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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 wheat’s profitability for U.S. wheat producers and its value for their customers.” USW activities are funded by producer checkoff dollars managed by 17 state wheat commissions and USDA Forei­gn Agricultural Service cost-share programs. For more information, visit or contact your state wheat commission.

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In This Issue:
1. Latest USDA Forecast Accounts for Increased U.S. Wheat Export Demand
2. Study Finds No Link Between Cancer and Glyphosate Use
3. New Study Examines Shifts in Global Agricultural Trade
4. Success in the U.S.-Morocco Free Trade Agreement
5. Promoting Wheat Around the World
6. Wheat Industry News

PDF Edition: (See attached file: Wheat Letter - November 16, 2017.pdf)

1. Latest USDA Forecast Accounts for Increased U.S. Wheat Export Demand
By Steve Mercer, USW Vice President of Communications

USDA market analysts cited Iraq’s major purchase of hard red winter (HRW) wheat as the specific basis for a significant drop in U.S. ending stocks in the November World Agricultural Supply and Demand Estimates (WASDE) report. The report correspondingly put its total U.S. export forecast for 2017/18 up 0.7 million metric tons (MMT) to reach 27.2 MMT. This would be down 5 percent from 2016/17 but 2 percent above the 5-year average, if realized.

The ending stocks forecast continues to be the primary plot of the 2017/18 global wheat market story. The WASDE report noted that even with slightly lower supplies and higher use, ending stocks are still expected to hit a record level.

USW Market Analyst Stephanie Bryant-Erdmann, who is currently on an international assignment, shows in USW’s latest Supply and Demand Report that global ending stocks are projected to reach a record level: 268 MMT, or 5 percent higher than 2016/17, if realized. Estimated Chinese ending stocks of 127 MMT account for 48 percent of global ending stocks, which is 58 percent greater than the 5-year average.

Bryant-Erdmann provides a more nuanced analysis of global stocks by charting the current global stocks-to-use ratio with and without China’s stocks, which are not likely to move to export. She shows that the 2017/18 ratio drops about 64 percent from 36 percent to 22 percent without Chinese stocks. More significant, though, is the historical look, showing that exportable stocks are on a three-year downward trend. In fact, Bryant-Erdmann shows that exporter ending stocks are expected to fall 5 percent year over year to 74.3 MMT, and ending stocks in importing countries are forecast to fall to 66.0 MMT, 5 percent below the 5-year average of 70.5 MMT.

2. Study Finds No Link Between Cancer and Glyphosate Use

In 2015, the U.S. wheat industry expressed concern about a report by the non-regulatory International Agency for Research on Cancer (IARC) that moved to reclassify glyphosate as a “probable” human carcinogen, even though more than 25 years of several, separate studies had concluded that the mammalian toxicity levels of glyphosate are low and glyphosate is not carcinogenic.

On Nov. 9, 2017, the Journal of the National Cancer Institute (JNCI) published new research on the use of glyphosate by agricultural workers. The study found no association between exposure to glyphosate, “and any solid tumors or lymphoid malignancies overall, including non-Hodgkin Lymphoma…and its subtypes.”

This research was conducted as a part of the Agricultural Health Study (AHS), described on a website as “a prospective study of cancer and other health outcomes in a cohort of licensed pesticide applicators and their spouses from Iowa and North Carolina. The AHS began in 1993 with the goal of answering important questions about how agricultural, lifestyle and genetic factors affect the health of farming populations. The study is a collaborative effort involving investigators from the National Cancer Institute, the National Institute of Environmental Health Sciences, the Environmental Protection Agency and the National Institute for Occupational Safety and Health. More than 89,000 farmers and their spouses in Iowa and North Carolina have participated in the study. Their participation has provided, and continues to provide, the data that researchers need to help current and future generations of farmers and their families live healthier lives.”

Glyphosate is an active ingredient in many “non-selective” herbicide formulations. To learn more about how U.S. wheat farmers manage the use of glyphosate, visit the National Wheat Foundation for a five-part blog series on “The Facts About Glyphosate.”

This new research comes at an important time, as several U.S. agriculture groups, including the National Association of Wheat Growers (NAWG), recently “joined forces to file a lawsuit in federal court against the State of California for ignoring science and conclusions from regulatory bodies around the world in a fundamentally flawed regulatory classification of glyphosate.” The coalition’s case was filed in the U.S. District Court for the Eastern District of California. Read the full announcement here.

