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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. U.S. Wheat Sales 11 Percent Above Average Near Marketing Year End
2. Mixed Conditions Seen in Smaller SW Crop
3. Track the Wheat Harvest with the USW Harvest Report
4. Statement on TPP Negotiations
5. Brazilian Millers Set to Examine HRW, SRW Crops
6. Wheat Industry News

Online Edition: Wheat Letter – May 29, 2014 (

PDF Edition: (See attached file: Wheat Letter - May 29, 2014.pdf)

USW Harvest Report:

1. U.S. Wheat Sales 11 Percent Above Average Near Marketing Year End
By Casey Chumrau, USW Market Analyst

The 2013/14 marketing year officially ends on May 31, but we will not know for couple of weeks if U.S. commercial wheat sales will meet USDA’s forecasted 32.3 million metric tons (MMT). However, U.S. exports have already far exceeded last year’s sales, a mark surpassed on Feb. 20.

As of May 15, total known outstanding sales and accumulated exports of all classes of wheat for the 2013/14 marketing year were 31.8 MMT, 16 percent greater than total 2012/13 exports of 27.4 MMT and 11 percent greater than the five-year average of 28.5 MMT. Sales increased for four of the six U.S. wheat classes.

Hard red winter (HRW) exports of 12.0 MMT, as of May 15, were 14 percent higher than the same date a year earlier. USDA predicts total HRW sales will reach 12.4 MMT, 3 percent higher than the five-year average. Brazil, which imported an average of 319,000 MT of HRW the last five years, has purchased 4.09 MMT in 2013/14, accounting for 34 percent of total HRW sales as of May 15. A small Argentinian harvest for the second consecutive year resulted in government-imposed export limits and forced Brazil to look outside the Mercosur trading block to fulfill the unmet demand. Sales to most of the other top 10 HRW customers from 2012/13 are lagging last year’s pace, mainly due to higher prices relative to competitors. Colombia, in the second year of the free trade agreement with the United States, increased year-over-year imports by 39,000 MT to 454,000 MT, compared to the five-year average of 328,000 MT.

The People’s Republic of China has accounted for 47 percent of total 2013/14 soft red winter (SRW) sales as of May 15. China strives to produce enough wheat to keep stocks at relatively high levels but with increasing consumer demand that has not been possible. As a result, purchasers took advantage of high-quality wheat at attractive prices to buy 3.57 MMT of SRW to date. For comparison, annual SRW exports to China the last five years averaged 117,000 MT. The higher Chinese sales this marketing year helped offset lower exports to eight of the other top 10 customers from last year, including a 70 percent decrease in Egypt, which had access to abundant supplies of lower priced Black Sea wheat in 2013/14. Total SRW sales surged 41 percent to 7.56 MMT as of May 15, up from the five-year average of 4.21 MMT and the most since 1989/90.

Hard red spring (HRS) sales are also ahead of last year’s pace. Unlike HRW and SRW, where a single country accounted for most of the increase, the majority of top 2012/13 HRS customers slightly increased imports, resulting in an overall 18 percent sales boost. Total HRS sales were 7.12 MMT as of May 15, up from 6.02 MMT last year on the same date and the five-year average of 6.74 MMT. Higher sales to the Philippines, Taiwan, China and Venezuela offset a 12 percent drop in sales to Japan, typically the top HRS customer.

Exports of hard white and soft white (SW) wheat fell a combined 1 percent from last year to 4.58 MMT as of May 15. Noting that 2012/13 included unusually high sales of SW to Japan and South Korea for feed use, white wheat sales fell behind pace early in 2013/14 following the discovery of an unapproved but isolated GM event last May, then steadily picked up as the year progressed. As of July 25, white wheat exports were 18 percent behind 2012/13. As of Dec. 26, sales were just 11 percent below last year’s pace. Sales to Japan, the top white wheat importer on average the last five years, fell 19 percent year-over-year to 854,000 MT. However, increases to the Philippines, South Korea, Indonesia and Thailand helped make up the difference.

Despite higher exports to the EU countries, durum sales were 7 percent behind 2012/13 as of May 15. Total sales of 532,000 MT fall well short of the five-year average of 910,000 MT. High prices compared to Canadian durum have hindered exports the past few years. Venezuela was the only country outside of the European Union to increase imports significantly, up from 51,000 MT last year to 82,000 MT in 2013/14.

USW will report final 2013/14 commercial sales as soon as the data is available. Throughout the marketing year, USW tracks current U.S. wheat sales on the USW website at

2. Mixed Conditions Seen in Smaller SW Crop
By Shawn Campbell, USW Assistant Director, West Coast Office

Since January, Pacific Northwest (PNW) SW wheat prices have trended upward. However, increasing prices have had less to do with SW crop conditions than with the devastating drought in the Southern Plains pushing up the price of all U.S. wheat classes. For wheat buyers eyeing the 2014/15 SW crop, several factors bear watching leading up to start of harvest in July.

