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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 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. GASC Tenders Reflect U.S. Wheat Buying Opportunity
2. Too Much of a Good Thing
3. India’s Massive Crop Grown from Poor Government Policies
4. Wheat Growers Welcome Introduction of Trade Promotion Authority Legislation
5. Practical Voices in the GMO Food Discussion
6. Wheat Industry News

Online Edition: Wheat Letter – January 23, 2014

PDF Edition: (See attached file: Wheat Letter - January 23, 2014.pdf)

USW Price Report:

1. GASC Tenders Reflect U.S. Wheat Buying Opportunity
By Casey Chumrau, USW Market Analyst

This month, Egypt’s General Authority for Supply Commodities (GASC) accepted its first and second bids for U.S. wheat in marketing year 2013/14 (June to May). Considering the significant freight advantage enjoyed by Black Sea and European suppliers, the latest GASC tender results indicate that U.S. wheat is once again competitive even in more price sensitive markets.

The Chicago Board of Trade soft red winter (SRW) March futures contract lost 21 percent of its value between Oct. 24, 2013, and Jan. 17, 2014. The FOB price for February delivery fell 9 percent in that same period. That translated to a drop of $26 per metric ton (MT) that helped put SRW in a very competitive range compared to every other supplier.

Between the two tenders, GASC purchased 115,000 MT of SRW at $265 per MT on a FOB basis for February delivery. Freight costs of $38 per MT from the Gulf put the total price at $303 per MT. In the first tender, U.S. wheat was the least expensive of all the bids by $7 per MT or more. GASC purchased an additional 55,000 MT of SRW in the second tender. It also purchased wheat from Ukraine, France and Russia for $301 per MT cost and freight.

GASC’s recent tender results also appear to reflect a buying pattern. The January tenders mark the third consecutive year in which the Egyptian government’s wheat importer made its first U.S. purchase around the beginning of the calendar year.

USDA expects Egypt, the world’s top wheat buyer, to import 10.5 million metric tons (MMT) this year, which would tie for the third highest on record for the country. On average the last five years, Russia and Ukraine accounted for 54 percent of the Egyptian market while the United States captured 17 percent. However, the availability of Black Sea wheat has been extremely variable in that time.

As the prices of depleted Russian grain supplies increased in 2012/13, for example, GASC turned to U.S. wheat for the first time on Feb. 11, 2012. By the end of the marketing year (May 2012), GASC and other private Egyptian buyers had imported 948,000 MT of U.S. wheat. Faced with even lower Black Sea supplies in 2012/13, GASC completed its first U.S. wheat purchase of the year on Dec. 1, 2013. Total U.S. sales to Egypt reached 1.71 MMT in 2012/13, accounting for 20 percent of total wheat imports.

With the recent downward price trend, current U.S. wheat export commitments do not extend much past the end of February. USDA reported that total known outstanding sales and accumulated exports of all U.S. wheat classes for 2013/14 through Jan. 9 are 24.9 MMT. That is 25 percent more than the 19.8 MMT total last year at this date. USDA expects 2013/14 U.S. wheat exports to reach 30.6 MMT or nearly 12 percent more than in 2012/13. Clearly, buyers like GASC recognize the value of U.S. wheat and are taking advantage of excellent price competitiveness.

2. Too Much of a Good Thing
By Shawn Campbell, USW Assistant Director, West Coast Office

Canadian farmers enjoyed the blessing of near perfect growing conditions this year, leading to a record wheat crop of 37.5 MMT that was 38 percent larger than last year’s crop. Combined with a record canola crop and good production for other crops, the year held great promise for Canadian agriculture.

Sadly, the bumper crops have overwhelmed the Canadian logistical system and proven to be too much of a good thing. Farmers report that country elevators are only offering low or even no bids on wheat for nearby delivery. Some farmers who signed forward contracts say elevators are pushing back their delivery dates and the CWB is not posting wheat basis prices for delivery before next October. As a result, farmers are stuck with crops losing value every day they stay in their bins. Reuters reported that some farmers have resorted to selling wheat into feed channels or trucking it south into the United States, but at very small volumes that cannot really improve the situation.