3. New Study Examines Shifts in Global Agricultural Trade

Participants at the U.S. Agricultural Export Development Council annual meeting, Nov. 14 and 15, 2017, in Baltimore, Md., got an early look at a new study indicating that developing countries have been competing quite effectively in global agricultural trade. In addition, the study showed that agricultural products are often classified as “sensitive products” in trade agreements, leading to a significant level of protection, especially by developing and advanced developing countries.

The report is “The Global Landscape of Agricultural Trade, 1995-2014,” just released by USDA’s Economic Research Service. The authors’ summary says the Uruguay Round Agreement on Agriculture (URAA) of 1994 imposed new disciplines on market access barriers, domestic support and export subsidies, and set up rules for non-tariff measures. In the two decades since the URAA, government interventions in agricultural trade have evolved, agricultural trade has expanded and BRIIC countries (Brazil, Russia, India, Indonesia, and China) and other emerging economies have become significant agricultural traders. The summary adds that although clear progress has been made in such areas as tariff reductions and elimination of export subsidies, there is room for further disciplines on tariffs, nontariff measures and domestic policy.

Specifically, the study showed that the value of global agricultural exports adjusted for inflation has doubled since 1994, indicating a significant increase in the total market size. Overall, as the BRIIC country share of total imports is increasing, North American and Western European countries are importing a smaller percentage of the total. Conversely, the total share of world agricultural exports from the United States is down from 20 percent to 14 percent, while BRIIC country share is up from 14 percent to 23 percent. Global wheat trade has displayed a similar pattern: as U.S. exports have remain fairly stable, the U.S. share of a growing total world wheat market has declined.

The report summary adds that major emerging economies have increased the support they provide to farmers, sometimes using methods like price supports or input subsidies that are more likely to distort trade. In some of these countries, the study showed, recent emphasis on agriculture support is a sharp departure from earlier policies that implicitly taxed agriculture. Read the entire report online here.

4. Success in the U.S.-Morocco Free Trade Agreement
By Elizabeth Westendorf, USW Assistant Director of Policy

In 2006, the United States signed the U.S.-Morocco Free Trade Agreement, making it the first U.S. free trade agreement (FTA) that did not fully eliminate tariffs on wheat. Instead, the FTA included a tariff rate quota (TRQ) for U.S. wheat, which is now set at 360,000 metric tons (MT) per year. Over the years, this TRQ has presented a challenge to U.S. wheat exports to Morocco. It is typically only briefly opened once a year, which makes it difficult for Moroccan customers to gain preferential tariff access to high quality U.S. wheat.

U.S. government officials have consistently raised this issue with their Moroccan counterparts, and this year the TRQ administration was improved to allow access to U.S. wheat exports multiple times per year. The first tender of the year filled because of a poor wheat harvest in Morocco in 2016, but Morocco only tenders for 90 percent of the tender at once because buyers can bid 10 percent over that amount in the tender. In October, Morocco agreed to issue a second tender for the remaining 30,000 MT of the TRQ. That tender was filled, and the wheat will arrive in Morocco in December. With the exception of last year and early this year, when Morocco had a poor wheat crop and needed to import more wheat, this is the first time in years that a significant quantity of U.S. wheat has gone in under the TRQ, and these efforts ensure that U.S. wheat will have improved access to the Moroccan market in the future.

Trade agreements do not automatically work perfectly, but this cooperative solution to a problem in the U.S.-Morocco FTA is an important example of the benefits of working within the FTA framework. Trade agreements are a vital tool for opening and expanding new markets and help reduce costs for international wheat buyers. They are especially important in the increasingly competitive global wheat market.

5. Promoting Wheat Around the World

As USW President Vince Peterson often says, at any given hour of the day there is someone, somewhere, talking about the quality, reliability and value of U.S. wheat. Wheat Letter wants to share some of the ways USW was working in September and October to promote all six classes of U.S. wheat in an ever more complex world grain market.

Asia. USW scheduled several meetings and wheat grading and flour milling seminars for Rob Bundy, Quality Assurance Specialist with the Federal Grain Inspection Service (FGIS), during a temporary duty (TDY) assignment to Southeast Asia in September. Throughout his trip, Bundy made stops with USW staff in China, Singapore, Myanmar, the Philippines, Taiwan and Japan. He discussed U.S. wheat grading procedures and documentation with hands-on grading exercises, wheat classes and characteristics as well as the FGIS review and appeals processes.

China. USW worked with a flour mill to help sponsor the Savor USA Home Baking Competition held in China via the online platform, WeChat, where contestants could submit recipes and food photographs. USDA’s Agricultural Trade Office (ATO) in Shanghai created the competition to bring together U.S. ingredient providers and Chinese customers, and capitalize on increasing interest in home baking. USW chef consultant Heinz Fischer demonstrated U.S. wheat flour performance with a live baking demonstration at the competition’s award ceremony.

