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Several wheat buyers from China, Dr. Byung Kee Baik, USW staff stand in front of the directory at the ARS Soft Wheat Quality Lab in Wooster, Ohio.
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China’s Soft Red Winter Purchases: The Right Wheat At The Right Time

The purchase by China of 1.12 million metric tons (MMT) of U.S. soft red winter (SRW) wheat for delivery in 2023/24 between Dec. 4 and 8 is a significant and, in terms of its volume, somewhat unexpected factor in the current market. The buyers clearly took advantage of a price opportunity, yet there are other influencing factors behind this buying surge to consider.

Already in the Market

China is in a wheat-buying phase driven in part by reported damage to its 2023 crop from rain at harvest. USDA expects China to exceed its WTO-agreed 9.6 MMT tariff rate quota again in 2023/24. By late November, China had already purchased a total of 1.01 MMT of four U.S. wheat classes, including 789,000 MT of SRW in 2023/24.

The U.S. Wheat Associates (USW) Price Report on Nov. 22 estimated SRW FOB export price out of the Gulf at $250 per MT, and on Nov. 30 at $258 per MT, a very competitive price relative to other wheat origins.

After the recent deals through Dec. 8, total 2023/24 SRW commercial sales to China to date now exceed 1.9 MMT. As a result, USDA raised its Dec. 8 estimate of total SRW sales in 2023/24 by about 817,000 MT to 4.76 MMT. If realized, that would be the largest volume of SRW exports since 2013/14.

A Trusted Source

Portrait of USW Regional Vice President Jeff Coey.

Jeff Coey

Why so much SRW? USW Regional Vice President Jeff Coey suggests that China’s buyers and flour millers are very familiar with this soft wheat class grown in the eastern third of the United States.

“It is a story that goes back decades,” said Coey. “First, our SRW is closest to the wheat grown in China. And the investment U.S. wheat growers have made in USW’s trade and technical service over many years has given Chinese buyers the confidence to import SRW, and other classes, when the opportunity arises.”

Coey said maintaining that education process was the goal behind USW’s investment of Agricultural Trade Promotion (ATP) program funds to bring a team of Chinese buyers to the United States in early November 2023. The visit included in-depth time with Federal Grain Inspection Service inspectors at an export elevator in Houston, Tex., as well as time with a SRW farmer and officials at USDA’s Agricultural Research Service (ARS) Soft Wheat Quality Lab (photo above) in Ohio.

“Those visits in particular were instructive,” said Coey. “Understanding the third-party inspection and certification process and the testing demonstrated at the ARS lab gave the buyers a sense of the design behind the quality data we share with them.”

Three people examine cookies at the USDA-ARS Wheat Quality Lab in Wooster, Ohio, in Nov. 2023.

Quality testing at the USDA-ARS Wheat Quality Lab in Wooster, Ohio, includes cookie spread testing, demonstrated during a November visit for a Chinese wheat buying team.

On the Ground Input

Ohio farmer and USW director Ray Van Horn was in the middle of his corn harvest when the Chinese buyers visited his farm.

“Ray and representatives of our member state wheat commission Ohio Corn and Wheat hosted the team on a crisp, clear afternoon in one of Ray’s fields with a beautiful, new stand of soft red winter wheat. It was a perfect place to share information about the wheat production decisions he makes and how that may affect buyers,” Coey said.

Ohio farmer Ray Van Horn talks with Chinese wheat buyers in his field planted with soft red winter wheat.

In a field seeded with a 2024 soft red winter wheat crop, Ohio farmer Ray Van Horn (right) discusses how he makes decisions and manages his crops with members of a Chinese wheat buying trade team sponsored by USW and hosted by Ohio Corn & Wheat in early November.

Adding value to this buying opportunity is the fact that U.S. farmers produced two large SRW crops with excellent quality in 2022 and 2023.

“Together all these factors helped build the confidence that these buyers can select U.S. soft red winter this year and have a deep supply of consistent quality with a ready domestic market,” Coey concluded.

By USW Vice President of Communications Steve Mercer

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Efficient Crop Information Seminars Help Support Wheat Sales to Nigeria

Based on information provided at a low-cost online crop information seminar, U.S. Wheat Associates (USW) encouraged Nigerian flour millers to continue purchasing U.S. hard red spring (HRS) between November 2022 and April 2023 even though the grade of available supplies had changed from the previous crop.

USW leverages annual crop quality seminars to give overseas buyers the information they need to adjust contract specifications and plan purchases based on supply and quality factors.

