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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. Wheat Prices Rebound on Speculative Factors; Quality Supply Remains a Concern
2. USW Presents Global Wheat Food Security Initiative to International Millers
3. Philippine Millers Helped Toward Fair Competition with Turkish Flour
4. Foreign Agricultural Service Announces Export Development Funding
5. Retired USW Associate Blends Work and Food in New Book
6. Wheat Industry News

Online Edition: Wheat Letter – December 4, 2014 (

PDF Edition: (See attached file: Wheat Letter - December 4, 2014.pdf)

USW Harvest Report:

1. Wheat Prices Rebound on Speculative Factors; Quality Supply Remains a Concern
By Casey Chumrau, USW Market Analyst

Since USDA released its first 2014/15 World Agricultural Supply and Demand Estimates in May, projections for record global wheat supply have severely depressed prices. Even in the face of quality issues in wheat from all of the major Northern Hemisphere suppliers, U.S. futures prices hit a five-year low in late September. Yet new information suggests exportable supply may be tighter than previously expected and looking ahead, poor weather conditions threaten newly planted winter wheat in several countries. While the headlines certainly move markets and are worth following, it is too early to say to what extent these factors will affect supply.

As has often been the case over the past decade, what is happening in the Black Sea region seems to be a major factor moving global wheat prices. Uncertainty there appears just as influential as facts and fundamentals. This year, Russia, Kazakhstan and Ukraine each produced their second consecutive bumper crop, contributing to abundant world supply. However, renewed fears of regional conflict have helped support global wheat prices in recent weeks. Then, last week, Russia’s governmental Veterinary and Phytosanitary Surveillance Service announced new regulations that the agency said could trim grain exports. The announcement came after weeks of speculation that Russia might restrict exports to protect its domestic market; U.S. and European futures prices spiked even at this hint of reduced exportable supply.

As the 2014/15 Australian wheat harvest enters its final stages, it is clear that production will fall short of earlier estimates. USDA expects Australia to account for 11 percent of global exports this year so a reduction would change the landscape and add to concerns. In June, the Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) predicted production would reach 24.6 MMT but minimal rainfall after July greatly reduced prospects. ABARES this week downgraded its official 2014/15 projection to 23.2 million metric tons (MMT). If realized, it would be a 14 percent drop from last year.

Although futures markets mostly ignored quality concerns in the Northern Hemisphere’s 2014/15 crop, less than ideal conditions for newly planted winter wheat in the U.S. and Russia are now lending some support. Cold weather in Russia in October slowed planting but warmer temperatures in November boosted crop development and conditions before dormancy. In the U.S., the winter crop and emerged earlier than average thanks to mostly adequate soil moisture. However, abrupt and extremely cold temperatures stopped plant growth earlier than normal in the Northern and Central Plains, causing some concern. In its final report of the season, USDA estimated 58 percent of the winter wheat was in good or excellent condition, compared to 62 percent last year. It rated only 6 percent poor or very poor, down from 8 percent last year on the same date. Realistically, though, the risk to Russian and U.S. winter wheat crops is speculative and it is far too early to predict a final impact.

These production and political factors have helped U.S. futures markets rebound from the September low and reach a five-month high. The market will eventually show whether these current bullish factors have long-term influence. However, USW has cautioned buyers for months that record world supply does not automatically equate to availability of wheat with adequate quality. Basis levels confirm that the supply of high protein, strong gluten wheat is tight and the market is trying to extract that wheat from global supplies.

2. USW Presents Global Wheat Food Security Initiative to International Millers

Citing the inadequacy of past, centrally planned food security policies, U.S. Wheat Associates (USW) President Alan Tracy today proposed an initiative to provide “genuine food security to the world’s wheat importers” by fully liberalizing global wheat trade. Tracy presented the concept of a global wheat food security initiative at the 25th Annual International Association of Operative Millers (IAOM) Mideast & Africa Conference & Expo in Cape Town, South Africa.

