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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. USDA Outlook: More U.S. Wheat in 2015/16
2. New Study on Abuse of WTO Agricultural Rules Could Help Focus Doha Round Negotiations
3. Senators Move Forward with Bill to End Cuban Embargo
4. USW Board Team Heads to Colombia, Costa Rica and Mexico
5. Amanda Spoo Joins USW
6. Wheat Industry News


Online Edition: Wheat Letter – February 26, 2015 (http://bit.ly/1wlYDti)

PDF Edition: (See attached file: Wheat Letter - February 26, 2015.pdf)

USW Price Report: http://www.uswheat.org/prices


1. USDA Outlook: More U.S. Wheat in 2015/16
By Casey Chumrau, USW Market Analyst

USDA released its Grains and Oilseeds Outlook for the 2015/16 harvest at its annual Agricultural Outlook Forum Feb. 20 in Arlington, VA. Despite lower expected planted acres, USDA predicted a 5 percent increase in total U.S. wheat production in 2015/16. Considering the winter crop is still dormant and the spring crop is not yet in the ground, weather conditions the next six months will be a major factor in helping U.S. wheat farmers meet or beat that expectation.

Drought conditions that forced high abandonment rates last year are still a concern in the southern and central plains but overall crop conditions are better than this time last year. USDA projected a higher ratio of harvested acres and better yields. The combination of these factors would help total U.S. production reach 57.8 million metric tons (MMT) or 2.12 billion bushels in 2015/16, up from 55.1 MMT (2.02 billion bushels) in 2014/15 and just slightly ahead of the five-year average. In its Jan. 12 Winter Wheat Seedings report, USDA estimated that farmers planted 40.5 million acres (16.4 million hectares) to winter wheat for the 2015/16 crop, a 3 percent decline from 2014/15. Assuming normal weather conditions, USDA forecasted the average yield up 3 percent to 45.2 bushels per acre (3.04 MT per hectare), equal to the five-year average.

Last week’s outlook also provided the first estimate of spring wheat and durum planted area, projecting a 4 percent increase from last year to 15.0 million acres (6.08 million hectares). As spring wheat typically accounts for less than one third of total wheat acres, the projected increase would not fully offset the estimated decline in winter wheat planted area.

Commercial wheat sales for 2014/15 to date may help explain these mixed planting numbers. Despite futures contracts at or near multiple-year lows, U.S. wheat prices have been relatively high on the world market this marketing year. Sales-to-date of hard red winter (HRW) and soft red winter (SRW) are less than last year due in part to a drop in demand from Brazil and China. However, sales of both hard red spring (HRS) and durum are well ahead of last year’s pace and both will likely exceed the five-year average. Overall, USDA estimated 46 percent (26.5 MMT, 974 million bushels) of the total U.S. crop will be exported in 2015/16.

While USDA will not release its first official 2015/16 global supply and demand estimates until May, it did comment at last week’s Outlook Forum that world wheat production will likely fall shy of the record 725 MMT (26.6 billion bushels) reached in 2014/15. However, current excellent growing conditions in several major importing countries will likely limit global wheat trade and keep export competition very strong. As a result, USDA predicted 2015/16 U.S. exports will increase 8 percent from 2014/15 to 26.5 MMT (974 million bushels) but fall short of the five-year average of 29.6 MMT (1.09 billion bushels).

Presuming these predictions will be realized, USDA projected 2015/16 U.S. ending stocks at 20.8 MMT (764 million bushels), their highest since 2010/11. While there is still a lot of time before the new crop hits the market, there is a good chance that the United States will once again have ample supply to meet both projected imports and any special needs that arise.


2. New Study on Abuse of WTO Agricultural Rules Could Help Focus Doha Round Negotiations

Several influential countries are not complying with the domestic agricultural support commitments they made as members of the World Trade Organization (WTO). That is the conclusion of a study sponsored by U.S. commodity organizations and introduced to agricultural negotiators Feb. 18 in Geneva, Switzerland. Those organizations made the point that recognizing the current realities in agricultural support and trade could help improve the chances of finally reaching a Doha Round agreement.