Online Option Expands Expertise

Choosing to conduct virtual crop information seminars with the five major Nigerian milling companies in November 2022 enabled USW Cape Town to include USW technical milling experts from the Casablanca office in the seminars. In addition, expenses to conduct the meetings were limited to the small portion of Foreign Market Development (FMD) funding that covers salaries for three USW non-U.S. citizen staffers.

Close up photo of hard red spring wheat kernels.

U.S. hard red spring (HRS) wheat.

USW knew that to meet Nigerian consumer preference for bread with a high loaf volume, millers there often contract for the HRS subclass “Dark Northern Spring” wheat, which has 75% or more “dark hard and vitreous (DHV)” kernels. At the crop information seminars, USW had to report that the 2022 U.S. HRS crop available through Gulf ports had graded 1 Northern Spring (NS) with an average of less than 75% DHV.

 

Crop Knowledge Pays

Yet USW was able to help the millers understand that specifying NS with a minimum of 60% DHV would yield flour with the functional characteristics to produce high loaf volumes.  As a result, two of the mills adjusted their NS/DNS specifications accordingly and purchased three shipments of HRS/NS between December 2022 and April 2023 for a total volume of 75,900 metric tons with an estimated total FOB value of $31 million.

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Grain Purchasing Course Increases Caribbean Market Demand

With funding from the Market Access Program (MAP), U.S. Wheat Associates (USW) educated some top U.S. wheat customers in the Caribbean Region about the methods and mechanics of grain purchasing and trading. Hosted at the Northern Crops Institute in North Dakota, the customized procurement course attracted milling companies from the Dominican Republic, Haiti, Mexico, Panama and Trinidad &Tobago.

Home to nearly 30 million people, the Caribbean’s proximity to the U.S. provides competitive advantage for U.S. wheat exports. USW considers the region a growth market for U.S. wheat and targets islands that have flour mills and sizeable end-product manufacturing. Giving millers updated tools to make purchasing decisions is seen as a solid business decision for the U.S. wheat industry.

Helping Customers See More Value

USW’s Grain Purchasing Short Course took place in June 2022 with a focus on U.S. wheat supply, global demand and grain merchandising.  The course also included a “Getting the Wheat Value You Want” presentation by USW and an opportunity to practice futures trading at North Dakota State University. Visits to the Port of Duluth-Superior, the CHS export facility in Duluth and meetings with the area grain trade were also part of the experience.

During follow-ups to the course, A Dominican Republic mill purchased an additional 3,000 metric tons (MT) of U.S. soft red winter (SRW) wheat and an additional 2,000 MT of hard red winter (HRW) wheat valued at approximately $1.9 million. A Haitian mill reported that, because of what it learned in the course, it was able to request and evaluate basis offers, FOB offers and CIF offers. Savings realized using these methods increased satisfaction with U.S. wheat. The company reported purchases of 36,000 MT of U.S. HRW from July 2022 through February 2023 valued at approximately $14.6 million.

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USW Helps Korean Flour Millers See Value in U.S. Wheat Purchases

The run-up in U.S. and global wheat prices following the Russian invasion of Ukraine made intensive trade service even more important for U.S. wheat importing customers. Foreign Market Development (FMD) program funds helped U.S. Wheat Associates (USW) gave Korean flour millers the experience needed to continue purchasing U.S. wheat in July 2022.

USW Seoul brought six flour milling executives responsible for wheat purchases through their membership in the Korea Flour Millers Industry Association (KOFMIA) to Montana, Washington State and Oregon to see the 2022 wheat crops and gain a better understanding of how the U.S. wheat supply chain ensures quality and value.

Loyalty is Strong

Even though U.S. wheat prices were higher than competing supplies, in August 2022, KOFMIA purchased 82,500 MT of hard red spring (HRS), hard red winter (HRW) and soft white (SW) wheat with an FOB value of $31.8 million. Based on information from the U.S. visit, KOFMIA saved money by adjusting SW protein specifications without compromising functional quality.

Then, in January 2023, one of the millers on the team contacted USW for guidance on a potential opportunity for SW prices. USW demonstrated the advantageous spread between SW and Australian soft wheat. The USW recommendation resulted in an additional purchase of 2,000 MT of SW with an FOB value of $616,000.

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USW’s Online Baking Program Putting U.S. Wheat ‘Top Of Mind’ In South America

An online training series developed by U.S. Wheat Associates (USW) in the early days of the COVID pandemic continues to have success in its effort to educate South American bakers and millers about the value and quality of U.S. wheat.

Specifically, the Online Baking Certification program promotes baking methods and processes that highlight all six U.S. wheat classes. What is significant about the program is that it’s able to reach a large number of bakery and milling staff who otherwise would not be able to take part in educational workshops. The virtual format allows participants to study at their own pace before testing through a handful of modules to earn certification.

