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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. Market Signals Best Time to Buy is Now
2. U.S. Wheat and NAWG Joint Committees Meet in Fargo
3. Wheat Quality Tour See Variability, Above Average Crop on HRS Tour
4. Trade Visit to Demonstrate U.S. Wheat Competitive Advantages to Venezuelan Millers
5. U.S. Wheat Associates Announces Several Staff Promotions
6. USW Farmer Directors Install New Officers at Summer Board Meeting
7. Wheat Industry News

Online Edition: Wheat Letter – July 28, 2016 ( )
PDF Edition:
USW Harvest Report: www.uswheat.org/harvest


1. Market Signals Best Time to Buy is Now
By Stephanie Bryant-Erdmann, USW Market Analyst


As of Friday, July 22, there was a 50 cent per bushel carry in the market between KCBT September wheat and KCBT March wheat. With harvest wrapping up, this market signal tells U.S. farmers that wheat storage is more profitable than selling at current values. However, that carry is also telling buyers that wheat prices will increase in the coming months and that they should, if possible, buy now and capture that storage premium for themselves.

This carry in the market widened for several reasons, including the fact that wheat competes for elevation with corn and soybeans. USDA expects U.S. corn exports to increase 12 percent year over year to 133 million metric tons (MMT) and expects soybean exports to reach 138 MMT, up 5 percent from 2015/16. Corn and soybean exports — though unseasonably strong — are not the current primary focus as traders wait for U.S. corn and soybean harvest to begin in September and October. Once those harvests begin, demand for barge and rail freight and elevation will all increase, which factored into the 25 cent carry from the KCBT nearby contract price compared to the December contract price on July 22.

While this competition partially explains the carry between the nearby futures and the March contract, there are other factors at play. The nearby futures price for KCBT wheat is near 10-year lows and currently below the cost of production for many producers, which not only makes them reluctant to sell, but also means prices are low enough to trigger Loan Deficiency Payments (LDP) in several counties. An LDP provides U.S. farmers with a short-term loan if they retain ownership of their wheat and the current local cash price in a county is below the applicable county loan rate. This program encourages U.S. farmers to retain ownership of their wheat until prices improve, supporting farmer storage.

Additionally, the carry represents the statistical improbability of a fourth consecutive global production record. According to USDA data, since 1960, the only time the world’s farmers produced four consecutive record crops was from 1980 to 1985. This improbability is seen in the uncertainty surrounding wheat production in a few major exporting countries this year.

While the 2016/17 U.S. hard red winter (HRW) harvest is nearly complete and safely in the bins, FranceAgriMer reported July 21 that harvest was 17 percent complete, compared to 53 percent on the same date a year ago. France — the European Union’s largest producer — received excessive rain throughout the spring and summer, hurting quality and yields. French consultancy ODA Groupe estimates French wheat production at 30.4 MMT. If realized, that would be 27 percent lower than last year’s record yield of 41.0 MMT. Delayed planting progress in Argentina has also started to cut into yield potential there.

This is certainly a buyers’ market, but buyers will need to compete with corn and soybean exports for elevation capacity and with storage revenues for U.S. wheat.



2. U.S. Wheat and NAWG Joint Committees Meet in Fargo
By Dalton Henry, USW Vice President of Policy

The two joint farmer committees of USW and the National Association of Wheat Growers (NAWG) met last week in Fargo, ND, for a policy update and to consider key issues facing the wheat industry. The joint committees were created more than a decade ago to enable and ensure close collaboration between the two organizations on policy priorities in trade and technology.

The Joint Biotechnology Committee, which has broadened its agenda to include a number of technologies, heard updates from private breeding companies on non-GM products they are rolling out to growers. Many of these companies are working to help increase efficiency and drive additional productivity. Two major updates included the continual development of hybrid wheat and products to produce better seeding rate recommendations.

The committee also heard from a researcher from Cibus, a company that has a process for producing gene-edited plants that do not contain any foreign DNA, but can yield substantial improvements for both growers and end-users. Recently they have focused on flax and canola, but according to the speaker, while they do not any active wheat projects, the technology could be readily applied in the wheat industry.

The Joint International Trade Committee considered a range of updates on several priority trade issues for the wheat industry including foreign country domestic support, the Trans-Pacific Partnership (TPP) and possible future negotiations at the World Trade Organization (WTO).

Staff presented additional detail about the domestic support study that was released earlier this spring. The study focused on wheat support policies in China and their impact on U.S. producers and producers in other exporting countries. In the U.S., the total farm gate losses are now estimated at $653 million, an increase of about $100 million from over a year ago, caused by the continued decline of world wheat prices amid burgeoning Chinese wheat stocks.