USDA reported SW planted area in the Pacific Northwest down slightly compared to last year by an estimated 100,000 acres (40,500 hectares), bringing the total to an estimated 3.3 million acres (about 1.3 million hectares). Dryland farmers in the PNW have few other crop options than wheat so the loss appears mainly due to farmers in areas like southern Idaho and Oregon’s Willamette Valley switching to more profitable, competing crops.

USDA expects SW yields to average less than last year due to dry conditions across many parts of the growing region. While most winter SW areas had good planting conditions last fall, a bitterly cold winter and dry spring have hurt the crop in many places. Reports from Oregon farmers are all over the board, with some reporting SW in excellent condition, while neighbors report a more negative outlook. Washington growers are divided as well, with very dry conditions reported in the central part of the state, and improving conditions moving eastward. Any additional rain for dryland SW over the next few weeks will still help improve the overall condition of the crop. Idaho farmers are comparatively jubilant with a very healthy looking crop thanks to timely rains in early spring. An unseen benefit to the drier conditions is that there have been very few reports of disease pressure in this year's crop.

Heading into 2014/15, USDA reports the lowest SW beginning stocks since 2008/09. High corn prices in recent years resulted in a large amount of SW used as feed rations, both domestically and overseas in countries like Japan and South Korea. This, in turn, has tightened SW stocks. While corn supplies have rebounded and feed prices have fallen, it will take more than one season to rebuild SW stocks to more comfortable levels.

The club wheat crop, key to the U.S. supply of Western White wheat, is potentially concerning. Club wheat supplies have dropped the past three years and will likely drop again this year. Despite increasing premiums for club wheat since last September, farmers planted less club this year. Planted area will likely to be down by 10 percent to the lowest level since 2009/10. Club wheat is relatively more susceptible to sprouting problems, and the club-growing region was hit hard by an unusually wet harvest season last year.

Overall, SW and club production will likely be lower than last year with supplies down to levels last seen in 2009/10. A portion of this lower supply will help offset reduced demand for SW as animal feed. However, if growth in demand for SW continues this year, as it did in China and Southeast Asia last year, supplies are likely to be tighter than in the past few years.

3. Track the Wheat Harvest with the USW Harvest Report

Every year, USW tracks U.S. crop conditions and wheat harvest progress in a weekly Harvest Report. With wheat harvest expected to be in full swing this week in the far southern plains, basic crop quality results for new crop HRW and SRW wheat will soon start coming in. USW posts the Harvest Report each Friday, including a first look at functional quality, on our website at The first report of the new year was posted May 22.

Wheat harvest started last week on a very limited basis in central Texas. Challenging growing conditions for the HRW crop in this region (central and west Texas, Oklahoma and Kansas) have sharply reduced yield potential. Farmers there have experienced a multi-year drought in addition to a hard freeze in April followed by large temperature swings and sustained high winds. The May 22 Harvest Report stated that the crop might yield as much as 40 percent less than last year, which was also quite stressed. Wheat grown north and northwest of Kansas is still in relatively good condition.

Another way to follow the harvest is through “All Aboard Harvest,” a feature sponsored by High Plains Journal. Harvest crews file regular reports as they make their way from Texas to the Dakotas. Sign up for daily e-mails from the crews at or follow them on Twitter at @AllAboardTour or on Facebook at

4. Statement on TPP Negotiations

USW and the National Association of Wheat Growers joined USA Rice Federation, the National Pork Producers Council and the International Dairy Foods Association in the following statement on Trans-Pacific Partnership negotiations.

Japanese Minister of the Economy Akira Amari’s recent statement in Singapore that none of Japan’s sensitive agricultural items will be fully liberalized may signal the end of hopes for the Trans-Pacific Partnership (TPP) to become a truly comprehensive and forward-looking 21st Century agreement. A country cannot shield its primary agricultural products from competition and still claim to be committed to a high-standard agreement liberalizing essentially all goods.

When Japan joined the TPP negotiations, it agreed “to pursue an agreement that is comprehensive and ambitious in all areas, eliminating tariffs and other barriers to trade and investment,” as stated in the earlier (Nov. 12, 2011) TPP Trade Ministers’ Report to Leaders. Yet according to several reports from the TPP Ministerial meeting just completed in Singapore, Minister Amari has now flatly told the other negotiating countries that Japan will not abolish tariffs in the five agricultural sectors it considers “sacred.” Those five sectors include seven basic agricultural products, covering most of agricultural production: dairy, sugar, rice, beef, pork, wheat and barley. They also include many downstream products made from those seven items, such as flour and flour mixes made from wheat and rice.