The study was conducted by DTB Associates, Washington, DC, and updates a similar study conducted in 2011. U.S. Wheat Associates (USW) was one of the sponsors of the latest study indicating that the governments of India, China, Turkey, Brazil and Thailand have dramatically increased trade distorting subsidies for wheat, corn or rice production over the past ten years to levels that exceed their WTO agreements — in most cases by large margins. That information has not been readily available to WTO negotiators.

“U.S. wheat farmers strongly support the goals of the WTO and the Doha Round,” said USW President Alan Tracy. “We also believe every WTO member must follow the rules. Sadly, the facts we have uncovered show this is not the case.”

Member countries are required to report their domestic support levels to WTO regularly, but more than 650 notifications were late as of November 2014, Tracy noted. Turkey has not reported its support since its 2001 crop year. China has not reported since 2008 and India just submitted a notification last fall covering seven crop years to make them current through 2010. However, the study demonstrates that even notifications that have been reported often rely on faulty methodology.

“This study shines a light on what is really happening,” said USW Vice President of Policy Shannon Schlecht. “What it shows is a massive increase in government-sanctioned support prices and violations of Aggregate Measure of Support agreements that are distorting world trade in wheat, corn and rice.”

The dramatic increases in current support price levels by country and commodity in the study are clear and most revealing when compared with reference prices in the United States.




*Reference Price, Agricultural Act of 2014
**Support price under the Paddy Pledging Scheme
Note: China and Brazil wheat reflect 2014/15 support price levels


The minimum government prices reported in the study indicated a significant increase in support for wheat production in these countries over the past several years. Since the original study in 2011, a few countries increased their minimum support price for wheat by $50 to $100 per metric ton.

Under the Uruguay Round Agreement of the mid 1990s, WTO member countries agreed to abide by limits on Aggregate Measure of Support (AMS). The DTB study showed India, China, Turkey and Thailand have exceeded their AMS commitments by a wide margin (See “Aggregate Measure of Support”). WTO records show that the United States has always met its annual notification commitment and has never exceeded its AMS limit of $19.1 billion.

Aggregate Measure of Support (AMS)
2013/14 and 2014/15
Billion U.S. Dollars
Country
Wheat
Corn
Rice
Other
Total
AMS Limit
China
$15.5 - $18.4
$20.6 - $54.4
$12.4 - $37.0
NA
$48.4 - $109.8
$0
India
$12.4 - $15.8
$2.5 - $3.8
$13.3 - $28.2
$33.0
$36.1 - 93.4
$0
Brazil
$0.8
01
$0.6
NA
$1.4
$0.912
Turkey
$5.7
$1.0
$0.3
NA
$7.0
$0
Thailand
NA
$0.5
$1.4 - 10.1
NA
$1.9 - $10.6
$0.634

1 Support below de minimis level

The fact that these countries have far exceeded their WTO support commitments leads to serious trade distortions. An insightful example may be found in the Indian government’s wheat production and trade policies.

The study determined that India’s minimum support price for wheat increased by 111 percent between 2005/06 and 2013/14. India recently notified the WTO of a much lower increase but the study showed that the Indian government used faulty tactics to calculate the number it reported, a number that many other WTO members have questioned.

Increasing support levels gave Indian farmers an artificial incentive to produce more wheat. In fact, India’s wheat production increased by 35 percent over those seven years to record levels. That buoyed world wheat supplies and increased pressure on prices that hurt wheat farmers in other countries.

Over the same time, Indian wheat exports increased from 300,000 metric tons (MT) to 6.5 million MT. The study also included evidence that India is offering wheat export subsidies that are also illegal under its WTO commitment. Yet, claiming it must maintain a large public stockpile of grain to maintain food security as an advanced developing country, India has demanded exemptions to its trade-distorting levels of support.

“We agree with our U.S. agricultural negotiators that we see no possibility of concluding the Doha agreement by pursuing the same approach used over the last decade,” Schlecht said. “Hopefully the facts in the study will help raise awareness of the current realities of trade-distorting farm subsidies. Without this information it will be impossible for WTO members to achieve a balanced Doha Round conclusion across the domestic support, market access and export competition pillars."