Funded by the Agricultural Trade Promotion Program (ATP) – a USDA Foreign Agricultural Service (FAS) program created in 2018 to help U.S. agricultural exporters enhance their work in international markets and mitigate other obstacles to trade – USW’s online trainings have made great strides toward reaching the goal of boosting awareness of U.S. wheat.

Bakers and millers in Colombia, Peru, Chile, Ecuador, Bolivia and Brazil have been getting a thorough introduction to U.S. wheat and are learning how they can utilize it to improve the quality of breads and other baked goods.

The goal for U.S. wheat is ambitious yet simple: Sharing ways to improve baked products made with U.S. wheat could result in increased consumption in South America, which could lead to more customers for South America’s bakeries.

It could also potentially lead to a greater demand for U.S. wheat.

Putting U.S. Wheat ‘Top of Mind’

USW’s Online Baking Certification program build’s upon an effort to create awareness of U.S. wheat in South America. Pictured here is an in-person workshop conducted in USW’s Santiago office in 2019, prior to the COVID pandemic.

USW’s Online Baking Certification program builds upon an ongoing effort to create awareness of U.S. wheat’s value and quality in South America. Pictured here is an in-person workshop conducted in USW’s Santiago office in 2019, prior to the COVID pandemic.

Miguel Galdos, USW’s regional director in South America, says the goal of the Online Baking Certification program is to create better awareness of U.S. wheat.

“We want U.S. wheat to be top of mind for more bakers in the region, as well as for the technical staff at the milling companies,” he said. “We want to place a higher emphasis on reaching bakers

and technical people to perhaps give them a voice when it comes to wheat purchasing decisions.”

The fact that both bakers and milling staff are registering for the online course, too, is a sign that many in the industry want to take advantage of the opportunity to get experience working with U.S. wheat.

USW, the wheat industry’s export market development organization, works with wheat buyers, millers, bakers, food processors and government officials in more than 100 countries to promote the reliability and value of the six U.S. wheat classes. The new emphasis on creating awareness in South America and educate the people who work directly with wheat and wheat flour inside of bakeries is strategic.

Creating awareness – putting U.S. wheat top of mind of bakers – opens all kinds of opportunities.

“The key is that once they learn one aspect of U.S. wheat’s quality, they want to see what else there is to learn,” explained Galdos. “In this program, they must test out of one module to be able to move on to the next. Before earning the certification, they must complete a two-day practical course in person. Soon, after moving through the program, they are an expert on our product. At that point, U.S. wheat has developed a customer.”

Virtual Training has Become Commonplace

The virtual baking training includes six different modules that allow bakers and milling staff to progress at their own pace. Participants must pass a module to move on to the next, assuring they are exposed to all of U.S. wheat’s positive attributes.

The Online Baking Certification program includes six different modules that allow bakers and milling staff to progress at their own pace. Participants must pass one module to move on to the next, assuring they are exposed to all of U.S. wheat’s many positive attributes.

Launched in October 2020 as an alternative to in-person training workshops during the height of the COVID pandemic, the Online Baking Certification program has grown rapidly. USW recently added a Portuguese version to the original Spanish version to attract more Brazilian participation. USW also has plans to add a master-level course in the near-future.

The current program has registered nearly 5,500 students in two years. Thanks to a partnership between U.S, Wheat Associates, the Brazilian Wheat Industry Association and the Brazilian Bakery and Confectionery Industry Association, further growth is expected.

The six South American countries targeted by USW are the six that purchase U.S. wheat.

“The biggest wheat buyer in Colombia has had 15 staff members go through the whole program and earn certification,” said Galdos. “Chile has been another active participant, so we are seeing interest from a good portion of the region. Brazil is promising. We have met with the millers and bakers’ associations and U.S. Wheat Associates is going to be recognized by those associations at an upcoming event.”

The birth of the program came by necessity after in-person trainings and workshops were eliminated because of COVID. By March 2020, USW’s staff in Santiago, Chile, were putting together educational materials to complete the online bakery course – courses featuring baking theory, video instruction and assessment platforms were assembled. USW Baking Consultant Didier Rosada played a key role in the production of baking videos for the modules, which were finished in May 2020 and then sent to selected baking staff around the region for testing.

Opportunity for a Competitive Edge

Those who have completed USW’s Online Baking Certification are reporting they gained greater knowledge of traditional baking methods that work well with U.S. wheat.

Miguel Galdos, USW regional director in South America

Miguel Galdos, USW regional director in South America

Galdos emphasized that the online courses provide U.S. wheat with an advantage over competing wheat growing and exporting countries.