Canadian grain exporters also expected a great year but now face similar challenges, especially those moving grain through the Pacific ports of Vancouver and Prince Rupert. USDA currently projects that Canada will export 23.0 MMT of wheat this year, the most since 1991/92. As of late December, Canada had exported 8.2 MMT of wheat in 2013/14, up 8 percent compared to the same time last year. However, its December exports only totaled 1.5 MMT. That is down 18 percent compared to November and down 14 percent compared to December 2012. It is also the first time this marketing year that the month’s wheat exports were less than the same month last year.

The Port of Vancouver is especially hard hit. Analysts reported an average processing time of 17 days per grain ship compared to a normal processing time of nine to 10 days. There are also reports that rail shipments arrive at export terminals with the wrong grain at the wrong time or just don’t arrive at all. The result is a growing backlog of ships, more than the available anchorage at Vancouver, ringing up more than $10 million (USD) in demurrage fees so far. Canadian Pacific exporters now indicate they will be unable to take on any new business until after May.

Railroads and rail car shortages may have contributed to the logistical problems. Local analysts indicated that major rail carriers Canadian National and Canadian Pacific accumulated a backlog of 40,000 cars from August to December. That is eight times more than last year with grain capacity of 4.0 MMT. However, Canadian National reported it moved 12 percent more grain than its five-year average for the same period while Canadian Pacific moved 16 percent more than its five-year average. The railroads claim their challenge is not a backlog, but rather the inability to get cars to the right place at the right time. Many analysts cited archaic rail regulations, such as a rail revenue cap, the lack of a secondary rail car market and a lack of rail demurrage fees for creating major inefficiencies in the grain handling system.

The Canadian grain trade, which is still adapting to an open market, may have tried to push too much grain through the system too quickly. Given the huge crop, some analysts suggest Canadian grain traders put out discounted bids after harvest. Buyers responded quickly. In fact, the Pacific Canadian grain terminals have exported 9 percent more than last year, including 670,000 MT going to countries normally serviced by the eastern terminals that could not compete with west coast prices. Eventually, though, the bottlenecks formed in the west because the system could not keep pace with demand.

The Canadian grain market is facing a difficult lesson in open grain marketing this year. Debate over the reasons behind the logistical issues will continue as the Canadian government initiates a review of the grain transportation system. Questions remain as to whether or not Canada will achieve USDA’s wheat export projection of 23.0 MMT. If not, Canada will likely end this marketing year with its highest wheat ending stocks since the early 1990s, and that will challenge the Canadian and U.S. wheat markets well into 2014/15 and maybe beyond.

3. India’s Massive Crop Grown from Poor Government Policies
By Alan Tracy, USW President

Recent estimates indicate that the wheat crop now in India’s fields could top 100 MMT. Only China has ever exceeded that level of production in a single year.

Hidden from the story about this remarkable production is how the Indian government's minimum price guarantee policy helped to create the bumper crops. Indian officials have steadily increased wheat support prices since 2005/06, most recently to 13,500 rupees or $228 per MT (see chart). That is a clear signal to farmers — from the government, not the market — to plant more wheat. Now, with most of India’s storage capacity already full of an estimated 20.0 MMT in carryover stocks, it is not surprising that India is aggressively promoting exports.

Source: USDA Foreign Agricultural Service, India Grain and Feed Report, 2/15/13

Market support prices do not tell the whole story. There are storage costs and transportation charges to move the wheat from the interior to India’s export facilities — costs estimated to be up to $80 or more per MT. Yet in an export tender closing Jan. 14, India’s state trading entities sold three cargos of wheat at $279.52 to $283.60 per MT. Considering the cost to get wheat to ports, clearly the puppeteers in India’s government have pulled the wrong strings and cannot compete in world wheat trade without paying significant export subsidies.

To be fair, the U.S. government provides a safety net for wheat farmers who choose to participate in its programs. One program sets a target price and pays the farmer the gap if cash prices fall below that target. But there is a big difference: compared to India’s minimum price support of $228 per MT, the U.S. government’s target price is $153 per MT — well below U.S. farm gate prices and the farmers’ cost of production.