“Wheat is the most important food grain in the world,” Tracy said. “It provides 20 percent of the calories consumed every day on earth and 20 percent of the protein for the poorest half of human population. Demand is growing, but not every country that consumes wheat can produce wheat. Thus, wheat is both the world's most planted grain and the most traded. Creating a government-to-government sectoral trade agreement, similar to the current initiative to achieve global free trade in environmental goods under the World Trade Organization (WTO), that eliminates trade barriers would assure importing countries of guaranteed access to the world's exportable wheat supplies.”

Tracy said real food security is possible when markets are allowed to work and governments invest to improve infrastructure that supports local production and improves access to world food supplies through trade. Policies that intervene in market dynamics, while implemented with good intentions, have only distorted trade and encouraged unsustainable investments.

Tracy noted that the call in 2011 by the G20 under the leadership of French President Sarkozy for internationally controlled emergency wheat stockpiles and other measures largely proved unworkable. He also criticized India’s food security demands that appeared to derail hopes for a WTO trade facilitation agreement in Bali, Indonesia, earlier this year.

"India's demand for an exemption from WTO subsidy rules was not really about food security," he said.

Admitting that such an initiative faces many challenges, Tracy said government trade officials and industry representatives from several countries have expressed an interest in exploring this concept.

“Given a fair chance, we can compete very well because we produce the highest quality wheat in the world,” said Paul Penner, a Hillsboro, Kan., wheat farmer and president of the National Association of Wheat Growers. “We agree that lower tariffs, less government intervention and freer global wheat trade would expand opportunity for farmers and their customers and we are eager to see how stakeholders respond to this idea.”

Tracy also asked flour millers at the IAOM meeting for their support within their own governments if the idea takes root.

“In exchange for eliminating tariffs, licenses and other trade barriers, the world’s wheat buyers would have guaranteed access to exportable wheat supplies even when world supplies are down,” Tracy said. “It also would encourage sound investment in wheat production and create a more level playing field on which exporting countries can compete. I believe, with your support, we can genuinely boost food security that is so critical to peace and justice in this growing world.”

3. Philippine Millers Helped Toward Fair Competition with Turkish Flour
By Shannon Schlecht, USW Vice President of Policy

The Philippine government recently set permanent anti-dumping duties on unfairly priced flour from key exporting companies based in Turkey. The decision marks the end of a thorough investigation by the Philippine Tariff Commission to determine dumping margins, injury or threat of injury to the industry. The Philippine government had placed provisional anti-dumping duties on Turkish flour earlier this year.

The Philippine Association of Flour Millers petitioned the government to place anti-dumping duties on Turkish flour after seeing this as a growing threat. According to import data, Turkish flour exports to the Philippines grew from nearly 55,000 metric tons (MT) in 2009 to a high of 178,000 MT in 2012.

The permanent anti-dumping duties will reach up to 16.19 percent and remain in place for a five-year period. The 2014 investigation that determined these dumping margins is a step forward in providing a fair and competitive playing field in this market.

Yet the Philippines is just one of many export markets where Turkish flour sells at suspect prices. Turkey has grown to become the second largest flour exporter in the world with volumes reaching nearly 2 million MT in recent years. These first anti-dumping duties to be permanently placed on Turkish flour send a clear signal that further investigation is needed into the policies, incentives and systems that exist within Turkey that have contributed to such explosive growth in flour exports. It is a necessary step to ensure that flour millers around the world are competing in the spirit of fair competition and international cooperation.

Additionally, the Turkish government has not provided required annual notifications to the World Trade Organization on its wheat or flour export subsidies or the domestic support provided to its wheat producers for more than 10 years. It also maintains extremely high tariffs on wheat and flour of more than 100 percent, which results in the need to use a complex inward processing and duty drawback system to export flour — yet another practice with insufficient transparency.

4. Foreign Agricultural Service Announces Export Development Funding

The U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) has awarded funding to more than 60 U.S. agricultural organizations, including USW, to help expand commercial export markets for U.S. farm commodities and agricultural products. Each of these organizations must receive funding from members to qualify for participation in these programs — and then they must compete each fiscal year with other applicants for a portion of the total funding allocated to each program.