One example is the value of U.S. hard red winter wheat compared to Canadian wheat.

“One thing we stress to the bakers in South America is that many of the products they are baking do not require Canadian wheat that is higher in protein but more expensive,” Galdos said. “U.S. hard red winter wheat is a better option, and the content in the online baking courses teach them why. We show them how to bake with it. The problem is that the bakers are not trained. We want more bakers in the region exposed to the value and quality of U.S. wheat and how using it can benefit their products and their businesses.”

Along with putting U.S. wheat top of mind for South American bakers, Galdos pointed out a valuable additional benefit to USW’s online baking program.

“Through this certification process we are working with bakeries, collaborating with millers, collaborating with the people who either are or could be buying and using U.S. wheat,” he said. “We are educating them and creating awareness for U.S. wheat. At the same time, we are building relationships.”

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Image shows grain rail cars by a country elevator to illustrate USW comments to the Surface Transportation Board.
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ATP Program Brings Mexican Buyer to U.S. for Rail Shipping Observation

U.S. Wheat Associates (USW) recognizes that direct rail shipments of U.S. wheat to millers in Mexico provides a significant advantage over competing wheat exporting countries. USW has been increasing its efforts to facilitate these types of sales by educating Mexican buyers about the rail shipping process and efficiencies.

In June 2022, USW’s Mexico City Office used Agricultural Trade Promotion Program (ATP) funds to organize and lead a trade team from a Mexican company that is a major buyer of U.S. wheat to meet with U.S. farmers, grain cooperatives and grain elevators in Ohio and Kansas that have direct rail shipment capabilities. The trade team included the company’s wheat purchasing manager and production manager.

Improved Infrastructure

Expansion of U.S. exports to the market via rail has been made possible by significant investments and dramatic improvements in the Mexican rail infrastructure over the last 15 years. Today, there are 46 shuttle train facilities, including 9 new facilities that were inaugurated in 2020-2022, and 12 milling companies have the capacity to receive shuttle trains.

Along with demonstrating the capabilities of shipping U.S. wheat directly to mills in Mexico, the trade team led by USW was educated on the quality and supply of U.S. soft red winter (SRW) wheat and hard red winter wheat (HRW).

As a result of discussions with the trade team – both during and after the visits to Ohio and Kansas – the company bought SRW for the first time in more than three years. The estimated total for the 44,160 metric tons (MT) of SRW purchases that resulted from the trade team was $15.7 million.

 

 

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Image of people around a stainless steel industrial table discussing technical support topics related to serving global wheat importing customers.
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ATP Helps USW Build and Share Valuable Milling and Baking Technical Support

Adding value to U.S. wheat export supplies requires strong technical support and broad knowledge of the milling, baking, and processing needed to produce hundreds of unique food products. With 11 professional flour millers and bakers on staff, U.S. Wheat Associates (USW) uses technical support to add value and create a differential advantage for U.S. wheat classes over competing supplies that often cost less.

With additional funding through the Agricultural Trade Promotion (ATP) program, and help from its educational partners, USW created and implemented a multi-year activity to improve its already strong technical support. In February 2022 and in March 2023, USW held “Core Competency Training” sessions for technical and marketing staff from all its overseas offices. The objective was to help USW become more competent to help milling and baking customers grow their businesses using imported U.S. wheat.

Image shows people in an industrial baking lab discussing production and quality of baguette bread made with U.S. wheat as part of a technical support training program.

At the Wheat Marketing Center in Portland, Ore., in 2022, USW technical and marketing staff gathered to “learn so they can teach” overseas customers.

Building Core Competency

The in-depth sessions and discussions give newer USW technical and marketing specialists the chance to learn from USW’s senior experts working in distant regions. Exchanging information and techniques about different flour and wheat food products creates the chance to develop new product opportunities in new markets. In addition, the Core Competency Training workshops have given USW the shared knowledge to help solve problems and develop more successful training and technical support for customers.

“A clear knowledge of the customer’s business is vitally important to opening the door to U.S. wheat farmers as valued suppliers,” said Peter Lloyd, one of USW’s senior technical managers and a recognized global flour milling expert. “I believe the Core Competency Training has improved our ability to bring the greatest value where it makes the most difference – on the bottom-line profit for a supply chain manager, miller, or baker.”

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Team of bakers showing their test production.
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Technical Baking Seminar in Mexico Leads to Increased Use of U.S Wheat Flour

Mexico is the world’s largest market for U.S. hard red winter (HRW) wheat and soft red winter (SRW) wheat, and the third largest market for U.S. hard red spring (HRS) wheat. U.S. Wheat Associates (USW) works to maintain and grow market share of all three classes by providing technical training to bakers in Mexico that demonstrates ways to improve products made with U.S. wheat.

