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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. U.S. Wheat Exports Start 2016/17 Fairly Strong
2. The U.S. Wheat Industry Helps Celebrate 100 Years of Grain Standards
3. A Busy Season of Wheat Market Development Activities
4. New Food for Progress Funding Reflects Food Aid Benefits
5. USW Farmer Directors to Meet in Fargo, ND
6. Wheat Industry News

Online Edition: Wheat Letter – July 14, 2016

PDF Edition: (See Attached)

USW Harvest Report: www.uswheat.org/harvest


1. U.S. Wheat Exports Start 2016/17 Fairly Strong
By Stephanie Bryant-Erdmann, USW Market Analyst

U.S. commercial sales for marketing year 2016/17, which began June 1, are off to a welcome start. As of July 7, U.S. wheat export sales for all classes totaled 8.78 MMT, up 35 percent from export sales on the same date in 2015/16. USDA now expects 2016/17 exports to total 25.2 MMT, up 19 percent from 2015/16, noting that this would be the highest volume in three years.

USDA reported hard red winter (HRW) year-to-date exports at 3.29 MMT, up 86 percent from the prior year. Significantly higher demand from Brazil is expected this year after rain delayed harvest and damaged wheat quality in both Brazil and Argentina, normally Brazil’s top supplier. As of July 7, HRW sales to Brazil totaled 232,000 MT, more than double the volume to Brazil at the same time last year. Sales to Mexico are also up 81 percent year over year due to more competitive pricing. To date, Chilean and Peruvian HRW sales are already greater than total 2015/16 HRW sales.

Sales of soft red winter (SRW) for 2016/17 are down 35 percent year over year at 827,000 MT, due in part to smaller carry-in stocks of milling quality SRW and early market perceptions about a recurrence of quality issues in this year’s crop. However, with nearly half of the 2016/17 SRW production safely in the bin, quality looks much improved. Sales to some Latin American countries, including Honduras, El Salvador and Costa Rica are slightly ahead of last year’s pace.

Hard red spring (HRS) sales of 3.02 MMT are up 53 percent year over year. As of July 7, buyers in the Philippines purchased 437,000 MT, nearly double their volume last year at the same time. The Philippines is the top HRS buyer, and sales to eight of the top ten HRS customers are also ahead of last year’s pace. Sales to the European Union (EU) of 157,000 MT are nearly triple last year’s sales on the same date. Year to date sales to Venezuela of 145,000 MT are nearly equal to total 2015/16 HRS sales.

As of July 7, exports of soft white (SW) wheat are up 27 percent year over year at 1.51 MMT. Sales to the top three SW customers — Philippines, Japan and South Korea — are all ahead of 2015/16 pace. U.S. SW sales to Thailand and Indonesia are also up. Year-to-date, Indonesia has purchased 110,000 MT, up from 42,000 MT on the same date in 2015/16. Thailand sales are up 57 percent year over year at 74,000 MT.

High prices continue to constrain durum exports. Year to date durum exports total 128,000 MT, down 54 percent from the same time last year. To date, Nigeria, the EU, Guatemala and Panama are the top durum buyers. A significant portion of these 2016/17 sales are designated as “sales to unknown designations.”


2. The U.S. Wheat Industry Helps Celebrate 100 Years of Grain Standards

On July 12, USW Chairman Brian O’Toole and National Association of Wheat Growers (NAWG) President Gordon Stoner sent a letter of congratulations to USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) on the 100th anniversary of the U.S. Grain Standards Act of 1916 (USGSA). Chairman O’Toole and President Stoner also told GIPSA Administrator Larry Mitchell that the remarkable benefits from the USGSA to the U.S. grain supply chain and its customers is worthy of an official proclamation from the U.S. Congress recognizing the Act and this important milestone.

The USGSA was a landmark law that helped resolve chaotic and inefficient marketing conditions and increase the trust in U.S. agricultural commodities. U.S. grain standards for wheat were established under the Act in 1917. Then, when fraud in the system again threatened the credibility of the U.S. grain marketing system, Congress amended the Act in 1976 to establish official weighing services, record keeping by elevators, registration of grain exporters, and user fees to cover federal supervision costs. Importantly, that amendment established the Federal Grain Inspection Service (FGIS) and required either federal or state agency inspections for export.

“It would be nearly impossible to calculate the value of the USGSA and the FGIS to America’s wheat farmers and their customers,” O’Toole and Stoner noted. “Today, the work FGIS does represents a critical component in U.S. wheat’s reputation as the world’s most reliable supply. With half of the wheat that U.S. farmers produce every year available for export, inspection helps increase the value of that wheat to overseas customers.

