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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. 2014/15: A Wheat Marketing Year in Review
2. USW Harvest Reports Provide Timely Information on Quality
3. Vietnam Promising for U.S. Wheat Exports, But TPA and TPP Are Needed
4. Value-Added Traditions Continue with 2015 U.S. Wheat Trade Teams
5. New Yield Contest Encourages Wheat Innovation
6. Wheat Industry News


Online Edition: Wheat Letter – June 4, 2015 ( http://bit.ly/1cA2MpB )

PDF Edition: (See Attached) (See attached file: Wheat Letter - June 4, 2015.pdf)

USW Harvest Report: Published every Friday online at http://www.uswheat.org/harvest.


1. 2014/15: A Wheat Marketing Year in Review
By Casey Chumrau, USW Market Analyst

Marketing year 2014/15 ended May 31 and proved to be another record setting year for wheat in several key categories. Production, supply and total consumption all hit record levels. However, quantity came at the expense of quality in many regions around the world and high protein wheat was in very short supply. Improved production in China and Argentina, combined with a strong U.S. dollar, resulted in lower U.S. exports.

This year saw higher production in the European Union (EU), Russia and China that offset lower production in the United States, Canada and several other major suppliers. USDA estimates the 2014/15 global wheat crop reached a record 726 million metric tons (MMT), up 1 percent from the previous record of 715 MMT set in 2013/14. The higher production, coupled with a 6 percent increase in carry-in stocks, put global wheat supplies at a record 913 MMT, up 20.6 MMT from 2013/14, according to USDA’s calculation.

The production scenarios were very similar in most of the major wheat producing countries in the Northern Hemisphere in 2014/15. Crop conditions in the United States, Canada and Black Sea region were promising before untimely rain hit just before harvest, which significantly diminished crop quality and reduced protein levels. In the EU, cool, wet weather throughout the growing season boosted yields and resulted in record production. However, the majority of the crop had low protein and poor overall quality. France, the EU’s top wheat producer, was the country most severely impacted by poor quality. Strategie Grains estimated just 64 percent of France’s 37.5 MMT crop reached milling quality, compared to a three-year average of close to 90 percent. In contrast, hot and dry conditions in the U.S. Pacific Northwest stressed the white wheat crop, resulting in higher protein in a class favored for its low protein content.

China and Argentina both harvested more wheat in 2014/15 than the prior year, causing a shift in global demand. Following multiple years when consumption outpaced production, China looked to the world market to replenish diminished government wheat stocks, buying 6.77 MMT in 2013/14, the most since 1995/96. On top of the added supply, China produced a record crop of 126 MMT in 2014/15. According to USDA, this exceeded the estimated consumption of 124 MMT, causing imports to drop to half of the five-year average at 1.5 MMT.

Argentina’s crop of 12.5 MMT in 2014/15 was closer to its historical average after two consecutive years of small output. In 2012/13 and 2013/14, the government restricted exports to a combined 5.8 MMT, putting its Mercosur trading partners in a tough spot. Brazil had to turn to the United States to help meet its annual 7.0 MMT import demand. These restrictions gave the United States a 68 percent market share in 2013/14, compared to a 7 percent average in the five years prior. Thanks to the larger crop, Argentina recovered some of its market share in 2014/15 when the government authorized 5.5 MMT for export. USDA anticipated a shift back to more normal trading patterns in 2014/15, with China relying on domestic production and Brazil relying on Argentina that would result in significantly lower U.S. exports. Initial estimates by USDA last May put 2014/15 U.S. exports at 25.9 MMT. However, a steady increase in the strength of the U.S. dollar toward a 12-year high, hindered exports even more over the course of the year. This further reduced the competiveness of U.S. wheat, which already holds a premium over competitors. Coincidentally, USDA estimates that 2014/15 exports fell to a 12-year low of 23.4 MMT, but it is interesting to note that because of its quality, variety and the reliability of its supply, customers in many countries continue to import U.S. wheat at a steady rate.

Despite record consumption of 716 MMT, 2014/15 total global trade fell an estimated 2 percent from the record set in 2013/14 to 162 MMT. However, global exports were still 11 percent above the five-year average. Records in all major supply and demand categories have been broken many times in the past ten years, including three new records in 2014/15. The trend is likely to continue as we look forward to 2015/16 and beyond.


