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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 19 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. International Grains Council Sees a Smaller 2017/18 Wheat Harvest
2. New U.S. Food Consumer Research Offers Insight for Wheat Importers and Processors
3. Plant Breeding Innovations to Help Meet Increasing Demand for Safe, Affordable Food
4. Farmer Leaders to Meet with Customers in Thailand and the Philippines
5. New Trade Policies Generate Some Whiplash
6. Wheat Industry News

PDF Edition: Wheat Letter – January 26, 2017 (See attached file: Wheat Letter - January 26, 2017.pdf)

USW Crop Quality Reports: http://www.uswheat.org/cropQuality


1. International Grains Council Sees a Smaller 2017/18 Wheat Harvest
By Stephanie Bryant-Erdmann, USW Market Analyst
USDA will issue its first 2017/18 world wheat supply and demand estimates in May, but on Jan. 19 the International Grains Council (IGC) provided an early look ahead at the next marketing year. IGC pegged 2017/18 world wheat production at 735 million metric tons (MMT), down 2 percent from the estimated 752 MMT produced in 2016/17. If realized, it would still be the third largest wheat crop ever, but would be the first year over year decline in 5 years. For comparison, USDA estimates 2016/17 global wheat production at 753 MMT.

IGC expects just two of the major exporting countries, Russia and Ukraine, to harvest more wheat in 2017/18, even though their estimates are up only 1 percent and 2 percent, respectively. IGC predicts European Union harvested area will remain stable in 2017/18. Harvested area is forecasted to fall 3 percent in Argentina, Australia and Canada, while IGC expects farmers in the United States and Kazakhstan to harvest 8 percent and 10 percent less wheat, respectively.

Harvested area in Morocco is expected to rebound to a more normal level after widespread rain eased drought conditions that cut its 2016/17 harvested area by 26 percent in 2016/17 to just 5.19 million acres (2.1 million hectares). Projected increases in India, North Africa, Turkey, Iran and Egypt will offset the expected decreases in harvested area among the major exporters according to IGC data.

2017/18 carry-in stocks are estimated at a record large 235 MMT, up 6 percent year over year, if realized. However, the larger carry-in stocks are not anticipated to offset the forecasted decrease in production, and total world supply would decline 3 MMT to a projected 970 MMT.

For the first time since 2012/13, IGC expects total consumption to be greater than total production. Total consumption is forecast at 737 MMT, down an estimated 1 MMT from 2016/17. Food use will climb over 500 MMT for the first time ever, partially offsetting an expected decrease in feed and residual use due to smaller production in Canada and the United States.

IGC believes 2016/17 world wheat trade will shrink to 164 MMT, down 4 percent from the prior year, if realized. With consumption outpacing production, IGC expects carryout stocks to decrease marginally year over year to 234 MMT.


2. New U.S. Food Consumer Research Offers Insight for Wheat Importers and Processors

In 2015, The Center for Food Integrity (CFI) shared the results of ongoing research showing U.S. consumers want more and more information about their food and primarily expect food companies to provide it. Those U.S. consumers surveyed also look to farmers for information about food.

CFI’s research shows being more transparent about food commodities and products builds consumer trust as well as a greater understanding of the challenges and opportunities facing the U.S. food system.

USW is sharing this information because in a broader sense, U.S. research can give the world’s commercial flour millers and wheat food manufacturers information about how consumer attitudes may evolve in their countries.

CFI took its 2016 research to a new level with an innovative methodology called digital ethnography. Charlie Arnot, CFI’s chief executive officer, said in a release that the new research offers much deeper insights into distinct groups whose actions about where they buy food, or how they form opinions about products, processes, people and brands, influence the decisions of others.

This emerging influence is why more U.S. consumers are flocking toward the things about today’s food that they believe is more sophisticated and represents “progressive” production, CFI noted. Arnot said this is seen in increased demand for food that is less processed, with simple labels that describe what is in, and what is not in, the products. USW see a relevant example for the world’s millers and bakers in the sponge and dough bread production method, using only flour, yeast and water, compared to “no-time” bread production that requires more additives and conditioners. Innovations in plant breeding may also be a resource for consumer questions (see Plant Breeding Innovations to Help Meet Increasing Demand for Safe, Affordable Food).

“Understanding consumer attitudes toward food and how those attitudes influence the conversation allows food companies to more effectively talk with consumers,” said Leigh Horner, vice president, communications at The Hershey Company. “Consumers want to feel good about the products they buy for themselves and their families and want easy access to balanced, useful information to know they are making the right choices. These insights will help food companies build trust … and engage in meaningful conversations about the food their customers buy.”

