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Opportunities Abound for Customers to Lock-in Competitive Prices

By Stephanie Bryant-Erdmann, USW Market Analyst

Sharply lower U.S. wheat production pushed futures prices to 2-and 3-year highs earlier this summer. However, bearish factors have recently pushed prices down. And when wheat futures are under pressure, wheat importers have the opportunity to lock in competitive prices and maybe even find some bargains.

Chicago Board of Trade (CBOT) soft red winter (SRW) wheat futures and export basis are both under pressure from a growing 2017/18 (June to May) supply, which USDA estimated at 14.2 million metric tons (MMT). The year-to-date average SRW Gulf FOB value of $196 per metric ton (MT) is $50 below the 5-year average, and this is a very good quality new crop (for more information on 2017/18 SRW quality, read “Millers and Processors Should Like the 2017/18 Soft Red Winter Crop” below).

Though U.S. hard red winter (HRW) production is forecast to shrink 30 percent in 2017/18, year-to-date Kansas City Board of Trade (KCBT) HRW wheat futures average $58 per MT below the 5-year average. This is due mainly to KCBT contract specifications and lower average protein levels in the 2016/17 and 2017/18 crops. While HRW futures trickle lower, protein premiums continue to widen. Historically, Gulf HRW protein premiums ranged between $1.50 to $4.40 per MT for each additional 0.5 percent of protein. Pacific Northwest (PNW) HRW protein premiums normally average $2.95 to $7.35 per MT. In 2017/18, that range is now $11 to $32 per MT for the Gulf and $8 to $18 per MT for the PNW.

The widening protein premiums represent the tightening global supply of higher protein wheat. Yet FOB prices for 12 percent Gulf and PNW HRW are $40 and $41 per MT below the 5-year averages, respectively (all U.S. wheat protein is based on 12% moisture). Customers who can use lower protein HRW can take advantage of FOB prices for ordinary/unspecified protein HRW, which are $73 per MT below historic levels at the Gulf and $57 per MT below the 5-year average in the PNW.  Preliminary data shows 2017/18 HRW average protein is 11.5 percent, slightly above last year’s final of 11.2 percent, but below the 5-year average of 12.6 percent.

The Minneapolis Grain Exchange (MGEX) hard red spring (HRS) wheat futures have retreated from the 3-year highs reached earlier this summer. However, U.S. and Canadian spring wheat production estimates are supportive of current price levels. StatsCan expects Canadian wheat production (excluding durum) to fall 7 percent to 22.3 MMT. MGEX HRS futures are hovering near the August 5-year average of $6.79 per bushel ($249 per MT), but HRS export basis levels are $15 to $25 per MT below normal at both PNW and Gulf export locations. With harvest still underway in the U.S. Northern Plains and Canada, customers can mitigate some of their risk by locking in these competitive basis levels.

Export pricing for soft white (SW) wheat is not tied to a wheat futures market, but as noted in the July 27 Wheat Letter, protein premiums are shrinking for SW due to the excellent quality and more normal protein distributions in recent crops. PNW FOB export prices for 10.5 max protein SW are $62 per MT below the 5-year average, while FOB prices for 9.5 max protein SW are $70 per MT lower.

Well-informed customers can take advantage of these buying opportunities and lock in lower prices for high-quality U.S. wheat in the next few weeks. Your local USW representative is ready to help answer any questions about U.S. wheat pricing or the U.S. wheat marketing system. To track U.S. wheat nearby prices, review and/or subscribe to the USW Price Report here.

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Harvest Report
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Assessing the Wheat Quality Council Tour 2017 Yield Estimate

Reprinted with Permission from “Agweek,” August 2, 2017

[Editor’s Note: The original source for this article is the North Dakota Wheat Commission.]

The annual Wheat Quality Council (WQC) tour of the spring and durum wheat region took place the week of July 24, with the final yield result sparking questions and sharp criticism, especially in social media circles. The North Dakota Wheat Commission (NDWC) would like to acknowledge these concerns from producers, assess the crop tour yield estimate, and clarify some misinformation.