2. USW Harvest Reports Provide Timely Information on Quality

For farmers and their customers, there is a timeless value in knowing that another wheat harvest is underway. USW Harvest Reports are an excellent way to read weekly updates and comments on harvest progress, crop conditions and crop quality for hard red winter (HRW), soft red winter (SRW), hard red spring (HRS), soft white (SW) and durum wheat. USW posted its first report on the 2015/16 crop on May 28.

A lengthy period of rain in the southern and central plains, and cooler than normal temperatures has delayed the HRW harvest and provided favorable conditions for plant disease development. While it is too early to identify what impact that might have, Harvest Reports provide timely information wheat buyers will need this year. The long-range weather forecast shows little chance of rain, so the harvest pace should pick up. Generally, the rain helped improve the potential supply of this year’s crop and provided desperately needed moisture after several years of drought (http://droughtmonitor.unl.edu/).

According to USDA’s latest National Agricultural Statistics Service (NASS) report, all winter wheat (HRW, SRW, SW) is in better condition this year compared to the 2014/15 crop on this date last year. Late last week, NASS rated about 44 percent of this year’s winter wheat crop as good or excellent compared to 30 percent last year. Comparing poor to very poor ratings, this crop stood at 20 percent compared to 44 percent on this date last year.

Looking further ahead, NASS reported that by May 31, 91 percent of the 2015/16 U.S. spring wheat crop was up and growing. That is well ahead of last year when just 64 percent had emerged and beats the five-year average by nearly 30 percentage points. Early planting reflected dry and relatively warm conditions this spring. A colder weather pattern set in a few weeks ago, but 88 percent of the crop currently rates as fair to good with 8 percent rated excellent.

The global demand for high quality wheat continues to grow and customers know that U.S. wheat producers deliver every year. It is good to know that U.S. wheat stocks are plentiful; yield potential is generally at or above average and U.S. wheat value remains high.

Stay informed about the 2015/16 crop as USW posts its Harvest Report every Friday afternoon at http://www.uswheat.org/harvest. To get insight directly from the custom harvest crews as the combines roll north, visit “High Plains Journal” and its “All Aboard Wheat Harvest” blog at http://www.allaboardharvest.com/.


3. Vietnam Promising for U.S. Wheat Exports, But TPA and TPP Are Needed
By Ben Conner, USW Assistant Director of Policy

By now, everyone paying attention to international trade has heard of the massive Trans-Pacific Partnership (TPP). The ambition of the agreement is to create the largest, most comprehensive free trading bloc in history. Japan’s involvement may get the lion’s share of attention in TPP negotiations, but another very important TPP partner that may be easily overlooked is Vietnam.

The desire to forge new trading relationships between countries is strong. It is remarkable to think that two countries at war with each other only 40 years ago are now on the verge of signing an agreement that would make them the closest of trading partners. Since the formal restoration of relations twenty years ago, trade between the United States and Vietnam has grown to nearly $35 billion.

Vietnam has achieved an average economic growth rate of 6.8 percent per year since 1990. Its population will roughly equal Japan’s by 2050. A 2014 Pew Research Center survey asked citizens of more than 40 countries if most people would be better off in a free market economy, and in Vietnam, the answer was a resounding yes with 95 percent agreeing. Compare that to only 70 percent in the United States who agree. With a rapidly growing economy and a large population that is committed to open markets, Vietnamese millers and bakers along with U.S. farmers can expect robust demand growth in the coming decades.

Vietnam imports an average of 2.0 MMT of wheat per year. Approximately 75 percent of that comes from Australia, used to make wheat noodles that are popular in Vietnam. However, many countries increase their purchases of bread wheat and lower protein soft wheat as their economies grow and Vietnam has done the same. Sales of U.S. wheat to Vietnam in 2014/15 were a record 273,000 MT, two-and-a-half times greater than last year and the five-year average.

USDA projects a 40 percent increase in wheat imports by Vietnam in the next 10 years, but the availability and cost of wheat will largely depend in part on U.S. government policy. Specifically, it depends on the ability of the U.S. Congress and Administration to come to an agreement on Trade Promotion Authority (TPA), which the House of Representatives is debating this month. If Congress fails to approve TPA, it would put the entire TPP agreement at risk.

