year since 2010/11. Plantings fell to 7.75 million acres, down from 8.50 million last year and 4 percent below the 5-year average, with reductions in every SRW producing state, including large drops in Ohio, Illinois and North Carolina. Wet conditions prevented seeding in some fields and, even though farm gate prices are relatively low, alternate crops offered more profit potential than SRW.

Spring has arrived a bit late in much of the eastern United States and that has slowed SRW development. Heading was behind schedule as far south as Louisiana in late March. Dan Weathington, executive director of the North Carolina Small Grain Growers Association, reported that with a bit more warmth, wheat there should start heading this week. USW colleagues visiting farms in eastern Maryland saw SRW still in the tillering stage on April 17 (see “Wheat Industry News” below).

Taken as a whole, the 2015/16 SRW crop is in good to fair condition (see SRW Conditions chart below) and yield potential remains about average according to several colleagues who shared their perspective this week.

“The North Carolina crop looked pretty good going into January but we had extremely cold conditions with some damage earlier this spring,” said Weathington. “Then rains came and kept a lot of farmers from applying nitrogen fertilizer, so I figure we will lose quite a bit of the crop due to rain and cold damage. We will have to wait for the official report in two weeks before we will have an idea how much that will hurt yields.”

“From what I hear, most wheat is in good condition and we predict normal wheat yields of about 64 bushels per acre, but will be from fewer acres this year,” said Diane Handley, executive secretary of the Illinois Wheat Association.

“Here in Ohio, planting dates tell the tale,” reported John Hoffman, who farms near Circleville in the south-central part of the state. “The wheat I was able to seed early looks really good, but in the state, seedings were down by 10 to 12 percent. A lot of that wheat was seeded late and it has struggled to grow. I spoke to a few farmers in northwest Ohio who might abandon part of their crop and on the fields they expect to harvest, yields will be below average.” Hoffman represents the Ohio Small Grains Marketing Program on the USW Board of Directors.

Extension Grain Specialist Dr. Wade Thomason said condition ratings in Virginia are mostly good but the crop is one to two weeks behind. He said there is significant late-seeded area and a cool, wet spring has limited tillering.

“Most folks say the crop is about one to two weeks later than ‘normal,’” said Dr. Bob Pitman, superintendent at the Eastern Virginia Agricultural Research Center in Warsaw, VA. “Overall, we should see only average yields in the state.”

SRW Conditions, Percent by State, as of April 21




4. Wheat Growers Support Quick Passage of Bipartisan TPA Legislation

The U.S. wheat industry applauds bipartisan support for the introduction of legislation to modernize and renew Trade Promotion Authority (TPA). The Bipartisan Congressional Trade Priorities and Accountability Act of 2015 includes improvements to the 2002 TPA law that are key to establishing the groundwork for progressive trade negotiations and outcomes for U.S. farmers and businesses.

“Trade is vital to the U.S. wheat industry, with 50 percent of the annual crop destined for export markets. U.S. farmers are eager to sell high quality wheat throughout the world, but artificial trade barriers often stand in their way,” said National Association of Wheat Growers (NAWG) President Brett Blankenship. “Passage of TPA would send a strong signal that Congress and the Administration are united in their commitment to opening markets for the benefit of farmers and rural communities and creating jobs throughout this country.”

The TPA legislation outlines U.S. trade policy objectives and sets out conditions for the President to negotiate free trade agreements and other trade liberalizing initiatives as well as allowing for expedited Congressional consideration. Also known as “fast track,” TPA builds confidence with our negotiating partners that once an agreement is reached, Congress cannot change it. The bill also institutionalizes consultation requirements to ensure that Congress and the President maintain a strong partnership in advancing trade policy goals.

Together NAWG and USW encourage the swift enactment of TPA as an essential tool for negotiating market-opening free trade agreements. The United States is currently engaged in negotiations to complete the 12-country Trans-Pacific Partnership (TPP) and the U.S. and European Transatlantic Trade and Investment Partnership (TTIP), which will lower barriers to U.S. wheat exports in several key markets. These agreements will also help ensure that U.S. wheat producers have the same market access as other wheat exporters, including Canada and Australia.


“Comprehensive free trade agreements create a more fair and level playing field, and U.S. wheat farmers need the leverage that TPA would give U.S. negotiators to have a unified voice in a growing international market,” said USW Chairman Roy Motter. “Japan and other countries are less likely to put their best offer on the table for politically sensitive agricultural products like wheat unless they have the confidence provided by TPA.”

The United States is the world’s largest wheat exporter, offering customers around the globe a reliable, high-quality supply of six wheat classes. In the 2013/14 marketing year, ending May 31, 2014, the United States exported about 32 million metric tons (nearly 1.2 billion bushels) of wheat valued at about $9.7 billion, which supports thousands of jobs and creates economic benefits across the country. More on the industry’s trade work is at
www.wheatworld.org/trade or www.uswheat.org/whatwedo/tradepolicy.


5. Kansas Farmer Testifies in Senate Ag Committee on Cuban Trade
By Jordan Hildebrand, Kansas Wheat, Reprinted with Permission

A Kansas farmer was recently called upon by the United States Senate Committee on Agriculture, Nutrition and Forestry, to testify on the opportunities and challenges for trade with Cuba. Kansas Wheat Commissioner Doug Keesling, Chase, KS, was part of a delegation organized by the U.S. Agriculture Coalition for Cuba (USACC) that visited the Caribbean country in order to explore re-establishing agricultural trade. Assistant Director of Policy Ben Conner represented USW in the delegation.