The wheat tour is organized by the WQC, based in Kansas City, not the NDWC. The tours are just a small part of the overall mission of the Council. Its primary focus is being a collaboration point and organization to test and evaluate new wheat varieties for end-use quality, and to ensure U.S. wheat production is meeting the quality needs of the wheat industry. It also serves to expand communication and education between wheat producers, wheat breeders, millers, bakers and other end-users.

The tour calculated an average yield of 38.1 bushels per acre for hard red spring wheat. While this is the lowest yield in about ten years for the tour, it was higher than expected by many producers, considering the severe drought conditions gripping nearly all western North Dakota. The NDWC agrees that this overall yield was higher than we anticipated based on weekly crop ratings and producer reports, and the WQC average yield needs to be looked at in its full context.

Why was the tour estimate higher than expected? Most routes covered central and eastern parts of the state, and higher yielding areas of Minnesota, with a lower than normal percent of field counts in western areas. This was not done intentionally; the tour has never taken routes into the far west portion of the state or into eastern Montana (also in severe drought). In more normal years when crop conditions are more balanced across the region, this has not been as big of an issue. However, in a drought year like this with high abandonment, it led to a lower than normal percent of field counts from western areas. The yield estimates given at the end of each day and at the end of the tour are simple averages. They are not weighted by production and there are no county yield estimates released. For durum, the average yield came in at 39.7 bushels per acre, which is well above the July USDA estimate of 27 bushels per acre for North Dakota. The tour routes did not cover the main durum producing counties in the state, which are facing the most intense drought conditions.

Accounting for abandoned acres is difficult, since yield reports are based on actual acres harvested for grain, not planted acres. It is well known that large portions of the crop are being abandoned due to the drought conditions in western growing regions, including South Dakota and Montana. Participants on the tour noted that on some routes, anywhere from 30 to 50 percent of the fields had been abandoned.

These abandoned acres will certainly have a significant impact on final production for both hard red spring and durum, but may not be fully reconciled until USDA releases its final harvested acreage report for the 2017 crops. Normal abandonment rates in the spring wheat region are 2 to 3 percent. The eastern acres will likely see normal abandonment, but portions of the western drought areas could be as high a 40 percent. In 2002, North Dakota abandoned 13 percent of its wheat plantings, and the rate was 23 percent in the 1988 drought. The question of abandonment is a concern in the market and once fully understood, it will have a big impact on final production; it is something buyers, producers and all involved in the wheat industry will need to focus on.

USDA’s July production report projected an average spring wheat yield of 38 bushels for North Dakota, 61 bushels for Minnesota, 26 for Montana, and 34 for South Dakota. All the USDA data is based directly on producer surveys with no objective yield surveys taken in fields. The upcoming August and September USDA estimates will follow the same pattern for yield, but it is uncertain when major adjustments for abandoned acres will be included. In its July estimate, USDA pegged planted acres of spring wheat in Montana, South Dakota and North Dakota at 8.55 million, and harvested at 8.22 million, reflecting a 4 percent abandonment level. For durum in Montana and North Dakota, it pegged planted acres at 1.75 million, with expected harvested acres at 1.7 million, just 3 percent abandoned. If final harvested area ratios fall to levels seen in 2002 across the region, there is another 1 million acres that need to be taken out from final production equations. This is a significant number, and some producers say it will be even higher.

Emotions are high this growing season, especially for producers in the heart of the severe drought conditions. The unexpected higher yield estimate and decline in prices since the beginning of July due to several factors has intensified these emotions. The wheat tour result is just one piece of information the markets react to. Two of the three days of the tour, the market moved higher, with analysts citing other factors as well, such as technical sell points, corn and soybean weather forecasts, and the start of spring wheat harvest impacting trends. The final harvest and yield report from producers themselves, as well as a full recognition of abandoned acres, and both domestic and international demand factors, will be the final driving forces in establishing the value of the 2017 crop.