The broad exemption that Japan is demanding will encourage other partner countries to withhold their sensitive sectors as well. The result would fall far short of a truly comprehensive agreement that would set a new standard for future trade agreements. In fact, the TPP envisioned by Japan, if it stands, would be the least comprehensive agreement the U.S. has negotiated since the 21st Century began.

U.S. negotiators still have a chance to push Japan to provide meaningful agricultural market access in the agreement. Failing that, the alternative is suspending negotiations with Japan for now and concluding a truly comprehensive agreement with those TPP partners who are willing to meet the originally contemplated level of ambition. It is a big step, but one that will be justified if Japan continues to refuse to open its agricultural sector to meaningful competition.

5. Brazilian Millers Set to Examine HRW, SRW Crops

Five executives representing the largest flour mills in Brazil will be in the United States June 1 to 7 to learn more about the condition of the U.S. SRW and HRW wheat crops as well as the wheat supply system. The team is well-timed as Brazilian millers, including the companies represented on this team, are the largest importers of U.S. wheat this marketing year, purchasing nearly 4.3 million metric tons (158 million bushels).

USW, the Maryland Grain Producers Utilization Board, the Virginia Small Grains Board and Kansas Wheat are sponsoring the trade team visit.

“We are very pleased to bring these millers to the United States because we have a unique window of opportunity to build demand for U.S. wheat in this market,” said Osvaldo Seco, USW assistant regional director for South America, who will travel with the team.

Argentina normally supplies most of Brazil’s imported wheat but could not supply enough to Brazil in 2012 and 2013. These millers have now had success milling HRW and SRW, so this trade team visit was planned to demonstrate why they should continue importing more U.S. wheat in the future.

Brazil imports around 7.1 million metric tons (260 million bushels) of wheat on average, putting Brazil in the list of the world’s top wheat buyers. Before the early 1990s, Brazil originated most of that wheat from the United States. However, the Mercosur free trade agreement allowed millers to import Argentinian wheat duty free and established a 10 percent tariff on wheat from non-Mercosur countries like the United States. When Argentina severely restricted wheat export licenses in 2013, USW helped Brazilian millers successfully petition their government to suspend that tariff from April to November. That opened a big opportunity for USW to promote the value of U.S. wheat.

By visiting farms in Maryland and Kansas, meeting with commercial elevator managers and seeing the USDA grain inspection system, these executives will go back to their mills with a greater knowledge of how to specify for the best quality and value from the U.S. HRW and SRW supply, Seco said. In turn, he added, they will have the confidence to consider buying more U.S. wheat even when more Argentinian wheat is available, in part because the demand for higher quality wheat foods, including whole wheat products, is growing in Brazil.

6. Wheat Industry News
  • Improving Waterway Infrastructure. Both chambers of the U.S. Congress passed the Water Resources Reform and Development Act in May, authorizing 34 water resources projects across the country such as dredging ports on the East Coast and Gulf of Mexico to handle deeper drafts from larger ships. For more information, visit
  • Ardent Mills Required to Divest Four Mills. The U.S. Department of Justice announced that ConAgra Foods Inc., Cargill Inc., CHS Inc. and Horizon Milling LLC must divest four competitively significant flour mills in order to proceed with the formation of Ardent Mills, their joint venture. For more information, please visit
  • U.S. Botanic Garden Opens Wheat Exhibit. The United States Botanic Garden in Washington, DC, opened its Amber Waves of Grain exhibit on May 24, inspired by Dr. Norman Borlaug’s statue installation in the U.S. Capitol. The exhibit will include an Amber Waves of Grain festival on June 14. For more information, visit
  • WMC Artisan Bread Baking Short Course. The Wheat Marketing Center in Portland, OR, will hold its Artisan Bread Baking Short Course June 16 to 20, 2014. For more information or to register, visit
  • IGP Milling Courses. The International Grains Program in Manhattan, KS, will have its Buhler-KSU Executive Milling Course in English July 7 to 11, 2014 and its Spanish version Aug. 11 to 15, 2014. For more information or to register, visit
  • NCI Rheology of Wheat and Flour Quality Course. The Northern Crops Institute in Fargo, ND will hold its Rheology of Wheat and Flour Quality short course July 15 to 17, 2014. For more information or to register, visit
  • Thank you to John Pitchford, director of the Office of Departmental Initiatives and International Affairs at USDA Grain Inspection, Packers & Stockyards Administration, who is retiring at the end of June after 39 years of service. Best wishes for all future endeavors!
  • Welcome to Patrick Hackenberg and Lisa Long, who joined the International Grains Program as educational media coordinator and event coordinator, respectively. For more information, visit

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