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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. 2015 U.S. Durum Supply and Demand
2. USW Celebrates Pasta and Durum in October
3. U.S. Wheat Industry Comments on Conclusion of TPP Negotiations
4. FGIS Reauthorization Complete
5. Coey to Provide New Leadership for USW in Chinese Market
6. Wheat Industry News


Online Edition: Wheat Letter – October 8, 2015

PDF Edition: (See Attached) (See attached file: Wheat Letter - October 8, 2015.pdf)

USW Crop Quality Report: http://www.uswheat.org/


1. 2015 U.S. Durum Supply and Demand
By Stephanie Bryant-Erdmann, USW Market Analyst

As everyone who works in the wheat industry quickly learns, the durum market is unique and, as one grain merchandiser puts it, “Durum is an entirely different beast.” Unlike the other classes of U.S. wheat, demand for durum links directly to demand for specific foods, including pasta, couscous and Mediterranean breads. In 2014, global sales of pasta reached $28 billion, according to Euromonitor. This demand, coupled with quality issues in the 2013/14 crop, led to greater than normal market volatility, had challenged USW to provide meaningful values for durum customers in its weekly Price Report. However, with this year’s high quality durum crop safely in the bins, USW resumed durum price reporting Oct. 2 at www.uswheat.org/prices.

2015 U.S. Durum Supply. The United States has produced a five-year average of 1.91 million metric tons (MMT) of durum across six states: Arizona, California, Idaho, Montana, North Dakota and South Dakota. This year, USDA estimates that durum production will reach 2.24 MMT, up 53 percent from 2014. On average, durum production accounts for three percent of total U.S. wheat production, but in the history of the USW Price Report, it has averaged a $1.60/bu ($58/metric ton) premium over the other five classes of U.S. wheat.

U.S. durum is categorized by the location of its production as either northern durum or Desert Durum®. Northern durum, which accounts for 74 percent of U.S. durum production, grows predominately in Montana and North Dakota with additional acres in Idaho and South Dakota. Montana and North Dakota saw a 43 percent and 31 percent increase in planted durum acres in 2015, respectively, due to attractive prices and favorable weather at planting time. The increase in planted acres put North Dakota — the largest durum producer in the United States by both acres planted and bushels produced — back above one million acres of durum for the first time since 2012. USDA estimates North Dakota produced 1.16 MMT in 2015. Not only is production up this year, but also quality, North Dakota Wheat Commission Marketing Director Jim Peterson reports.

“Producers could not have asked for better planting conditions in North Dakota,” Peterson said. “Durum planting finished three weeks earlier than average this spring, and a good growing season followed that resulted in high yield potential. Farmers were able to get that quality in the bins because we also had a really good harvest period. I think buyers are going to be very pleased with the available durum quality this year,” he added. “Average test weight, protein and vitreous kernels are all up, while moisture, dockage and total defects are down.”

The Desert Durum® trademark applies only to durum produced under irrigation in Arizona and California, and is often delivered to domestic and overseas customers “identity preserved” to allow buyers to purchase varieties with intrinsic qualities specific to their needs. Desert Durum® accounts for an average 10 percent of total durum acres, but 26 percent of total durum production due to an average yield of 101 bu/acre (6.79MT/ha).

Michael Edgar, AGRPC and USW board member, noted, “Desert Durum® is known for its reliability and high quality, and because our harvest occurs while the northern crop is planted, the United States is able to deliver high-quality durum year round.”

In preliminary crop quality data for the northern durum crop, USW reported the average grade is No. 1 hard amber durum (HAD) compared to the 2014 average grade of No. 2 amber durum (AD). The average falling number is 420 seconds, demonstrating a sound crop, and significantly better than the 2014 average of 291. The 2015 Desert Durum® crop values are typical, with an average grade of No.1 HAD and a test weight of 62.4 lb/bu (81.3 kg/hl).

2015 Durum Demand. The International Grains Council (IGC) expects world durum 2015/16 production to increase by 11 percent to 36.1 MMT this year. Algeria, the second largest U.S. durum buyer, expects to double its durum production from 1.3 MMT in 2014 to 2.5 MMT this year. Morocco, Syria, Turkey and the European Union (EU) also expect increases in production. If realized, the resulting decrease in demand from these markets will result in a 13 percent decline in world durum trade. However, on Oct. 2, StatsCan reported that Canada, the world’s largest single-country durum producer, would produce the smallest durum crop in three years at 4.74 MMT, a 9 percent decline from marketing year 2014/15 due to drought in key durum producing areas. Therefore, there is still demand for U.S. durum, as the USDA weekly export sales data demonstrates.