Other countries are not waiting to see if TPP will make it across the finish line. Australia recently signed a free trade agreement with Vietnam and other Southeast Asian countries, which will provide duty-free access to Australian wheat exports by next year. This past week, leaders of the Eurasian Economic Union (including Russia and Kazakhstan) signed a trade agreement with Vietnam. These agreements will soon give Russia, Kazakhstan, and Australia, three of the largest wheat exporters, duty-free access to the Vietnam market. If Congress cannot pass TPA, and TPP flounders as a result, U.S. farmers could lose out on market opportunities because Vietnamese wheat buyers will have to pay more for the high-quality U.S. wheat they have just learned to admire.


3. Value-Added Traditions Continue with 2015 U.S. Wheat Trade Teams
By Amanda J. Spoo, USW Communications Specialist

Consistency, trust and quality are essential to good business relationships, particularly for U.S. wheat farmers who annually produce enough to export about 50 percent of their crop. To help strengthen those cornerstone characteristics, USW and its state wheat commission members connect U.S. farmers directly with their customers through annual trade team visits — allowing them to shake hands, share meals and have a firsthand farm experience.

Every year from spring to early fall, USW organizes trade team visits to learn about U.S. wheat production and marketing systems. Accompanied by their regional USW representative, participants range from millers and bakers to grain purchasers, traders and executives. Each team’s itinerary and experience is unique, but all center on giving overseas customers the opportunity to ask questions, build relationships and learn why the United States has the most reliable export supply in the world.

Trade teams visit wheat farms and university plots that grow the classes of wheat important to their markets, taking the opportunity to discuss crop conditions with the farmer or hear from wheat breeders on future varieties. They also tour elevators and export facilities, meeting with industry representatives to observe grain grading and inspection procedures.

There are currently 14 USW trade teams planned for 2015, representing at least 12 countries. According to USDA’s May 21 Weekly Export Sales Report, these countries represent 55 percent of total 2014/15 U.S. commercial wheat sales.

Time and experience have proven the success of these team visits to the participants and U.S. wheat farmers. Some countries recognize a long-term value in the teams they send, such as the Nigerian Trade Mission and the Japanese Executive Millers, making their visits an annual occurrence.

In 2009, a Chilean Trade Mission traveled to Portland, OR, to tour port facilities and meet with grain trade association members. Upon returning to Chile, two of the largest mills on the mission immediately purchased three combined cargoes (up to 100,000 MT) of SW and HRW wheat from the Pacific Northwest (PNW). Chile has continued to be the number one SW buyer in South America.

“The trade team yielded good results in building and strengthening the confidence that Chilean wheat buyers and millers have in U.S. wheat,” said USW Santiago Office Assistant Regional Director Osvaldo Seco. “Consequently, in 2010 and 2011 Chile imported 99 percent and 94 percent of its total wheat requirements from the PNW, respectively.”

In addition to sales, trade team visits help build valuable relationships. In 2013, a European Durum Trade Team met with Desert Durum® traders in California. One participant from Italy, Intergrain CEO Marco Percossi, formed contacts that led to a follow-up meeting later that year in Italy between the Arizona Grain Research and Promotion Council and seven Italian durum milling and pasta manufacturing companies.

“Trade teams help our overseas customers get closer to the market,” said USW Rotterdam Office Marketing Specialist Rutger Koekoek, who recently spoke at the International Grain Summit in Italy by invitation from a 2014 trade team participant. “When I travel, I continue to meet new contacts and have the opportunity to capitalize on the value of a face-to-face conversation. Trade teams are the foundation of building those relationships.”

In 2015, trade team visits will cover 16 states, as well as the District of Columbia. In addition to funding from USDA/Foreign Agriculture Service (FAS) market development programs, state wheat commissions support these trips through their checkoff dollars. They also help organize itineraries and accompany the team traveling in their state, playing an essential role in the traditions of trade teams and their history of success.

“Interaction with farmers is one of the biggest benefits of hosting a trade team,” said Kansas Wheat Commission Director of Communications Marsha Boswell. “These buyers appreciate the interaction they get with the Kansas farmers who produce that wheat. Their visits also give us the chance to promote the quality and reliability of Kansas and U.S. wheat.”