United Arab Emirates (UAE). In October, USW participated in the 28th Annual International Association of Operative Millers (IAOM) Middle East and North Africa (MEA) Conference and Expo 2017, in Dubai, UAE. As a founding organization of the IAOM MEA, USW has maintained an active role in the annual event. Vice President of Overseas Operations Mark Fowler and Regional Vice President Ian Flagg are currently members of the IAOM MEA Leadership Council.

Philippines. Also in October, USW staff conducted two baking workshops entitled "The Korean Way of Bread Making," to help Philippine bakers diversify product offerings and production techniques. The workshops focused on Korean baking processes and formulations, including several Korean pan bread and baguette styles.

Mexico. Colleagues from USW Mexico City conducted a Transportation and Logistics Workshop in Mexico, Sept. 11 to 13 for wheat buyers and executives from U.S. and Mexican railroads. Forty-five participants, attended the workshop to learn more about vital information and technology used to facilitate U.S. wheat shipments to Mexico via rail.

Belgium. USW participated in the 57th European Commodities Exchange, Oct. 12 to 13, in Brussels, Belgium, which attracted 3,000 professionals involved in grain trade and processing from 56 countries. Visitors to the USW booth received updates on U.S. wheat quality data and marketing and were invited to USW's upcoming Crop Quality Seminars.

Costa Rica. USW conducted an on-site Contracting for Wheat Value Seminar with a leading Costa Rican flour miller in September. USW Consultants Dr. Bill Wilson from North Dakota State University and Shawn Thiele from the IGP Institute helped lead the seminar with a focus on how to increase U.S. wheat value by making appropriate adjustments to purchasing specifications and production methods. Staff from the mill’s purchasing, quality control and production departments learned how to maximize the value gained from quality attributes such as lower moisture content and maximizing flour extraction rates through proper tempering times.

Colombia. The Servicio Nacional de Aprendizaje (SENA) is Colombia’s largest technical institute that prepares students for technical service jobs, including bakers. USW Consultant Didier Rosada conducted a five-day seminar for SENA instructors from the bread baking department, with the goal of providing improved baking methods to incorporate into the regular SENA curriculum. The seminar also provided a chance to discuss the characteristics and end uses of U.S. wheat classes.

Chile and Bolivia. USW Consultant Jay O’Neil traveled to La Paz, Bolivia, and Santiago, Chile, to conduct purchasing seminars for wheat buyers. He focused on the U.S. wheat production and marketing systems, U.S. grain standards, purchasing contracts and negotiations, futures markets and ocean freight. USW covered wheat classes and their use, and in Bolivia, a local grain trader led a discussion on the current Bolivian market.

Ecuador. USW and milling consultant Andrea Saturno, traveled to Quito, Ecuador, to conduct two technical milling seminars, Oct. 17 to 20. The first seminar for a private mill focused on the control elements critical to maintaining efficiency and quality. The second seminar for ASEMOL, the Ecuadorian Milling Association, included an introduction to wheat cleaning, tempering, quality control, mill performance, new developments in milling science and the best application of U.S. wheat classes for different end products. An FGIS official joined the seminar to discuss the U.S. grain grading system and different buying strategies, and led a hands-on activity to identify grain damage.

South Korea. Wheat import managers and wheat flour quality control managers from flour mills in Korea participated in a Contracting for Value Workshop at the Wheat Marketing Center (WMC), Aug. 19 to 26, in Portland, Ore. During the workshop, the participants also visited the EGT export facility in Longview, Wash., met with several grain traders and toured an Oregon wheat farm. In the WMC lab, participants saw several functional test demonstrations and participated in WMC product evaluations on a variety of end products.

Indonesia. In August and September, USW’s milling and baking specialists provided in-plant consultations for four of Indonesian flour milling companies on the island of Java, and sanother milling company in Medan on the island of Sumatra. The consultations focused on contracting for U.S. wheat value, best practices to improve end product quality, baking tests, troubleshooting technical issues and concerns, assessing potential opportunities and increasing the use of solvent retention capacity (SRC) tests to analyze flour streams.

6. Wheat Industry News
  • Quote of the Week: “If Kansas, along with several other Hard Red Winter wheat producers, would commit at least a third of our red wheat production to white wheat production, we would show our international buyers that we are not only serious about producing Hard White wheat, but that we would be a reliable supplier.” – Ron Suppes, a wheat farmer from Dighton, Kan., and past USW Chairman, in this opinion article on trade agreements.

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