When the full extent of the drought-impacted production areas is considered, it certainly appears the tour overestimated both spring wheat and durum yield potential in 2017. For durum, it is significant since likely two-thirds of the main region was not part of the survey routes. For spring wheat, it may not be as significant because there is strong yield potential in the eastern third of [North Dakota and] into Minnesota that will offset some, but not all, of the reduction in harvested acres in the west … Tour organizers have noted the strong negative reaction from producers from the final tour yield results. And also heard from the NDWC and producers during the tour about concerns over the lack of accounting for abandoned acres and lack of field counts in western areas. It will lead to some reevaluation of routes in future tours, or recognition of the need to weight yield counts to better account for significant crop condition difference between regions.

The tour has been conducted for more than 20 years, and has provided a great opportunity to build connections between producers in this region and some of its most important customers. This year may have added some challenges, but it also provides an opportunity to expand communication along all segments of the industry. Milers and other end-users of wheat grown in our region need to have producers be successful, for them to be successful.

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Annual Spring Wheat Tour Sees Drought Taking Toll on Yield Potential

By Erica Oakley, USW Director of Programs

This week, the Wheat Quality Council hosted its annual hard red spring (HRS) and durum crop tour. Participants spent three days in North Dakota surveying this year’s crop and estimating yield. The tour, which surveyed a total of 496 fields, estimated weighted average HRS yield at 38.1 bushels per acre (bu/a), significantly lower than last year’s HRS average of 45.7 bu/a because of ongoing drought conditions in western areas. The durum weighted average yield was 39.7 bu/a, down from 45.4 bu/a in 2016. Results from six HRW fields showed a weighted average of 46.6 bu/a.

Participants on the tour always represent a wide range of the wheat industry, including millers, traders, media, farmers, researchers and government officials. There were 76 participants on this tour, who traveled along eight distinct routes covering most of the state’s wheat production. I joined my USW colleague Assistant Director of Policy Elizabeth Westendorf on the tour.

It was insightful to see the conditions on the ground after reading reports about the drought. It was also interesting to see the difference in field conditions along each of the routes over all three days.

On the first day, participants drove between Fargo and Bismarck, with two routes going farther into the western part of the state, and others covering western Minnesota and northern South Dakota. Conditions on the eastern side looked good, though there was evidence of drought stress. Reports from the west included evidence of much more severe conditions. The Day 1 weighted average yield was 38.8 bu/a, down from 42.9 bu/a in 2016. For HRS specifically, the yield was 37.9 bu/a, down from 43.1 bu/a in 2016. The scouts surveyed 207 fields on Day 1, of which 194 were HRS, 10 durum and three HRW.

On Day 2, the tour surveyed 225 fields, 188 of which were HRS; along with 34 durum and 3 HRW. The group moved from Bismarck to Devils Lake. The more western routes reported drought stress, though not as severe as the scouts saw in southwestern North Dakota on Day 1. Overall average for Day 2 was 35.7 bu/a, down from 46.5 in 2016. For HRS, the yield was 35.8 bu/a, down from 46.9.

The third day of the tour included a half day of crop surveying. The participants then all returned to North Dakota State University’s Northern Crops Institute in Fargo to compile the overall crop report. On Day 3, participants surveyed at total of 61 HRS fields and three durum fields. The Day 3 weighted average yield for HRS was 46.2 bu/a, down from 51.9 bu/a in 2016. The weighted average durum yield from just three fields was 46.2 bu/a, down from 52.1 bu/a in 2016.

The results reflect a snapshot of yield potential observed by the participants in the fields they scouted.

“There is still a question of abandonment because of the dryness,” said Dave Green, executive vice president of the Wheat Quality Council. “We do not yet know how much of the crop has been hayed — how much of it has been plowed under.”

View highlights and photos from the tour by searching #wheattour17 on Facebook and Twitter. For more information and for results from previous tours, visit the Wheat Quality Council’s website at www.wheatqualitycouncil.org.