In December 2022, USW’s Mexico City Office used Market Access Program (MAP) funds to present a technical baking seminar for one of the top baking companies in Mexico. The seminar focused on improving current end-products by reinforcing the use of sponge and dough methods, with an emphasis on the production of bolillos, baguettes and ciabattas. Thirty-five participants attended the USW course, including 29 bakers and managers from several different store locations.

Within two months after the seminar’s conclusion, the baking company reported that, due to information it received at the USW seminar, it implemented the sponge and dough methods in 70% of its production centers. It also set a goal of reaching 100% adaptation of the methods by March of 2023. Additionally, the company reported a 4.7% increase in sales resulting in a corresponding increase in U.S. wheat flour usage valued at an estimated $584,000 per year.

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ATP Helps Show Philippine Bakers the Power to Demand U.S. Wheat Flour

U.S. Wheat Associates (USW) works to help wheat food companies expand product lines in which U.S. wheat classes have an advantage. This strategy demonstrates that bakers have the power to demand flour products made with imported U.S. wheat and helps increase total wheat consumption. From February 2021 through July 2022, USW leveraged its regional technical expertise and Agricultural Trade Promotion (ATP) funds to expose Philippine bakers to production methods and new products from South Korea.

Webinars on Korean Wheat Foods

USW hosted three webinars in February, May and June 2021 featuring baking demonstrations of trendy Korean baked goods with USW Seoul Food/Bakery Technologist, David Oh. Oh taught popular U.S. wheat flour Korean bread and confectionary product recipes formulated for the Philippine market. Nearly 2,000 Philippine commercial bakers participated and through surveys most said they could apply the recipes in their business. USW has identified 12 Philippines bakery retailers that added products from the seminars made with U.S. wheat flour.

In July 2022, USW technical staff serving the Philippines and South Korea organized and held a comprehensive bakery workshop in Seoul in cooperation with the Korea Baking School. The purpose again was to familiarize Philippine millers and bakers with Korean-baked products, recipe formulations, and production methods.  As a result of the workshop, four of the participants created a total of eight new bakery products made with flour milled from U.S. hard red spring (HRS) and soft white (SW) that are still on sale.

The Philippines remains the largest importer of HRS and SW in the world and, including hard red winter imports, purchases a total average annual volume of about 3 million metric tons of U.S. wheat.

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ATP Funds, FGIS to Help Train Importers to Recognize Wheat Grade Factors

U.S. Wheat Associates (USW) frequently uses the unique U.S. grain inspection system to demonstrate a competitive advantage to the world’s wheat buyers. Now, with additional funding from the Agricultural Trade Program (ATP), USW is expanding its effort to demonstrate the integrity of the U.S. wheat supply chain in cooperation with the Federal Grain Inspection Service (FGIS).

The international affairs office of FGIS provides educational training programs to overseas buyers explaining the mission of the agency to certify the physical and contractual integrity of U.S. wheat and other grains. In July 2019 in Peru, a country the imports a total of 2.0 million metric tons (MMT) of wheat each year, USW worked with FGIS agent José Robinson to conduct half-day seminars for 53 quality control managers from the country’s five largest wheat importing companies. The participants also shared their processes with Robinson, showing examples of the wheat they inspected in plant. As a result, the managers were able to test their abilities to conduct similar inspections with guidance from directly from FGIS.

Under ATP, the USW South American regional representatives based in Santiago, Chile, plan to repeat this training activity in four other South American countries over the next two years.

USW believes this service for wheat importing customers gives them a deeper understanding of and increased trust and confidence in the FGIS inspection and certification process. The changes implemented in the mills following the training sessions should result in fewer discrepancies between the FGIS grade and the results of local, in-plant inspections, leading to increased satisfaction with U.S. wheat.

In addition, USW has earmarked ATP funds to conduct a similar FGIS Grain Inspection and Certification training session at the African Milling School in Nairobi, Kenya, in 2019. This session will be in part a “train the trainer” session for faculty members from the African Milling School and from the IFIM flour milling school in Casablanca, Morocco. Technical officials from the Office of Cereals in Algeria, the agency that plans and purchases the country’s wheat imports, and other participants from selected organizations in Sub-Saharan Africa will also participate.

Working with these schools extends knowledge of U.S. wheat value to flour millers throughout North and East Africa, as well as the Middle East. That is increasingly important in these competitive markets, especially in educating millers and processors in the growing cake and confection markets that need the specific information about the differential performance of U.S. soft red winter (SRW) and soft white (SW) wheat classes.

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