NAWG staff discussed TPP and possible windows for Congressional consideration this calendar year. Staff were confident that the U.S. Trade Representative’s (USTR) office has been working closely and making progress with Congressional leadership to prepare for eventual introduction of the legislative text ratifying TPP, even though the negative rhetoric on trade has increased dramatically from many political candidates during the U.S. election season. TPP would lower tariffs and import restrictions on wheat to the benefit of U.S. wheat farmers and their customers overseas.

Committee members also briefly discussed the current negotiating status at the WTO. Though negotiations on agricultural market access have been largely stalled for some time, progress is being made in other sectors including services and environmental goods. Progress in these other areas may provide a template for future agricultural negotiations. The next WTO ministerial, the most likely target for an attempt at agreement on some portion of unresolved issues, will be in December 2018. The WTO remains a key body for liberalizing trade and ensuring a rules-based trading system exists.


3. Wheat Quality Tour See Variability, Above Average Crop on HRS Tour
By Dalton Henry, USW Vice President of Policy

As harvest begins in North Dakota, farmers are expecting a crop that continues this year’s trend of above average yields and production. According to crop scouts on the 2016 Hard Red Spring (HRS) and Durum Wheat Quality Tour, North Dakota producers should see a crop that averages more than 45 bushels per acre (bu/ac) statewide for the fifth year in a row. This week 72 crop scouts traveled across North Dakota, evaluating yield potential and wheat quality concerns. Overall, they estimated a final average yield potential of 45.5 bu/ac, which is considerably smaller than last year’s estimate but still above the long-term average. Final tour estimates were calculated based on 455 stops over the past three days, and the individual class estimates were an average yield potential of 45.7 bu/ac for HRS, 45.4 bu/ac for durum and 34.7 bu/ac for HRW. USDA currently projects total North Dakota HRS acreage at 6.3 million acres and production at 279 million bushels.

Participants on the annual tour represent the full range of the wheat industry, including millers, bakers, growers, traders, reporters, researchers and USDA staff. Each day tour vehicles travel a region of the state on eight unique routes, covering 90 percent of North Dakota wheat producing counties and parts of northern South Dakota. At the end of each day, participants meet to report on the fields they scouted and combine their data to produce a summary of results. USW sent two colleagues on the tour this year: Vice President of Policy Dalton Henry and Market Analyst Stephanie Bryant-Erdmann.

The first day of the tour covered most of southern North Dakota and northern South Dakota, where participants faced challenging conditions as summer storms left fields muddy and some hail damage. HRS yields from the first day averaged 43.1 bu/ac, 8 bu/ac under the 2015 tour, but only 2 bu/ac under the 5-year average. Tour participants noted the advanced stage of the crop, seeing many harvested fields on the southernmost routes. Growers in attendance stated the crop was ahead of schedule primarily due to warm spring weather that allowed planting to begin in early April. One of the cars that followed a route through South Dakota stopped at several elevators that were already taking in wheat and found early reports of protein levels above the 2015 crop.

On the second day, tour routes covered much of central and northwest North Dakota, traveling from Bismarck to Devil’s Lake. Scouts reported seeing a greater concentration of wheat fields compared to the first day, more durum fields than previous years and very few harvested fields. Overall yields on the second day averaged 46.9 bu/ac for HRS and 45.4 for durum, compared to last year’s averages of 47.3 bu/ac and 40.2 bu/ac respectively. There was an increase of leaf disease reports from the first day, though the earlier stage of the crop might have facilitated easier identification. Even though the wet weather late in the growing season was conducive to rust diseases, growers in attendance reported disease pressure was about average. USDA’s National Agricultural Statistics Service also noticed an increase in durum fields and project that North Dakota farmers increased durum acres by 16 percent to 1.3 million acres, the most since 2012.

The third and final day of the tour is always shorter, with scouts making just 78 stops as they traveled on separate routes from Devil’s Lake to Fargo. On this trip through the northeast part of the state, wheat fields experienced more late season moisture, likely leading to increased yields.

Participants took the opportunity to recognize and say thank you to Ben Handcock — the longtime executive director of the Wheat Quality Council and lead tour coordinato. After serving the council for more than 25 years, Handcock is retiring soon and participated in his last official wheat tour.

For more information and for results from previous tours visit the Wheat Quality Council’s website at www.wheatqualitycouncil.org.


4. Trade Visit to Demonstrate U.S. Wheat Competitive Advantages to Venezuelan Millers

Quality control and purchasing managers from three Venezuelan flour mills will visit North Dakota, Nebraska, Kansas and Ohio July 31 to Aug. 6, 2016, to learn more about the value of working with the U.S. wheat supply chain. With funding from USDA’s Foreign Agricultural Service (FAS), USW is sponsoring this trade team in cooperation with the North Dakota Wheat Commission, Nebraska Wheat Board, Kansas Wheat Commission and Ohio Small Grains Marketing Program.