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U.S. Wheat Production to Fall to Lowest Level Since 2002/03

USDA forecast U.S. 2017/18 wheat production at 47.9 million metric tons (MMT), down 24 percent year over year and 18 percent below the 5-year average. The reason: an anticipated 12 percent decline in average yield and the lowest planted acres since USDA records began in 1919. However, USDA expects 2017/18 U.S. beginning stocks to total 32.2 MMT, up 21 percent year over year and the most since 1988/89. As a result, total 2017/18 U.S. wheat supply is forecast at 80.1 MMT, down 10 percent from 2016/17 but still 1 percent above the 5-year average of 79.3 MMT. USDA expects average yield to be 46.2 bu/acre (3.10 MT/ha), which is close to the 5-year average of 46.6 bu/acre (3.13 MT/ha).

On June 30, USDA estimated total planted wheat area would fall 9 percent year over year to 45.7 million acres (18.5 million hectares). If realized, that would be 17 percent lower than the 5-year average. USDA expects 2017/18 harvested area to drop 13 percent from last year and 18 percent below the 5-year average to 38.1 million acres (15.4 million hectares).

USDA forecast 2017/18 hard red winter (HRW) production to total 20.6 MMT, down 30 percent from 2016/17 and 14 percent below the 5-year average. A smaller planted area and sharply lower harvested area led to the decline. U.S. farmers planted 23.8 million acres (9.63 million hectares) of HRW for 2017/18, down 10 percent from 2016. Due to weather and wheat streak mosaic virus, harvested area in top HRW-producers Texas, Oklahoma and Kansas is projected to fall 16 percent year over year. USDA forecast 2017/18 HRW beginning stocks at 16.1 MMT, up 33 percent year over year and 81 percent above the 5-year average. Total 2017/18 HRW supply is expected to total 36.8 MMT, down 12 percent from 2016/17.

Soft red winter (SRW) production is also expected to decline 11 percent to 8.33 MMT in 2017/18 due to fewer planted acres. USDA estimated total 2017/18 SRW area at 5.61 million acres (2.27 million hectares), 15 percent lower than 2016/17 and 30 percent below the 5-year average. In contrast to recent years, SRW harvest in the U.S. Southern Plains is progressing rapidly with good harvest conditions. On July 7, the USW Weekly Harvest report showed the average grade on 199 samples was U.S. #2 in a generally sound crop with DON levels that are significantly below the 5-year average. USDA estimates that SRW 2017/18 beginning stocks totaled 5.85 MMT, up 37 percent from 2016/17 and 47 percent above the 5-year average. The larger beginning stocks will offset reduced production, and total 2017/18 SRW supply is expected to increase by 500,000 MT year over year to 14.2 MMT.

USDA reported white wheat production will decrease 11 percent from 2016/17 to 6.91 MMT, but still 1 percent above the 5-year average, if realized. The decline is due to 3 percent fewer planted acres and slightly lower forecast yields. Idaho, Oregon and Washington have received ample moisture and winter wheat conditions there average 78 percent good to excellent. USDA estimates soft white (SW) beginning stocks increased 42 percent year over year to 2.86 MMT. The larger beginning stocks are expected to offset the lower production, leaving the 2017/18 SW supply unchanged year over year at 9.77 MMT.

Hard red spring (HRS) production is expected to plummet in 2017/18 to 10.5 MMT, down 22 percent from the prior year and the lowest since 2002/03, if realized. The average spring wheat yield is forecast at 40.3 bu/acre (2.73 MT/ha), down 15 percent from 2016/17. USDA also estimates farmers planted 10.3 million acres (4.17 million hectares) to HRS, 10 percent below 2016/17 levels. As of July 11, 55 percent of North Dakota is in a severe or extreme drought and the remainder of the state is abnormally dry or in a moderate drought. Similarly, 72 percent of South Dakota and 45 percent of Montana are in a moderate to extreme drought. As of July 10, just 35 percent of the spring crop was rated good or excellent and 39 percent was poor or very poor. In North Dakota, the largest HRS producing state, 36 percent of the crop is in good or excellent condition. USDA anticipates 2017/18 HRS beginning stocks of 6.39 MMT are 14 percent less than last year. Estimated 2017/18 HRS supply will total 16.9 MMT, down 19 percent year over year. USDA expects the HRS stocks-to-use ratio to fall to 22 percent in 2017/18, compared to 41 percent one year prior.