The Center for Food Integrity is a not-for-profit organization that helps today’s food system earn consumer trust. Our members and project partners, who represent the diversity of the food system, are committed to providing accurate information and working together to address important issues in food and agriculture. The Center does not lobby or advocate for individual companies or brands. For more information, visit www.foodintegrity.org.


3. Plant Breeding Innovations to Help Meet Increasing Demand for Safe, Affordable Food

Through advancements in agriculture and the development of new crop varieties, humans have historically strived to meet the needs of a growing population and to develop a safe, reliable and sustainable food supply. How will we continue to meet this challenge, while dealing with a changing climate and threats of new pests and diseases? The American Seed Trade Association (ASTA) affirms that continued innovation is paramount to the future of agriculture and to our shared quality of life. Plant breeders including those who develop new wheat varieties will need access to available tools to responsibly meet these challenges.

The fundamental practices of plant breeders have not changed over time, ASTA notes. Plant breeders still select the best plants for their desired goal, which may be higher yields, disease resistance, improved end use characteristics or better nutrition. However, the tools and information that plant breeders use have evolved, allowing them to take advantage of the growing understanding of plant science and genetics. Today, with the capability to sequence plant genomes and the ability to link a specific gene or genes to a specific characteristic, breeders are able to more precisely make improvements in plant varieties. Breeders can also make specific changes in existing plant genes in ways similar to changes that could occur in nature.

Innovative breeding methods include a variety of tools that mimic processes that have been used in traditional breeding since the early 20th century. ASTA reports that breeders may opt to use the newer methods rather than classical breeding to reach the same endpoint more accurately and efficiently. As with more traditional breeding methods, some of the newer methods focus on using a plant’s own genes, or genes from the plant’s wild relatives, to create a desired characteristic, such as disease resistance or drought tolerance. It is a more precise way of creating genetic variation — a longtime goal of plant breeders. To read more about innovations in wheat breeding, visit http://www.heartlandinnovations.com/about-us/kansas-wheat-innovation-center.

It is important to note that seeds are comprehensively regulated by USDA. A key feature of the plant breeding process is extensive testing and evaluation starting early in the process and continuing until the final product is commercially available. These tests are based on procedures breeders have used for many decades to create new plant varieties that are safe to grow and eat.

The world’s farmers and food manufacturers understand that America’s agriculture producers face the very real challenge of providing for a growing population so future generations have access to the same diverse, nutritious and high quality food we enjoy today. ASTA believes improved breeding methods will help meet these needs more efficiently and economically through agriculture practices that preserve natural resources and biodiversity. These new breeding methods are accessible to both public and commercial plant breeders in developed and developing countries, and they can be used across all agriculturally important crops, including food, feed, fiber and fuel crops.


4. Farmer Leaders to Meet with Customers in Thailand and the Philippines

Every year USW sends teams of U.S. farmers overseas to visit markets they supply with wheat. These regional visits highlight the day-to-day work and marketing strategies of USW’s overseas offices and connect the farmers to their customers and industry stakeholders.

“The feedback we hear consistently from our customers is how much they appreciate getting to know the farmer firsthand,” said USW Vice President of Overseas Operations Vince Peterson. “These team visits give farmers the opportunity to follow their wheat overseas, and as businessmen and women, those personal connections are invaluable.”

USW Communications Specialist Amanda Spoo will lead USW’s 2017 South Asia Board Team to Thailand and the Philippines in February. The team includes Dustin Johnsrud, a wheat farmer from Epping, ND, serving his first four-year term on the North Dakota Wheat Commission; Denise Conover, a wheat farmer from Broadview, MT, and a director on the Montana Wheat and Barley Committee; and Clint Vanneman, a wheat farmer from Ideal, SD, and a current USW director representing the South Dakota Wheat Commission.


The team will first meet at the USW West Coast Office in Portland, OR, for briefings by USW and the Wheat Marketing Center, as well as visits to the Federal Grain Inspection Service and the local United Grain export terminal. During three days in Thailand, the team will visit the United Flour Mills (UFM) Baking and Cooking School as well as tour a flour mill, a bakery and an international food manufacturing plant. The second leg of the trip features two days in the Philippines, which includes tours of a mill and a food manufacturer. The team will also have the opportunity to attend the Filipino-Chinese Bakery Association Inc. (FCBAI) Bakery Fair.

The Thai milling wheat market has grown at a robust 5 percent for the past two years. USDA estimates that milling wheat demand reached 1 MMT for the first time in the 2012/13 marketing year and has increased to 1.24 MMT in 2016/17. Customers there imported about 50 percent of their milling wheat from the United States in 2015/16. In an evolving Thai market, consumer preferences are changing and there is increased demand for baked goods, biscuits and noodles. Over the past four decades, USW has worked closely with the UFM Baking and Cooking School in Bangkok to train and provide technical assistance to South Asian bakers and demonstrate the quality and value of U.S. wheat classes.