Chad Weigand, USW Assistant Regional Director for Mexico, Central America and the Caribbean, said U.S. wheat exports to Venezuela are not as strong as they once were, in part because increased government intervention and limited access to U.S. dollars have forced millers there to make cost the primary buying criterion.

Venezuela imports durum, high protein spring wheat and soft red winter wheat. However, current market conditions there have given Mexican durum a competitive advantage. Canadian western red spring wheat has only recently come up in price to near parity with U.S. HRS wheat, but the high U.S. dollar value continues to favor Canadian origin export prices. For the vibrant cookie and snack market in Venezuela, soft red winter grown in eastern Canada continues to compete with U.S. SRW.

Participants on this team represent some of the largest mills in Venezuela, but they do not have significant knowledge of U.S. wheat quality, its marketing system or federal inspection services.

“With key decision makers like these, we have to demonstrate why performance and value is worth more, but it is very difficult for our staff to conduct activities in Venezuela,” said Weigand. “By coordinating with our state wheat commissions, however, we can bring these customers to the United States to see our production and export system at work. That first-hand experience will help increase their confidence in U.S. wheat.”

Weigand, who is based in USW’s regional office in Mexico City, is leading the team, which includes Jenny Villasuso, Purchasing Manager for MONACA, the second largest milling group in Venezuela. Laura Paz is Purchasing and Quality Manager for Pastas Capri in Caracas, one of Venezuela’s largest pasta producers. Violeta Rosales is Purchasing Manager for Molinos Hidalgo, which operates a mill in Catia La Mar.


5. U.S. Wheat Associates Announces Several Staff Promotions

USW, the industry’s export market development organization, promotes three associates to Vice President. Ian Flagg is named Regional Vice President for the organization’s European and Middle Eastern, North and Eastern Africa regions. Jennifer Sydney becomes Vice President of Programs and Planning, and Dalton Henry becomes Vice President of Policy. In addition, Shawn Campbell is promoted to Deputy Director, West Coast Office, and Jim Frahm becomes Senior Advisor.

Flagg is based in USW’s regional office in Rotterdam, The Netherlands. Sydney and Henry serve in the organization’s Headquarters Office in Arlington, VA. Campbell works in Portland, OR, and Frahm works half-time from his home in Charleston, SC.

“I have said many times how proud I am of the people who work at U.S. Wheat Associates,” said USW President Alan Tracy. “These associates and the people who report to them are making a real and positive difference for USW and for the U.S. wheat farmers we represent. Their commitment to their jobs and promoting U.S. wheat is very strong and is clearly evident in the results of their work.”

Minnesota native Ian Flagg first served USW as Assistant Director, West Coast Office, then as Market Analyst in the Headquarters Office, before accepting a position in 2009 as Assistant Director for the Middle East, East and North Africa (MEENA) region in Cairo. He was promoted to Regional Director in 2014 and moved to Casablanca, Morocco, then transferred again to Rotterdam in January 2016 to direct activities in MEENA and Europe. Flagg has a bachelor’s degree in economics from Minnesota State University, Moorhead, and a master’s degree in Agribusiness and Applied Economics from North Dakota State University.

Jennifer Sydney directs the preparation and submission of USW’s annual Unified Export Strategy proposal to the USDA’s FAS, manages FAS activity amendments, coordinates state funding and supervises USW Programs staff. Sydney had similar responsibilities at the U.S. Grains Council in Washington, DC, before joining USW in 2010. She is a native of Greeley, CO, and received a bachelor’s degree in Asian Studies from the University of Colorado.

Dalton Henry has lead responsibility for coordinating the USW policy team’s efforts and managing relations with wheat value chain organizations. He joined USW in March 2015 after five years with Kansas Wheat as Director of Governmental Affairs. Henry grew up on and is still involved with a diversified crop and livestock operation near Randolph, KS. He has a bachelor’s degree in Agricultural Communications and Journalism from Kansas State University.

As Deputy Director, West Coast Office, Shawn Campbell is responsible for liaison with the grain export trade and constituent state-level wheat commissions, hosting visiting trade delegations and additional support for headquarters and overseas office staff. Before joining USW in 2009, Campbell was an agricultural economist for an Alberta, Canada, feedlot. An Oregon native, Campbell earned a bachelor’s degree in Agribusiness and Agricultural Systems Management and a master’s degree in Agricultural Economics from the University of Idaho.