Smaller planted area and 30 percent lower yields are expected to reduce durum production to 1.55 MMT in 2017/18, down an estimated 45 percent from 2016/17 and 26 percent below the 5-year average. USDA expects average durum yields to sink to 30.9 bu/acre (2.08 MT/ha), compared to 44.0 bu/acre (2.96 bu/acre) in 2016/17. Durum planted area decreased this year as farmers responded to lower prices and large carry-out stocks. Spring-planted northern durum is grown primarily in North Dakota and Montana, and the Desert Durum® harvest in Arizona and California is nearly complete. USDA estimates 2017/18 durum beginning stocks at 980,000 MT, up 29 percent from the prior year and 45 percent greater than the 5-year average. Increased beginning stocks will not offset the drastically reduced 2017/18 production so USDA expects the U.S. durum supply will fall to 2.53 MMT, 29 percent below 2016/17 levels and 9 percent below the 5-year average. The U.S. durum stocks-to-use ratio will fall to 24 percent, on par with the 5-year average.

Even with reduced production for 2017/18, U.S. farmers stored significant amounts of grain last year, ensuring that customers can continue purchasing reliable, high-quality wheat. Customers are encouraged to contact their local USW representative to discuss purchasing strategies in this volatile global wheat market.

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Premiums for Protein on the Rise

By Stephanie Bryant-Erdmann, USW Market Analyst

Much needed rain across the U.S. Northern Plains this week gave emerging hard red spring (HRS) and durum crops a drink, but the rain was bookended by hot, windy conditions and likely did little to alleviate drought conditions.

Total rainfall for the region ran 60 to 75 percent below average for three months before this week’s storms, with Minot, ND — in the heart of the HRS growing area — recording just 1.23 inches (3 cm of rain) since March. The June 13 U.S. Drought Monitor showed 83 percent of North Dakota is in a moderate or severe drought and the remainder of the state is abnormally dry. Similarly, 79 percent of South Dakota and the eastern third of Montana are abnormally dry or in a moderate to severe drought.

The lack of rain and above normal temperatures is taking an early toll on crop conditions. On June 13, USDA reported 45 percent of spring wheat was in good to excellent condition, down 10 percentage points from the prior week and the lowest rating on record for that week. USDA noted 20 percent of the spring wheat crop was in poor or very poor condition, up from 11 percent the prior week and just 2 percent at the same time last year. Markets will be closely watching next week’s USDA crop condition report, and further deterioration of crop conditions will support Minneapolis Grain Exchange (MGEX) HRS wheat futures.

In the past two weeks, the nearby MGEX HRS wheat futures contract rallied 8 percent or 49 cents to $6.28 per bushel, the highest level since December 2014. Concern about the HRS crop and early harvest reports of low protein hard red winter (HRW) also support widening HRW protein premiums. Last June, the protein premium for 12.0 percent protein HRW (on a 12 percent moisture basis) averaged 12 cents per bushel ($4.59 per metric ton) over 11.0 percent protein HRW. This year, the same premium is 60 cents per bushel ($22 per metric ton).

With 60 percent of high protein wheat exports (13 percent protein on a 12 percent moisture basis or higher) originating from the United States and Canada, protein premiums are also widening due to Canadian crop and soil moisture conditions. In Saskatchewan, where Canadian farmers are wrapping up spring planting, topsoil moisture is rated 40 percent short or very short compared to 8 percent short or very short last year.