As of last Thursday, Oct. 1, U.S. durum exports totaled 514,000 MT, which is 190 percent of 2014 total U.S. durum sales to all countries on the same date. Of that, 63 percent or 325 MMT of durum has been exported to Italy, the largest buyer of U.S. durum, and number one consumer of pasta per capita in the world. Euromonitor reports that on average, every Italian consumes 58 lbs. (26.3 kg) of pasta each year. As a comparison, U.S. consumers eat only 8 lbs. of pasta annually. USDA expects U.S. durum exports to reach 1.09 MMT this year.

As the main ingredient in pasta, this data on durum arrives at a convenient time. Domestically, the United States recognizes October as National Pasta Month and on the international level, Oct. 25 marks the World Pasta Day celebration.


2. USW Celebrates Pasta and Durum in October

With a rich history transcending many cultures and traditions, pasta remains today, a healthy, dynamic and cost-effective global food source. World Pasta Day is an initiative, recognized annually on Oct. 25, to promote positive messages about pasta with media and consumers. Pasta is an important part of the global wheat market. As a supporting member of the International Pasta Organization (IPO), USW is committed to promoting the reliable supply of high quality U.S. durum that this beloved end product is made from and the U.S. wheat farmers who grow it.

Durum — a name derived from the Latin word for “hard” — is a separate type of wheat from that commonly used to make bread, pastries and most wheat products. Durum kernels are harder than common wheat kernels and have a rich amber color and high gluten content ideal for pasta, as well as other products such as couscous and Mediterranean bread. When common wheat is milled, the endosperm, or heart of the wheat kernel, breaks down into a fine, powdery flour. Durum’s endosperm is hard enough to hold together, creating a granular product called semolina, the principal raw ingredient in pasta. When semolina mixes with water, it forms a stiff dough that is extruded, dried, and used create more than 350 pasta shapes. Since durum’s endosperm is yellow, and not creamy-white like other wheats, it gives pasta its pleasing yellow hue.

There are two different categories of U.S. durum wheat, Northern Durum, grown predominately in North Dakota and Montana, with additional acres in Idaho and South Dakota; and Desert Durum®, grown in California and Arizona. USW Market Analyst Stephanie Bryant-Erdmann further discusses the crop’s quality outlook and U.S. durum’s place in the global market in her article, “2015 U.S. Durum Supply and Demand,” featured in this issue of “Wheat Letter.”

Pasta is truly a global food source, consumed each year by more than 80 countries, according to Euromonitor, led by Italy in 2014. This year’s World Pasta Day celebration, held in conjunction with the World Pasta Congress, Oct. 25 to 27, in Milan, Italy, will bring together delegates representing the world pasta industry, including durum growers, millers, equipment companies, nutritionists, public authorities and the media.

This year’s theme, “Feeding the plant, energy for life,” is an initiative that aligns itself well with the values and purpose of the U.S. wheat industry. In addition to its role in World Pasta Day, IPO offers promotional resources on their website, www.pastaforall.info, for pasta manufacturers around the world

The United States also celebrates pasta domestically, recognizing October as National Pasta Month. Join the conversation using #WorldPastaDay and #NationalPastaMonth, and follow USW at www.facebook.com/uswheat and www.twitter.com/uswheatassoc.


3. U.S. Wheat Industry Comments on Conclusion of TPP Negotiations
A joint statement from USW and the National Association of Wheat Growers (NAWG).

USW and NAWG are pleased that negotiators have reached an agreement in the Trans-Pacific Partnership (TPP).

“Asia is a growing regional market and this agreement has the potential to increase economic opportunity and wheat demand even in countries where we already have duty free access,” said USW President Alan Tracy. “That is critically important because our competitors like Australia are moving ahead with bilateral agreements that eliminate tariffs on wheat imports with countries like Vietnam. The high standards in the TPP agreement should help us be more competitive and hopefully lead to even more opportunity for our wheat as new countries join TPP in the future.”

“Trade agreements are essential for U.S. wheat farmers with more than 50 percent of our crop heading overseas. Concluding TPP negotiations is a step in the right direction. My fellow farmer-leaders and I look forward to reviewing the final text and working with Congress to determine how this will impact U.S. wheat farmers,” commented NAWG President, Brett Blankenship, wheat grower from Washtucna, Wash.

USW and NAWG thank Ambassador Froman and the entire U.S. team focused on agricultural issues for their leadership and hard work in concluding these important TPP negotiations.


4. FGIS Reauthorization Complete
By Dalton Henry, USW Director of Policy

The months-long process to reauthorize the U.S. Grain Standards Act and make key improvements in the U.S. inspection system ended Sept. 30 with President Obama’s signing of the Agriculture Reauthorizations Act of 2015. Critical to U.S. exports, the Act enables USDA to establish official marketing standards for grain and to provide procedures for grain inspection.

The Act provides the Federal Grain Inspection Service (FGIS) the much-needed authorization to collect inspection fees through 2020. It also includes several provisions that should provide U.S. exporters and their customers overseas the certainty that inspection serves will remain available and conducted by unbiased inspectors.