For more information, visit
www.dtbassociates.com/docs/DomesticSupportStudy11-2014.pdf and www.dtbassociates.com/docs/domesticsupportstudy.pdf.


3. Senators Move Forward with Bill to End Cuban Embargo

On Feb. 12, a bipartisan group of lawmakers led by Senator Amy Klobuchar (D-MN) introduced major legislation that would end the U.S. trade embargo of Cuba. The bill would end the restrictions on U.S. companies doing business in Cuba that have been in place since 1961. Senators Mike Enzi (R-WY), Debbie Stabenow (D-MI), Jeff Flake (R-AZ), Patrick Leahy (D-VT) and Dick Durbin (D-IL) co-sponsored the bill.

The National Association of Wheat Growers (NAWG) and USW are pleased to see bipartisan Congressional progress being made, and look toward a speedy and permanent end to the Cuban trade embargo. NAWG and USW are members of the U.S. Agricultural Coalition for Cuba, which also endorsed the legislation.

“It is refreshing to see our nation’s lawmakers reaching across the aisle to produce real and meaningful change. Increased trade with Cuba has great potential for U.S. wheat growers,” commented NAWG President Paul Penner.

Cuba's 11 million people consume close to 1.0 MMT of wheat each year. It is the largest wheat market in the Caribbean, but it currently purchases almost all of that wheat from the European Union and Canada. Cuba could import at least 500,000 MT of wheat from the United States each year but has not purchased U.S. wheat since 2011. Under the current embargo, the United States can export agricultural products to Cuba through the use of third-party banking institutions, which makes facilitating trade burdensome and often more expensive.

“The farmer directors of NAWG and USW recently renewed a call to end the Cuban trade embargo," said USW President Alan Tracy. "We support the bipartisan effort in the Senate that moves us one step closer to seeing U.S. wheat flowing to our Cuban neighbors again.”


4. USW Board Team Heads to Colombia, Costa Rica and Mexico
By Stephanie Bryant-Erdmann, USW Programs and Planning Assistant

Over the next two weeks, I will be traveling with three wheat farmers on USW’s 2015 Latin America Board Team. Board Teams are intense, regional visits designed to bring together the farmers who supply the world’s most reliable source of high quality wheat and the people who import and use U.S. wheat to help improve their products and expand their businesses.

Traveling with me are:
  • Von Johnson, Chairman, Nebraska Wheat Board, Cambridge, NE
  • Ken Tremain, Past President, Wyoming Wheat Growers, La Grange, WY
  • Scott Van Allen, Chairman, Kansas Wheat Commission, Clearwater, KS

Our trip starts this week at USW Headquarters Office in Arlington, VA, and at USDA/Foreign Agricultural Service offices in Washington, DC, before leaving for Cali, Colombia, on Saturday. The team will spend three fast-paced days in Colombia. We will visit millers, bakers and government contacts in Cali, Medellin and Bogota. After a short but busy day in Costa Rica to tour Caldera’s port facility and meet with MOLCRISA, Costa Rica’s largest flour mill, and two large food processors, the team will fly to Mexico for the last leg of our journey. There we will meet with pasta manufacturers and millers in Puebla and Mexico City before returning home on March 10.

We will be posting regular updates and photographs of our travels. Follow the team’s progress on the USW Facebook page at www.facebook.com/uswheat.


5. USW Hires Communications Specialist

USW welcomes Amanda Spoo as communications specialist in its Arlington, VA, headquarters effective March 9, 2015. Spoo will provide public relations and marketing communications support, specifically working to communicate the value of USW to stakeholder organizations.

“Amanda’s education and creative approach in her current position are ideal to support what we are doing to expand outreach to wheat farmers and their overseas customers,” said USW Vice President of Communications Steve Mercer. "We look forward to having Amanda join our growing base of young, talented associates.”