Farmers in northern Alberta and Saskatchewan are having the opposite problem — too much moisture. On June 6, the Alberta crop report rated topsoil moisture at 29 percent excessive in the Northeast and 40 percent excessive in the Northwest. Wet fields and harvesting 1.16 million acres (2.86 million hectares) of overwintered crops delayed spring planting progress in the province. Spring wheat planting was 95 percent complete on June 6, up from 84 percent the prior week but behind the 5-year average of 98 percent complete. Agriculture and Agri-Food Canada estimated total Canadian wheat production for 2017/18 will be 29.5 million metric tons (MMT), down 7 percent year over year due to a slight decline in planted area and a return to trendline yields.

“Conditions are variable right now with too much water in many northern areas, too little in the southern areas and probably very good conditions in between the two,” noted Robin Speer Executive Director of Western Canadian Wheat Growers Association. “We think the next two weeks become very important for this crop.”

Though HRS planted area is expected to be 7 percent smaller this year and yield potential for this year’s HRS crop is still unknown, U.S. farmers will continue to have the high quality, high protein wheat the world needs. In its June World Agricultural Supply and Demand Estimate, USDA pegged 2016/17 HRS ending stocks at 5.86 MMT, slightly more than the 5-year average of 5.28 MMT. The larger than normal ending stocks ensure the U.S. wheat store will always be open; the only unknown is how much customers will need to pay.

To read the latest USW Weekly Harvest report, click here.

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Profiling U.S. Wheat Sustainability: David Clough, Hard Red Spring Wheat Farmer

By Elizabeth Westendorf, USW Policy Specialist

David Clough’s career as a farmer has been a journey of constantly evolving technology and improving practices. Clough started farming in North Dakota in 1969. The first few years were difficult because as a first-generation farmer he didn’t have a farm legacy to get him started; he was on his own. Now, he has been farming for almost 50 years, and his farm is thriving. Over the years, Clough has grown HRS wheat, edible beans, sunflowers, soybeans and barley. He says sustainability is a smart business decision and helps ensure his farm’s survival in the future.

Clough is one of six U.S. wheat farmers featured in a USW series on wheat sustainability. These profiles show the differences in wheat production practices across the country and how those farming practices enhance the sustainability of U.S. agriculture.

“As farmers, we have always been conservationists,” said Clough. “The land is our livelihood. We need it, so we try to preserve it in many ways.”

Clough has made a lot of changes on his farm over the years. Now, he uses advanced GPS technology to increase efficiency and conserve resources on his farm. These features mean there are no overlaps when he applies fertilizer or crop protection products, which is good for the environment, but also good for business.

“We weren’t as sustainable when I first started farming almost 50 years ago, but we have changed and adapted and we will keep changing and adapting,” said Clough. “We’re doing it to survive here and to keep our land in good shape for future generations.”

In the years that Clough has been farming, he has had to adapt to new technology, unpredictable markets and lean years. But diversifying his business on the farm helped him weather those changes. Today he has many more crops to plant in rotation, which also helps improve soil health and control weeds. He also sells seed and previously sold farm equipment as a side business. Clough credits his success in farming to his ability to embrace new technology and new sustainable farming practices.

“You’re writing stories as you go through life. How many good stories are you going to write? I have had about 47 chances to tell my farming story. I only get one chance a year to get it right, and some years, you don’t get it completely right,” said Clough. “Each year is a different story, and the way we react cannot be the same either. That is what makes farming challenging and rewarding every year.”

Learn more about Clough and his farm at www.uswheat.org/factsheets. U.S. farmers, ranchers, fishermen and foresters also share their values, sustainability experiences and conservation practices at the U.S. Sustainability Alliance.

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No Difference Between Modern and Heritage Hard Red Spring Wheat for Celiac Incidence

By Dr. Senay Simsek, Bert L. D’Appolonia Cereal Science and Technology of Wheat Endowed Associate Professor, North Dakota State University, Fargo, ND

With the global demand for wheat remaining quite strong, there is a continual need to develop new varieties that have resistance to the latest disease threats, as well as improved yield, agronomic and end-use qualities. The varieties available today are improved over historic varieties, yet their basic genetic structure is essentially unchanged. In the Northern U.S. Plains during the past century, there have been many improved wheat cultivars, including many public varieties developed by breeders at North Dakota State University (NDSU).