Jim Frahm has been with USW since 1978, serving most recently as Vice President of Planning. He coordinated long term strategy and program evaluations with and between USW's overseas offices and USDA FAS. As Senior Advisor, Frahm will continue to represent the organization on wheat quality and sanitary/phytosanitary issues and in other assignments. His first position with USW was in Rotterdam directing market development activities in Eastern Europe. He worked as a grain merchandiser for Continental Grain before joining USW. Frahm received a bachelor's degree in History and International Relations from Iowa State University. He also earned a master’s degree in International Affairs specializing in Russian area studies at Columbia University.


6. USW Farmer Directors Install New Officers at Summer Board Meeting

The USW Board of Directors installed new officers at its annual meeting July 20, 2016, in Fargo, ND. Jason Scott of Easton, MD, was installed as Chairman, while last year’s Chairman Brian O’Toole of Crystal, ND, transitioned to Past Chairman and Chairman of the USW Budget Committee. Other officers installed included Mike Miller of Ritzville, WA, as Vice Chairman and Chris Kolstad of Ledger, MT, as Secretary-Treasurer. USW officers were elected to these one-year positions at the January 2016 Winter Wheat Conference in Washington, DC.

Jason Scott is a sixth generation wheat farmer from Maryland’s Eastern Shore, where he is farm manager of Walnut Hill Farms and produces SRW wheat, row crops and vegetables. He is also an Independent Sales Representative for Pioneer Hi-Bred Int'l, under the title Scott’s Seed, L.L.C. Scott is a founding member of the Dorchester County Young Farmers, past president of the Maryland Grain Producers Utilization Board and the Maryland Grain Producers Association. In 2011, he won the Maryland Young Farmers Achievement Award. In his seven years on the USW Board, Scott has represented his state and USW on two board team delegations to Africa and Europe and served as Secretary-Treasurer and Vice Chairman as well as on several USW committees. He and his wife Dr. Casey Scott have a young daughter.

Mike Miller is a fourth generation farmer who operates a dryland wheat farm and grows multiple crops on a separate, irrigated farm in east central Washington. He has served on many local, state and national boards, and is in his third term on the Washington Grain Commission and his fifth year as a USW director representing Washington. Miller is also very active in supporting wheat research and development. He and his wife, Marci, have three children.

Chris Kolstad is the fourth generation of his family to farm in Montana’s “Golden Triangle” region. He and his wife Vicki have four children, including their son Cary who is a partner in their operation. They grow HRW wheat, dark northern spring wheat and durum, plus barley and dry peas. A commissioner of the
Montana Wheat and Barley Committee, Kolstad has represented his state on the USW board since 2012. He is also a member of the Montana Grain Growers Association and Montana Farm Bureau. His community leadership includes serving on his local school board, as treasurer of his family’s church and as a regular blood donor who has given almost 19 gallons of blood since 1972.

Brian O’Toole is the president of T.E. O'Toole Farm Seed Company. He and his wife Sara have four children and raise wheat, edible beans and sugarbeets on their northeast North Dakota farm. O'Toole is an experienced agricultural and community leader. He serves on the North Dakota Wheat Commission, on the board of the Wheat Marketing Center in Portland, OR, and is Chairman of SBARE Wheat Granting Committee. He is also past president of the North Dakota Crop Improvement and Seed Association and past president of Crystal Farmers Elevator Co-op. O’Toole has received the Young Outstanding Farmer Award, Master Farmer Award and Friends of 4-H Award. He has served as Secretary-Treasurer and Vice Chairman of USW.

Official business was called to order Tuesday, July 19, and continued through Wednesday, July 20. Reports to the board included a welcome from North Dakota Lieutenant Governor Drew Wrigley, background on local production and policy from the Agriculture Commissioner of North Dakota, Doug Goehring, and a review of market factors that could change the dynamics of the world wheat market from Mike Krueger, President of The Money Farm. The board also heard an update on trade relations with Cuba from Tyler Jameson, Legislative Assistant to Sen. Heidi Heitkamp (D-ND), USW Regional Vice President Mitch Skalicky and Assistant Director of Policy Ben Conner. The farmer directors from 18 states also heard from Vance Taylor, President and General Manager of the North Dakota Mill and Elevator Association in Grand Forks, ND, about the history and output of the only state-owned milling facility in the United States.

USW's next board meeting will be held jointly with NAWG in Denver, CO, Nov. 2 to 5, 2016.


7. Wheat Industry News
  • IGP Institute to Host Buhler-KSU Executive Milling Course. This course, scheduled for Nov. 7 to 26, 2016, at the IGP Institute Conference Center in Manhattan, KS, will focus on understanding the underlying principles of the milling process and the parameters that can be influenced by either the raw material or the milling system; understanding the challenges of the operating staff; and learning which critical control points to check in order to judge whether an operation is running well. 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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