The Philippines was the third largest buyer of U.S. wheat in the 2015/16 marketing year with total imports reaching almost 2.2 MMT and was the largest buyer of both soft white (SW) and hard red spring (HRS). In this dynamic market, USW continues to help the milling and baking industry navigate changes by providing technical assistance and marketing training, and investing in activities to increase wheat flour consumption. USW established an office in Manila in 1961, allowing USW to maintain close, long-term relationships with industry leaders in the Philippines.

“Visiting these markets will give the farmers a unique look at the value of using high quality U.S. wheat and why these markets prefer it for their end-products,” said Peterson.

The team will post regular travel updates and photographs, and will report to the USW board. Follow their progress on the USW Facebook page at
www.facebook/uswheat and on Twitter at @uswheatassoc.


5. New Trade Policies Generate Some Whiplash
By Ben Conner, USW Director of Policy

As promised, on the first working day of his presidency, Donald J. Trump fulfilled his campaign promise to withdraw from the Trans-Pacific Partnership (TPP), and gave notice to Mexico and Canada that the United States intends to renegotiate some parts of the North American Free Trade Agreement (NAFTA).

For decades, U.S. presidents of both parties have been largely consistent in their views on trade agreements. The TPP vision began under President George W. Bush, and was almost fulfilled under President Barack Obama — two presidents who agreed on few other policy areas. They both believed that opening borders to (mostly) free flow of trade in goods and services would benefit its TPP partners in the Asia-Pacific region and, in turn, U.S. industries.

As producers of high quality wheat classes, U.S. wheat farmers are oriented towards international markets. Through decades of experience, the industry also recognizes that free trade agreements like TPP and NAFTA are good for our customers looking to expand their milling and wheat foods enterprises in part with U.S. wheat quality and value. For exporters and importers, these agreements also offer rules to ensure that the resulting “free trade” is also “fair trade” or close to it.

It is clear that the Trump Administration does see some value in the existing trade agreements. Its next action on trade was to request a panel at the World Trade Organization (WTO) dispute settlement body in the U.S. trade enforcement case about excessive Chinese subsidies. This request, made on January 25, starts the official litigation process under WTO rules.

One could be forgiven for experiencing a bit of trade policy “whiplash.” On Day 1, President Trump withdrew from TPP alleging it is not strong enough for American workers; on Day 3 his Administration used WTO rules to act on behalf of American farmers. The new trade enforcement rules under TPP would have been much stronger than WTO rules in most respects. Now that TPP is gone, the United States must work within rather cumbersome WTO rules across most of the Asia-Pacific, at least until new trade deals are negotiated.

The statement directing the Office of the U.S. Trade Representative to withdraw from TPP also directed it “to begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.” USW continues to support new agreements that expand free, rules-based trade, as TPP would have done, and encourage that agricultural interests be able to continue to provide input into those negotiations.


6. Wheat Industry News
  • Quote of the Week: "Our organizations took a long-view of the benefits TPP held out — a trade agreement that promoted economic growth abroad as a way to grow export sales and prosperity for farmers at home.” — Jason Scott, USW Chairman and a wheat farmer from Easton, MD. Read the full article here.
  • Wheat All About It! The Washington Grain Commission has started its own public podcast series, “Wheat All About It!” featuring 20-minute segments. The podcast is available via download online or on smartphones. Learn more about the podcasts on its Facebook page or on the commission’s website.
  • IGP Institute Expert Milling Course Offered in English and Spanish. Buhler, Inc. and the IGP Institute are hosting separate Buhler-KSU Expert Milling Courses for English and Spanish speakers. The course is designed for experienced millers to gain a better understanding of the processes and will teach them how to calibrate their mill to maximize efficiency. The English course is March 6 to 10, 2017, and the Spanish course is March 13 to 17, 2017. Both courses will be held at the IGP Institute Conference Center in Manhattan, KS. Click here for more information and to register.
  • Wheat Marketing Center Asian Noodle Technology and Ingredient Application Course. This hands-on course from June 6 to 8, 2017, will focus on better understanding noodle formulation, processing technology, evaluation techniques and the functionality of food ingredients in Asian noodle applications. For more information and to register vist http://wmcinc.org.
  • Northern Crops Institute Pasta Production and Technology Course. This course from April 18 to 20, 2017, introduces the fundamental and applied aspects of manufacturing extruded pasta products. Raw material quality criteria, specifications and processing variables and their impact on final pasta quality will be present in detail. The registration deadline is March 27. For more information and to register visit www.northern-crops.com/training-courses.


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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