Here is another difference: the United States takes seriously its obligations as a member of the World Trade Organization (WTO). When India joined the WTO in 1995, it agreed not to subsidize agricultural exports, a promise it has consistently ignored. At the recent WTO ministerial meeting in Bali, Indonesia, India’s negotiators reneged on an earlier agreement by threatening to veto any outcome that did not give India extended exemption from subsidy rules for its stockholding program. Yet as we all know, India is awash in wheat.

As the world's second largest wheat producer and now a significant, albeit irregular, exporter, India’s wheat policies are worth watching. There can be no doubt that its erratic and sometimes contradictory price support and export policies are spilling out of its borders and negatively affecting world wheat trade. In the end, policies that reflect the true nature of the world market would better serve wheat farmers and their customers.

4. Wheat Growers Welcome Introduction of Trade Promotion Authority Legislation

The U.S. wheat industry welcomes the introduction of legislation to grant the President of the United States trade promotion authority (TPA).

“We are pleased to see bipartisan support for trade promotion authority and hope Congress will act quickly to pass this important legislation,” said Bing von Bergen, a wheat farmer from Moccasin, MT, and president of the National Association of Wheat Growers (NAWG). “Putting TPA in place will create a fast track for negotiations on current and future trade agreements that will benefit U.S. wheat farmers.”

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 congressional consideration of these agreements without amendment. 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.

The directors of NAWG and USW recently passed a resolution supporting passage of TPA “as an essential tool for negotiating market-opening free trade agreements,” including the 12 country Trans-Pacific Partnership (TPP) and the U.S. and European Transatlantic Trade and Investment Partnership (TTIP) talks. These two agreements, currently in negotiation, 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.

“Our competitors are moving fast and with success to sign beneficial trade agreements,” said Dan Hughes, a wheat farmer from Venango, NE, and USW chairman. “TPA would give our trade negotiators a unified voice and the power to push for the best deal for U.S. farmers, businesses and workers. Without TPA, we risk falling farther and farther behind in a growing international market.”

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 2012/13 marketing year, ended May 31, 2013, the United States exported about 27 MMT of wheat valued at about $9.0 billion, which supports thousands of jobs and creates economic benefits across the country. More on the industry’s trade work is at or

5. Practical Voices in the GMO Food Discussion

Earlier this month, U.S. food manufacturer General Mills Inc. generated significant media attention when it announced it would no longer source ingredients with biotechnology traits to make its flagship oat cereal “Cheerios.” It comes at a time when several U.S. states and the U.S. Congress are considering legislation that would require labeling of food products that contain genetically modified ingredients.

Following are some of the voices weighing in on these discussions with links and additional resources to learn more.

“What makes modern bioengineering unique is its greater precision and thus the greater predictability and safety of the resulting varieties. Toxins and undesirable properties (such as greater susceptibility to pests) have been inadvertently introduced into marketed products by conventional genetic modification techniques … But no such harmful or unintended effects have ever occurred — and are far less likely to occur — with bioengineering. Study after study, as well as real-world observations by academics and government agencies, has confirmed the safety of the technology.”
- From “General Mills Has a Soggy Idea for Cheerios,” Henry I. Miller and Gregory Conko, Wall Street Journal, Jan 21, 2014.

“Mandatory labeling of GM foods fails every justification for requiring them: scientific, economic, legal, and most of all, common sense,” says risk expert Jeff Stier. “[This is] for the sole benefit of those seeking the labels. Mandatory labeling of safe products represents a classic case of rent-seeking; this is an effort to assert political influence at the expense of consumers and responsible farmers for the sole benefit of those seeking the labels.”
- Jeff Stier, Senior Fellow and Head of Risk Analysis at the National Center for Public Policy Research, Washington, DC

“We are members of the Environment & Agriculture Committee that studied … the bill to require the labeling of genetically modified foods. After 19 meetings during which we investigated every aspect of the bill in exhaustive detail, both of us voted against the mandatory labeling of foods made with genetic engineering. We'd like to share with you the reasons why. First, there has been no credible scientific study that proves that there is any material difference between GMO and non-GMO foods. No nutritional difference. No health safety difference. In fact, we have all been eating foods made with genetic engineering for more than 20 years. To that end, the U.S. Food and Drug Administration's regulations state that requiring the labeling of foods that are indistinguishable from foods produced through traditional methods would mislead consumers by falsely implying differences where none exist.”
- From an article in the New Hampshire Union Leader by state representatives Tara Sad and Bob Haefner.