Those of us involved in wheat research, production and processing fully accept that flour from HRS and other wheat classes as well as semolina is healthy and very nutritious for the vast majority of people. However, this has not prevented opposing points of view, and serious attacks against food products that contain gluten.

Celiac disease is a real and serious autoimmune condition that has gained a lot of attention in the past few years. Reputable medical organizations have determined that celiac disease is prevalent in about 1 of every 100 people worldwide. However, the over-simplified explanation that “gluten causes celiac disease” has likely hurt the reputation of wheat and wheat foods. There is a subtle but significant difference that demonstrates gluten alone does not cause celiac disease and, as our study showed, that new wheat varieties are not responsible for increased cases of celiac.

The gluten in wheat, which is essential for the elastic texture of dough, is composed of two separate proteins: glutenin and gliadin. Glutenin and gliadin are divided into distinct compounds, which in turn are made up of specific peptides (compounds of two or more amino acids in a chain).

A genetic predisposition to celiac must exist in individuals before the presence of certain gliadin and glutenin peptides may trigger an immune response that results in damage to the lining of the small intestine. These peptides are therefore considered “immunogenic.” Previous studies have found that α-gliadin proteins in wheat have a high number of immunogenic peptides.

In many ways, simply blaming gluten for celiac has helped spark quite a bit of unwanted attention from bloggers, authors, doctors and others making claims that modern breeding practices have changed wheat protein chemistry. This has resulted in a higher concentration of immunogenic peptides in modern wheat in comparison to historical wheat varieties, and that this is a contributing factor towards increased incidence of celiac disease.

To test this hypothesis, we studied the protein chemistry of 30 HRS wheat cultivars released in North Dakota in the last century. The presence of celiac disease-initiating-peptides was determined using untargeted mass spectrometry, and the amount of these peptides was quantified using a targeted mass spectrometric approach. We collaborated with Dr. Steven Meinhardt from the NDSU Plant Pathology Department and graduate student Maneka Malalgoda worked with us as part of her master’s thesis project. This project was funded by growers through checkoff funds from the North Dakota Wheat Commission.

In the qualitative analysis, we determined the presence of 15 immunogenic peptides. We found that the presence of these peptides is not related to the release year of cultivars and that these peptides appear randomly. In our quantitative analysis, we specifically tracked two prominent immunogenic peptides, PFPQPQLPY (DQ-α-I/ glia-α9) and RPQQPYPQ (glia-α20), and total α-gliadin. The results supported our previous findings. That is, the amount of the peptides varied randomly across the years that were analyzed, and there is no correlation between release year and the number of immunogenic peptides or total α-gliadin.

Thus, overall, our results demonstrate that modern HRS wheat is not higher in terms of celiac disease immunogenicity in comparison to historical HRS varieties.

Our team plans to submit the complete study report to a peer reviewed journal in the future.

Editor’s Note: Capital Press has reported that a researcher is working with the Kansas Wheat Commission at the Heartland Plant Innovations Center in Manhattan, KS, toward a “celiac-safe” wheat. In theory, celiac-safe wheat would still contain the gluten proteins necessary for making bread, but would have none of the immunogenic peptides which trigger an immune response in people with the genetic predisposition for celiac disease, said Chris Miller, director of wheat quality research for Heartland Plant Innovations.

“I think the problem of celiac disease is so big that it won’t be solved by a single group of researchers,” Miller said. “If we can identify the underlying cause of celiac reactivity in the process, and we have the means to reduce it, we should be working towards those types of goals.”