“When USW brings buyers to the United States, one of the first stops is almost always at an FGIS regional office or laboratory at an export elevator,” they added. “Buyers around the world know that the wheat they tender for from the United States is the wheat that will be loaded on the vessel. FGIS inspection logs give importers the data to extract the most value from their tenders. If there is a discrepancy, buyers know that experienced workers at the National Grain Center in Kansas City, MO, have the samples needed to conduct another impartial inspection.”

O’Toole and Stoner went on to say that overseas buyers are more willing to purchase U.S. wheat because they have confidence that our industry, growers and grain grading system consistently deliver high value products.

The wheat leaders concluded: “On behalf of the wheat farmers USW and NAWG represent and their customers, we thank Congress, GIPSA, FGIS and the hundreds of individual grain inspectors across the country and we look forward to the next 100 years of collaboration as we grow and prosper together.”

Learn more about FGIS grain inspection here: http://blogs.usda.gov/2015/07/10/usda-grain-inspectors-work-to-uphold-americas-reputation-for-quality-support-new-markets/.


3. A Busy Season of Wheat Market Development Activities

USW works steadily to share trade, market and technical information for the world’s wheat buyers. The first few months of marketing year 2016/17 (June to May) are proving to be a very busy time, including several face-to-face meeting opportunities for visiting trade teams, short courses and other activities, all funded by state wheat commissions and export market development funding from USDA’s Foreign Agricultural Service (FAS).

In June, USW’s Sub-Saharan Africa regional office provided tuition for three milling managers to take the IAOM Executive Milling Course and sponsored eight millers at a Nigerian and South African Flour Millers Short Course at Kansas State University’s IGP Institute.

USW brings trade teams from around the world to the United States each summer to witness wheat harvest and get a firsthand look at the new crop’s initial quality. This June, Nigerian millers visited Texas, Kansas and North Dakota. In addition, USW Assistant Regional Vice President Joe Sowers traveled with four Philippine journalists to the Pacific Northwest and Washington, DC, to visit with farmers, discuss supply and quality with industry representatives and visit elevators and port facilities, as well as to meet with USDA and other U.S. government officials. To read more about that effort, visit http://www.mb.com.ph/ph-emerges-second-biggest-buyer-of-us-wheat/.

A highlight in June was the very successful Latin American and Caribbean Buyers Conference in Portland, OR, with nearly 80 overseas buyers and industry representatives participating. Read more about the conference at Wheat Buyers Conference Positions U.S. Wheat as an Exceptional Value. USW President Alan Tracy also traveled to London in June to give an update on world wheat market issues at the International Grains Council meeting.

Early July saw a five-person Korean team of bakers participate in a whole wheat cookie and cracker short course at the Wheat Marketing Center (WMC) in Portland, OR. The bakers worked on developing whole wheat flour-based formulations using SW for biscuit items and product quality evaluation. A custom course on pasta production and technology for several customers from South America, Mexico and Africa at the Northern Crops Institute (NCI) in Fargo, ND, is set to begin July 18. Starting July 30, NCI and USW will also host a workshop in which wheat buyers from South Asia will learn how to write tenders to get the most value possible from U.S. wheat purchases. At about the same time, beginning and advanced Asian noodle production courses for Nigerian customers start at the Wheat Marketing Center.

Customer visits continue in July and into August with six more trade teams from Colombia, Venezuela, Mexico, as well as two separate teams from Korea and a team from the growing market of Indonesia. Looking ahead to September, USW is planning a seminar for durum buyers to be held in Morocco.

The connections forged through visits and courses like these are the very foundation of past, present and future success for U.S. wheat farmers, industry stakeholders and overseas customers.

“Our visitors always say that building relationships with farmers and the people in the U.S. wheat export supply chain makes a difference in their jobs,” said USW Director of Programs and Planning Jennifer Sydney. “They get firsthand knowledge of the new crop and proof that the United States remains the world’s most reliable supplier of high quality wheat.”


4. New Food for Progress Funding Reflects Food Aid Benefits
By Elizabeth Westendorf, USW Policy Specialist

Last week, USDA announced Food for Progress funding allocations for fiscal year 2016. A total of $153.2 million in funding will go to projects in eight countries that USDA estimates will reach over 3.8 million beneficiaries.

Half of the countries on the list (Burkina Faso, Ethiopia, Malawi, and Mozambique) are in Africa, where this Food for Progress funding will not only enable development projects in these countries, but will also raise money for those projects by providing U.S. commodities for sale in the local markets. All four of these countries are experiencing severe droughts that have hurt domestic food production. The monetized commodities through Food for Progress supplement locally produced food supplies that are currently not sufficient to fully meet their populations’ needs. They also provide economic stimulus to encourage continued development that can lead to more resilience in future food crises.

Studies show a strong positive correlation between food insecurity and political instability. When it seems like instability around the world is rising and there are more crises demanding U.S. foreign assistance, these food aid programs are more important than ever.