Spoo grew up in Hermiston, OR, and earned a bachelor’s degree in agricultural communications and journalism at Kansas State University. She gained valuable experience in the grain industry by working three years as a student communications specialist at the IGP Institute and worked as a communications intern in Government Affairs with ICM, Inc., a Kansas biofuels company. Spoo was an active member of Agriculture Future of America, serving on its student advisory team. Over the past two years, Spoo managed a broad range of strategic producer communications and consumer outreach projects as director of communications at the Kansas Pork Association.

6. Wheat Industry News
  • Bayer to Invest $1.9 Billion in Wheat Research. Bayer CropScience announced its research and development commitment through 2020 at its Cereal Future Forum in Brussels, Belgium, Feb. 11 and 12. The initiative includes seven wheat breeding stations around the world, working on high-yielding seeds and new crop protection solutions. For more information, visit http://bit.ly/1zIasLM.
  • New Pasta-Focused Newsletter. The International Pasta Organisation launched a new monthly newsletter – “The Truth About Pasta.” The newsletter will focus on promoting – “pasta is healthy, sustainable, convenient, delicious, affordable, doesn’t make you fat and much, much more.” To read the first edition or sign up for the newsletter, visit http://www.pastaforall.info/wordpress/.
  • CIMMYT Scientist Contributes to Book on Climate Change. Matthew Reynolds, wheat physiologist and distinguished scientist at the International Maize and Wheat Improvement Center (CIMMYT), recently contributed his expertise to the book “Climate Change and Crop Production.” Reynolds plays a leading role in several international wheat initiatives, including the Heat and Drought Wheat Improvement Consortium (HeDWIC) and the International Wheat Yield Partnership (IWYP). For more information, visit http://bit.ly/1vSJ6qw.
  • Pew Research Shows Perception Gap Between Consumers and Scientists. A new report from the Pew Research Center surveyed citizens and scientists connected to the American Association for the Advancement of Science to analyze views on science, engineering and technology issues. The largest gap was related to the safety of genetically modified foods, with 88 percent of scientists saying they believed that genetically modified foods are relatively safe, while only 37 percent of the public group held the same viewpoint. To read the full study, visit http://pewrsr.ch/1wF3R2h.
  • IGP Buhler Flour Milling Courses. In conjunction with Buhler Inc., Kansas State (K-State) University’s Department of Grain Science and Industry and the IGP Institute are offering several milling courses in the IGP Executive Conference Center and the Hal Ross Flour Mill on the K- State campus in Manhattan, KS. The courses run from March through November with both English and Spanish language instruction. For more information on the courses and to register, visit http://www.grains.ksu.edu/igp.
  • NCI Pasta Course. The Northern Crops Institute in Fargo, ND will hold its Pasta Production and Technology Short Course April 14 to 16, 2015. For more information or to register, visit http://www.northern-crops.com/.
  • WMC Biscuit and Cracker Technology Short Course. The Wheat Marketing Center in Portland, OR, will hold its Biscuit and Cracker Technology Short Course May 12 to 16, 2015. For more information or to register, visit http://wmcinc.org/WMC_03_Cookie_and_Cracker.html.
  • U.S. Dietary Guidelines Keeps Whole Grain and Enriched Recommendations. The Dietary Guidelines Advisory Committee kept the 2010 recommendation to have 50 percent of grain intake be from whole grains, after considering a cut in the recommended intake of enriched grains. Public comments will be accepted on the Committee’s advisory report through April 8, 2015. For more information or to submit comments, visit http://www.health.gov/dietaryguidelines/dga2015/comments/.
  • Merged GFF Website Goes Live. The Grains Food Foundation (GFF) rolled out a new website merging the “Go with the Grain” and “Grains for Your Brain” websites. The rebranding includes a new logo, brand position and brand statement. Check out the new site at http://grainfoodsfoundation.org/.

Nondiscrimination and Alternate Means of Communications
USW prohibits discrimination in all its programs and activities based on race, color, religion, national origin, gender, marital or family status, age, disability, political beliefs or sexual orientation. Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USW at 202-463-0999 (TDD/TTY - 800-877-8339, or from outside the U.S., 605-331-4923). To file a complaint of discrimination, write to Vice President of Finance, USW, 3103 10th Street, North, Arlington, VA 22201, or call 202-463-0999. USW is an equal opportunity provider and employer.
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