Through the Market Access Program (MAP), FAS is a partner with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities. For fiscal 2015, 62 nonprofit organizations like USW and farmer cooperatives will share a total MAP allocation of $173.2 million. The Foreign Market Development (FMD) program focuses on trade servicing and trade capacity building by helping to create, expand and maintain long-term export markets for U.S. agricultural products. Under FMD, also known as the Cooperator Program, 22 trade organizations like USW that represent U.S. agricultural producers will share a total allocation of $26.7 million by FAS.

USDA's international market development programs have had a significant and positive impact on U.S. agricultural exports. U.S. farm exports in fiscal year 2014 reached a record $152.5 billion and supported one million jobs in the United States. USW believes its customers also benefit from its work, funded through MAP, FMD and other programs, providing wheat market, quality and price information as well as technical support to the world’s millers and bakers. For more information, contact your local USW office or visit

5. Retired USW Associate Blends Work and Food in New Book

Fred Schneiter started writing in his late teens for the “East Oregonian” newspaper in Pendleton, OR, and pursued a journalism career that eventually led him to “chase horizons” outside the United States, including work with USW in nearly a dozen Asian countries from 1964 to 1994. Schneiter headed the organization’s work in China for 13 years. He also lived and worked in Karachi, Manila, Taipei and Hong Kong.

That experience serves as back-story to Schneiter’s new travel adventure cookbook called “The Taste of Old Hong Kong.” The book’s subtitle is “Recipes and memories from 30 years on the China coast.” He described the book as a light-hearted reminiscence of adventures, misadventures, friends, fun and food from a bygone era.

“Every chapter ends with an easy-to-follow, international recipe, many of them national treasures,” Schneiter said. “But you can still enjoy them today on the boulevards and back lanes of Hong Kong, the Queen City of International Cuisine.”

Among the stories associated with his work promoting U.S. wheat, Schneiter recalls introducing ramen instant noodles to Chinese government officials and working jointly with the government to set up the first instant noodle production line in the country.

“After a dozen years, nearly 800 instant noodle plants had been established throughout the country and Chinese officials estimated they were some 500 plants short of meeting demand,” he said. “There was such a high level of respect for USW programs that ministry officials in Beijing even invited us to work with them to help improve traditional Chinese noodle production.”

Before wheat farmers launched market development programs in Asia, many Western wheat foods like pizzas and hamburgers were virtually unknown, Schneiter said.

“Now, they have pretty much become staples throughout that part of the world,” he noted. “I think that is a healthy, nutritional plus from the days when ’eating well’ simply meant filling kids up with white rice.”

“The Taste of Old Hong Kong” is published by Blacksmith Books, Hong Kong, and is available through bookstores and online retail sites including

6. Wheat Industry News
  • USDA Announced the Final Rule for the Export Credit Guarantee (GSM-102) Program. This represents a rewrite of the credit guarantee program’s regulations “to meet modern needs.” The final rule applies to payment guarantee applications received on or after Dec. 18, 2014. USDA says the new rule represents operational changes that reflect current agricultural trade practices and new U.S. government requirements such as electronic bills of lading, and government-wide suspension and debarment requirements. The modifications will help improve program efficiency, enhance overall program clarity and integrity and increase program availability to participants. For a copy of the final rule, visit
  • Experts Debunk Herbicide Misinformation. In its Nov. 28 “Food for Thought” blog, invited University of Oklahoma professors to answer incorrect accusations about the use of glyphosate herbicide in U.S. wheat production. This expert information thoughtfully and respectfully provides reassuring facts that U.S. wheat remains a wholesome, high quality source of flour for the world. Read more at
  • Ardent Mills Introduces “The Inside Scoop” YouTube Video Series designed to provide customers with reviews of the latest U.S. Department of Agriculture grain reports, including those covering all wheat classes. “The Inside Scoop” will review production, stocks and consumption as well as developments affecting world trade in grains. Find upcoming episodes on the risk management page on the web site or by visiting
  • The December Rediscover Wheat Magazine is Out. The official publication of the Kansas Association of Wheat Growers and the Kansas Wheat Commission this month includes information about trade success in Brazil, updates on wheat breeding, whether we eat enough whole grains (spoiler alert: we probably do not) holiday recipes and more. The magazine is available electronically at and at

  • Condolences to Plains Grains Executive Director Mark Hodges and his family on the recent death of his father.

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