Keesling testified in front of the committee, chaired by Kansas Senator Pat Roberts, on April 21 and discussed the potential that he, and the nearly 100 other members of the USACC delegation, saw in Cuban trade.

"We had the opportunity to hear from Cuban government officials and speak with Cuban farmers," said Keesling. "We are certainly interested in selling our products to Cuba, but we were also there to learn and to help break down the wall that has separated the people in our two countries for so long."

Cuba is the largest country in the Caribbean by area and population. Wheat and rice are both staples of the Cuban diet, though only rice is produced domestically. There are 11 million people on the island, but its population is growing very slowly. The opportunities for increased wheat consumption are limited, unless population growth accelerates or the tourism sector takes off.

It has been estimated that Cuba could import up to 90 percent of its wheat from the United States. That is because today Cubans buy no wheat from the United States. The state-owned grain buyer, Alimport, buys almost all their wheat from Canada and Europe, even though Cuba is much closer to U.S. gulf ports.

"Now that Cuba is allowing increased investment by the private sector, we can expect the sophistication of the Cuban flour milling, processing and retail segments to improve, which could lead to even more imports in the future," Keesling said. "But if current policies continue, those imports will not be products raised by U.S. farmers."

Keesling testified that for Cuba to become a successful export market for U.S. farmers, regulatory obstacles must be removed. Under current sanctions, U.S. food and agricultural companies can legally export to Cuba. However, financing restrictions limit the ability of the U.S. industry to serve the market competitively. But Cubans are not going hungry; instead, they are purchasing their imports from competitors like Canada and Europe.

"It doesn't make any sense to me that if somebody wants to buy the wheat I grow, they have to jump through all sorts of hoops imposed by our government," said Keesling. "I would suggest that Congress carefully consider if there is a compelling, practical reason to restrict the freedom to engage in commerce, especially for those who are just trying to sell wholesome, U.S.-grown food."


6. Wheat Industry News
  • NAWG Urges Close Oversight Over Federal Grain Inspection Service (FGIS). NAWG believes there must be a mechanism in place to ensure there are no trade disruptions and urged Congress to reject attempts that would undermine the current system of inspections. Click here to read NAWG’s letter to the U.S. House Committee on Agriculture.
  • Steve Wirsching Elected Vice-Chair of FGIS Advisory Committee. USW Vice President and West Coast Office Director Steve Wirsching will serve as vice-chair of a committee that advises the Grain Inspection, Packers and Stockyards Administration (GIPSA) on the programs and services it delivers under the U.S. Grain Standards Act. Read more here.
  • Edgar S. McFadden Symposium on Wheat Improvement. The Edgar S. McFadden lecture on April 20, 2015 at USDA Headquarters in Washington, DC, featured keynote speaker Kevin Kephart, Vice President for Research and Economic Development, South Dakota State University. USW President Alan Tracy joined NAWG CEO Jim Palmer to give concluding remarks. For more information on Edgar S. McFadden visit www.sdstate.edu/mcfadden/.
  • USW Visits Walnut Hill Farm. Several colleagues who have joined the USW Headquarters staff in the past few months enjoyed a day away from the office April 17 traveling to eastern Maryland and Jason Scott’s family farm near Hurlock. They learned a lot about SRW production and how to calculate yield potential. They will put that knowledge to work later this year at the annual hard winter and spring wheat tours sponsored by the Wheat Quality Council. A special thank you to Jason and his family for hosting the group. Look for more photos on the USW Facebook page.



On April 17, this SRW field on Walnut Hill Farm in eastern Maryland was in the tillering stage. Overall, the U.S. SRW crop is about two weeks behind average progress with average yield potential. Walnut Hill Farm is the family operation of USW Secretary-Treasurer Jason Scott near Hurlock, MD.
  • Syngenta Introduces “2015 Voices 4 Wheat” Blog Campaign, a wheat-focused blog that spotlights the wheat production story all year through the experiences of growers and retailers. To follow the 2015 participants on their journey, visit http://voices4wheat.com.
  • Wheat Food Council Improves Website. This organization, funded primarily by U.S. wheat farmers through state wheat commissions, does a great job educating nutritionists and other influencers in the U.S. wheat foods value chain. Its newly re-designed website features expanded content and is even more attractive and easier to navigate. Many overseas customers will want to visit to access the latest information about U.S. wheat quality and food safety. Visit www.WheatFoods.org.
  • IGP Risk Management Course. The IGP Institute in Manhattan, KS, is hosting this course Aug. 2 to 7, 2015. "Our program is not focused on … the proper use of futures and options as a risk management tool to control price volatility and market risk," said Jay O'Neil, senior agricultural economist and course instructor. Registration closes July 2. 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 how to analyze, interpret and apply rheological results effectively. For more information or to register, visit www.northern-crops.com/courses2/.
  • WMC Cookie and Cracker Baking Technology Short Course. The Wheat Marketing Center in Portland, OR, will hold its Cookie and Cracker Baking Technology Short Course June 1 to 5, 2015. For more information or to register, visit http://wmcinc.org/WMC_03_Cookie_and_Cracker.html.


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