The Act contains strict new requirements for USDA to resume inspections immediately if a delegated state agency stops service. This clause furthers the reliability of U.S. wheat supplies and ensures there will not be a repeat of the inspection stoppage that plagued the Port of Vancouver in summer 2014.

The bill also maintains the critical role of FGIS and delegated state agencies in export grain inspections, preserving trust in a system that U.S. wheat customers have come to expect, and sustaining U.S. wheat producers’ reputation as the world’s most reliable suppliers of quality grain. In addition to a re-certification process for delegated state agencies, the Act further prioritizes transparency and accountability by providing an opportunity for public input on services through a notice and comment period.


5. Coey to Provide New Leadership for USW in Chinese Market

USW has hired Jeff Coey as Assistant Regional Vice President to fill the vacant position in its Hong Kong office left by Matt Weimar, who recently relocated to the regional office in Singapore as the new Regional Vice President for South Asia. Coey will manage U.S. wheat market development programs and USW’s business and government relationships in China. This includes two offices and staff located in Hong Kong and Beijing.

Coey joins USW with more than 25 years of marketing and trade facilitation experience in East Asia including industry relations and government affairs consulting, as well as demand-building branded retail campaign management. He worked in cotton merchandising in Hong Kong and China and helped set up office operations in Beijing. Most recently, Coey lectured for the master's degree program at the Hong Kong Baptist University's School of Communication covering subjects including consumer behavior, intercultural communication, writing for public relations, issues management and crisis response.

“Jeff's experience in the private sector, commodity trading, market development and academia throughout the greater China region represent an important new asset for the U.S. wheat industry and our China interests,” said Weimar.

“China is a complex market of immense proportions and possibilities,” said USW Vice President of Overseas Operations Vince Peterson. “Jeff has the background and experience necessary to package USW's efforts in China in a productive manner that allows us to capitalize on those market opportunities.”

Fluent in Mandarin, Coey studied Chinese language and literature at Middlebury College and National Taiwan University. He holds bachelor's degrees in East Asian Studies and Chinese from the University of Kansas, as well as a Master of Business Administration from the University of Wisconsin, Madison, where his concentration was in international business and marketing.


6. Wheat Industry News
  • Bayer CropScience Expands its European Center for Wheat Breeding. The company has tripled the capacity of its complex in Gatersleben Biotech Park in Saxony-Anhalt, Germany, with investments amounting to approximately EUR 15 million since its inauguration in 2012. In the coming years, the wheat breeding area will expand to 80 hectares. Read the full announcement here.
  • The Washington State University Plant Growth Facility, completed July 2015, is an expansion of the university’s old greenhouse, thanks to a three-way partnership between the university, the Washington Grain Commission and the USDA Agricultural Research Service. The 72-hundred square foot, state-of-the-art research greenhouse provides 12 new bays, a seed storage area and lab space for WSU wheat and barley breeders. Already up and running, the facility’s dedication ceremony is on Oct. 17. Read the full announcement here.
  • Montana Grain Growers Association Leadership Recognized. The Montana State University College of Agriculture and Montana Agricultural Experiment Station will present Lola Raska, MGGA executive vice president, with its annual Outstanding Agricultural Leader award during its Celebrate Agriculture event, Nov. 5 to 7. This award honors well-respected individuals or couples in Montana’s agricultural community. Read the full announcement here.
  • The Texas A&M Wheat Improvement Team recently received a 2015 College of Agriculture and Life Sciences Dean’s Outstanding Award for Interdisciplinary Research. The team includes Dr. Jackie Rudd, AgriLife Research wheat breeder; Dr. Shuyu Liu, AgriLife Research small grains geneticist; Dr. Qingwu Xue, crop physiologist; Dr. Amir Ibrahim, AgriLife Research wheat breeder; Dr. Joseph Awika, head of the Wheat Quality Laboratory; and Dr. Clark Neely, AgriLife Extension Service state small grains specialist. In the past 12 years, the team has developed, released and licensed 12 wheat, four oat and two triticale varieties. Read the full announcement here.
  • The “Great American Wheat Harvest” Wins a Regional EMMY. The 2014 documentary, awarded a Mid-America Regional EMMY Award for Best Documentary- Cultural, features American harvesters traveling from Texas through the Western Plains to harvest wheat and other crops that feed the world. Read the full announcement here.
  • Congratulations to Cymantha Frederickson, assistant director of the California Wheat Commission for her 20 years of service. Thank you for your contributions to the U.S. wheat industry.
  • Registration Open for IGP-KSU Introduction to Flour Milling Course. The IGP Institute will once again host this course giving an overview of U.S. wheat production; the general milling process and major milling equipment; principles of mill flow sheets; milling math (extraction, tempering and blending); flour functionality, flour and dough testing practices and methods. The course will run from Jan. 11 to 15, 2016, and registration closes Dec. 18, 2015. Register and learn more here.


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