To read more about each team as visits continue throughout the year, visit www.uswheat.org/newevents.


5. New Yield Contest Encourages Wheat Innovation
By Hugh Whaley, Director of Corporate Relations, National Wheat Foundation

The National Wheat Yield Contest (NWYC), a new program of the National Wheat Foundation (NWF) in the United States, is an opportunity for all U.S. wheat growers to help enhance the quality and quantity of the U.S. wheat crop. Wheat growers will take advantage of this national competition to showcase individual ability to produce more of the best quality wheat in the world.

“The contest will help increase U.S. wheat grower productivity to ensure an ample supply of quality U.S. wheat to reliably meet the needs of our valued overseas customers and the domestic wheat market,” said NWF Chairman Dusty Tallman, a Colorado wheat grower. “The results of this competition will reinforce our reputation as the world’s most reliable supplier of wheat.”

NWF will launch this new knowledge-sharing competition this fall. That is possible with generous support from NWYC founding and crop protection partner BASF, equipment partner John Deere, seed partner Monsanto and agronomic services partner WinField.

Tallman said NWF grower-leaders appreciate industry partner assistance with funding, designing and creating this program. Through sponsor support, NWF hopes to drive innovation in the industry, encourage growers to share information, encourage the use of available technology and identify top wheat growers in each state who will compete for the top five national winter wheat and spring wheat winners.

The NWYC is modeled, in part, after a successful 50-year old National Corn Yield Contest (CYC) of the National Corn Growers Association (NCGA). That contest has helped boost U.S. corn production exponentially. In fact, NCGA has determined that it takes about 10 years for the CYC winner’s yield to become the national corn yield. NWF believes wheat growers will see similar results with the focus to improve quality and yield encouraged by the NWYC. NWF envisions a marked increase in both production and profitability for growers over the next five years.

NWF grower-leaders and the NWYC industry partners firmly believe competition brings out the best in growers and sets the stage for the industry as a whole to take that next step. Being able to compete on an equitable basis, compare best practices and turn data into usable insights is key to ensuring the viability and future of U.S. wheat production.


6. Wheat Industry News
  • Nebraska Farmer Elected Plains Grains Chairman. Nebraska Wheat Board District 3 Director Larry Flohr of Chappell was recently named chairman of Plains Grains Inc. Flohr, a past USW director, is a certified wheat and millet seed dealer and corporation president of V&F Farms. Plains Grains, Inc. is a nonprofit organization that provides quality characteristics and production data on HRW wheat production from 12 states to foreign and domestic millers and grain purchasers. A board of directors representing Colorado, Idaho, Kansas, Montana, Nebraska, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Washington and Wyoming guides the organization.
  • The Alliance to Feed the Future launched a new mobile responsive design and update for its website. The site has new features highlighting the organization’s mission to “raise awareness and improve understanding of the benefits and necessity of modern food production and technology in order to meet global demand.” This includes a live Twitter feed, a prominent top navigation bar and an index of resources. Visit the site at http://www.alliancetofeedthefuture.org/.
  • Wheat Industry Leader Plans to Retire From Farming. After 30 years of farming, Randy Suess, Washington Grain Commission board member and farmer from Colfax, WA, recently announced that he plans to retire after this year’s harvest. Suess has had a long-standing leadership role in the industry, including serving as a USW director and as chairman in 2011-2012. “He was very articulate and one of the better speakers that I’ve ever worked with,” said Tom Mick, former CEO for the commission. “That went over very well at seminars and programs we put on around the world.” Read more here.
  • Four Weeks Left to Register for IGP Institute Risk Management Course. Understanding the importance of risk management within trading markets is crucial to the security of a company's financial future. Individuals interested in expanding their knowledge of marketplace challenges are encouraged to take advantage of this two-part course, held August 2 to 7 in Manhattan, Kansas. Registration closes on 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 effective analysis of rheological results. For more information or to register, visit www.northern-crops.com/courses2/.
  • Wheat Marketing Center Whole Grain Summit Pre-Meeting Workshop. This whole grain product workshop held June 22 to 23 at WMC in Portland, OR will offer a hands-on experience to produce different types of popular products with whole-grain raw materials and functional ingredients. For more information or to register, visit http://wholegrainsummit2015.com/pre-meeting-workshop/.


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