Note: On Jan. 22, the New Hampshire House of Representatives rejected the bill that would have required labels on foods that are the product of genetic engineering.

Additional resources:

A Lonely Quest for Facts on Genetically Modified Crops,” New York Times, Jan. 4, 2014;

Panic-Free GMOs,” series;

What I Learned from Six Months of GMO Research: None of it Matters,”, Jan. 9, 2014.

6. Wheat Industry News
  • The U.S. Grain Industry Promoted Whole Grain Value on Jan. 14 before USDA’s 2015 Dietary Guidelines Advisory Committee. At the meeting, distinguished professor and registered dietitian Dr. Joanne Slavin, of the Department of Food and Nutrition at the University of Minnesota, strongly supported keeping the recommendation for daily grain consumption at six servings of grains, with at least half being whole grains, in the 2015 Dietary Guidelines. Read more.
  • Board Team Update. The USW Africa-Europe Board Team’s two-week visit to customers in Nigeria, Ghana, Spain and Italy ends today. The Team includes Larry Hunn, third generation HRW farmer in northern California; Jason Scott, sixth generation SRW farmer from Maryland’s Eastern Shore and USW board member; Brent Robertson, family HRW farmer from southwest Nebraska; and Julia Debes, USW Assistant Director of Communications. You can see and read more about their journey on the USW Facebook page at
  • USW Officer in Taiwan. USW Secretary-Treasurer Brian O'Toole is in Taipei for several days this month to participate in USW's annual Unified Export Strategy planning sessions. Industry reports confirm that the Taiwan Flour Mills Association (TFMA) purchased U.S. wheat this week at a meeting Brian attended. This was a great opportunity for Brian and another reason to celebrate our long-standing relationship with TFMA. To see photos from the meeting, visit USW on Facebook at
  • Important Recognition for Wheat Geneticist. Dr. Jorge Dubcovsky, an acclaimed plant geneticist and international leader in wheat genomics at the University of California - Davis, was named a recipient of a 2014 Wolf Prize in Agriculture, awarded annually by the Wolf Foundation to outstanding scientists and artists in the fields of agriculture, chemistry, physics, mathematics, medicine and the arts. Read more.
  • Against the Grain. The Economist recently cited information from Argentina’s National Institute of Agricultural Technology showing that the average area of wheat planted in Argentina declined by 1.2 million hectares after its government began directly intervening in the market in 2006.
  • Collaborative Courses. In response to industry demand, Kansas State University’s International Grains Program and the Northern Crops Institute are combining resources to host a durum wheat milling course April 7 to 9, 2014, and an advanced grain procurement strategies course May 19 to 23, 2014. Both courses will be held at the NCI educational center at North Dakota State University. To learn more or register, visit
  • Asian Noodle Technology and Ingredient Application Course. The Wheat Marketing Center, Portland, OR, will hold this hands-on course in improving noodle quality by optimizing flour and functional ingredients March 11 to 14, 2014. For more information or to register, visit
  • DuPont, USAID to Fight Hunger Together. DuPont Chair and Chief Executive Officer Ellen Kullman participated in a panel discussion at the World Economic Forum Annual Meeting in Davos, Switzerland, this week to discuss the forces reshaping the global context for food security, such as climate change, the emerging global middle class and agricultural value chains. To learn more, please visit
  • Congratulations to Cathy Marais, financial accountant, Sub-Sahara African Region, Cape Town, South Africa, on her 20th anniversary with USW. Thank you, Cathy, for your service!
  • Condolences to the Family and Friends of Mark Hausinger of Vancouver, WA, who passed away Jan. 11. Mark worked for Louis Dreyfus (LD Commodities) as a spring wheat trader for many years and served as the Pacific Grain Exporters Association president 2008 to 2010.

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