The United States is the largest provider of food aid worldwide. USAID funding has evolved to include new methods of reaching those in need, but U.S. wheat farmers believe traditional in-kind food aid will always have a place in both emergency and developmental humanitarian aid programs. New emergency aid tools like local and regional procurement and cash vouchers supplement the foundational aid tool of in-kind food aid.

USW is committed to supporting programs that help feed food-insecure people. In a world with political uncertainty and increasingly volatile climate conditions, U.S. wheat farmers are proud that their product is going to benefit food-insecure populations through USDA and USAID emergency and developmental aid.


5. USW Farmer Directors to Meet in Fargo, ND

At their annual meeting July 17 to 20, 2016, USW directors representing 18 state wheat commission member organizations will hold committee meetings, including two joint committees with the National Association of Wheat Growers (NAWG), and install officers for 2016/17 among other activities. The board meets in Fargo, ND, this year, a site selected by out-going Chairman Brian O’Toole of Crystal, ND. USW will share more information during and after the meeting.

Guest speakers at the joint board meeting include North Dakota’s Lieutenant Governor Drew Wrigley, the Agriculture Commissioner of North Dakota, Doug Goehring, and President of The Money Farm, Mike Krueger. The board will also hear an update on trade relations with Cuba from USW Regional Vice President Mitch Skalicky and Assistant Director of Policy Ben Conner. Farmers who participated in “board team” travel to Latin America and North Asia earlier this year will report on their experience.

One of the highlights will be a presentation by Vance Taylor, the President and General Manager of the North Dakota Mill and Elevator Association in Grand Forks, ND, the only state-owned milling facility in the United States. Over the years, the organization has worked cooperatively with state agencies in promoting North Dakota and its high quality products by participating with and hosting international trade teams, including wheat buyers, and serving as a resource center for training, research and testing. The North Dakota Mill receives no funds or financial assistance from the State of North Dakota to subsidize the milling operations, but has contributed more than 50 percent of its profits to the North Dakota State General Fund for more than 35 years and continues to be a valuable asset to the State of North Dakota.

USW and Chairman O’Toole wish to thank these supporting sponsors: BNSF Railroad, Columbia Grain, North Dakota Mill and Elevator Association, Monsanto, Syngenta, AgCountry Farm Credit Services, Northern Crops Institute, Dakota Growers Pasta Co., U.S. Durum Growers Association, Otto Ag, Dakota Specialty Milling and the conference host North Dakota Wheat Commission.


6. Wheat Industry News
  • House Passes GMO Labeling Bill. "The Hill" reported today that a bill to create a federal labeling standard for foods with genetically modified ingredients passed in the U.S. House of Representatives and Pres. Obama is expected to sign the bill into law directing USDA to create a national labeling standard. It allows food producers to choose how they want to disclose the presence of genetically modified ingredients, through text, symbols or a QR code that consumers can scan with a smartphone to relay the information. The federal law supersedes several state labeling laws. Read the full article here.
  • New Foreign Service Officers Sworn In. Ten USDA Foreign Agricultural Service (FAS) employees were sworn in as Foreign Service Officers at USDA headquarters July 13. The new officers will begin working as agricultural attachés at U.S. embassies in nine countries including Guatemala, South Korea, China, Peru, United Arab Emirates, Mexico, Colombia India and Thailand. The new attachés are among about 140 FAS Foreign Service Officers posted to 93 offices at U.S. diplomatic missions around the world, covering 171 countries. USW staff are meeting with many of these officers before they leave on their new assignments to brief them on our wheat trade issues with those countries. For the full release and more information about FAS, visit www.fas.usda.gov.
  • Hope for Improved Ag Trade with Cuba. This week, Agri-Pulse, which covers ag news in Washington, DC, reported that the chance that approval of a bill that end the U.S. prohibition on financing agricultural exports to Cuba is closer than it has ever been, said the author of the legislation, Rep. Rick Crawford. USDA Acting Deputy Secretary Michael Scuse told Agri-Pulse he thinks “that there is now momentum to make the changes necessary, especially when it comes to agricultural products.”
  • Low Cash Prices Trigger Government Loan Program. Kansas AgLand reported this week that for the first time in nearly 15 years, cash wheat prices in Kansas have triggered government loan programs. Farmers and elevator managers are scrambling to bone up on programs like Loan Deficiency Payments (LDP) as HRW wheat price hovers around $3 a bushel ($110/MT). In one Kansas county, the posted price was $0.06 below the government approved loan rate of $3.23 per bushel ($118.70/MT). The story added that one elevator operator said the last time he filed LDP paperwork was 2004. USDA estimated the 2016/17 Kansas HRW crop at almost 12.4 million MT, with a record average yield of almost 3.8 MT per hectare.
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