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Profiling U.S. Wheat Sustainability

By Elizabeth Westendorf, USW Policy Specialist

In 2016, Field to Market published its third National Indicators Report that assessed sustainability metrics in U.S. agriculture and looked at production of each crop on a national scale. Based on its environmental indicators, the report showed that wheat production has continued to improve, with particular progress in reducing soil erosion, over the past 25 years. The assessment results reflect yield improvements in wheat and demonstrate how farmers have adopted conservation practices. Reports like this help quantify sustainability and production improvement over time.

Assessing wheat sustainability on a national scale is difficult, however, because of the highly regional nature of its production. There are six U.S. wheat classes, grown in distinct regions and local micro-climates. Aggregate measures of sustainability are important, but they fail to capture the nuances of a crop that is grown across many different climates, soil types and farm environments.

To capture some of those nuances, USW has developed a series of farmer profiles that highlight regional sustainability in U.S. wheat production. Featuring farmers that grow a specific U.S. wheat class, the profiles highlight their practices, dedication to sustainability and unique growing conditions. They illustrate that while no two farmers are the same, they share a dedication to protecting their land for the next generation and a commitment to responsible stewardship.

The profiles include:

We encourage our customers and stakeholders to read the profiles at www.uswheat.org/factsheets. There is also more information about how U.S. farmers, ranchers, fishermen and foresters share their values, sustainability experiences and conservation practices online at The U.S. Sustainability Alliance.

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Premiums Rise as Supplies of High Protein Wheat Fall

By Stephanie Bryant-Erdmann, USW Market Analyst

As the Dec. 9 World Agricultural Supply and Demand Estimate (WASDE) confirms, global wheat supplies are at a record high this year. USDA increased its estimate for 2016/17 global wheat production to 751 million metric tons (MMT), up 2 percent from 2015/16 and 6 percent above the 5-year average. USDA now forecasts Australian wheat production to reach a record 33.0 million metric tons (MMT), up 35 percent year over year, if realized.

Higher yields tend to be associated with lower protein. As discussed in the Nov. 3 Wheat Letter, quality test results from Stratégie Grains, UkrAgroConsult, Canadian Grain Commission and other international agricultural groups show lower-than-average protein in the supplies from wheat-exporting countries.

Lower average protein content is problematic for many end-users. According to work done by Shawn Campbell, USW Deputy Director, West Coast Office, nearly all of the world’s high protein wheat exports (13 percent protein on a 12 percent moisture basis or higher) originate from just six countries: Australia; Canada; Kazakhstan; Russia; Ukraine; and the United States. High protein wheat production in these countries accounts for an average one-fifth of their total production in a normal year.

High protein wheat supply and demand factors are driving the growing premium between the Minneapolis Grain Exchange (MGEX), which trades hard red spring (HRS), and the Chicago Board of Trade (CBOT) and Kansas City Board of Trade (KCBT), which trade soft red winter (SRW) and hard red winter (HRW), respectively. Last December the intermarket spread between MGEX and KCBT averaged 36 cents. Fast forward to this December, and the MGEX to KCBT spread averages $1.47.

If the same high-yield, lower-than-average protein correlation also plays out in Australia, there will be little help from that corner for buyers searching for high protein wheat, further supporting the MGEX to KCBT and MGEX to CBOT spreads.

The demand for higher protein wheat also supports HRW protein spreads, which have widened significantly this year at both Gulf and Pacific Northwest (PNW) ports. Over the past 15 years, the average premium for 12 percent protein (12 percent moisture) at the Gulf has been 12 cents per bushel. This year that premium is 46 cents per bushel. The 15-year average premium for 12 percent protein HRW at the PNW is $1.05 per bushel. Since the beginning of the 2016/17 marketing year on June 1, that average premium is $1.64 per bushel.

Despite the increasing premiums for higher protein HRW and HRS, U.S. HRW exports are 25 percent ahead of the 5-year average and U.S. HRS exports are 29 percent ahead of the 5-year average. While the average protein content of HRW exports this year is down from last year due to increased demand for all HRW, 12 percent protein shipments account for 31 percent of all HRW shipments to date, up from 27 percent last year. The brisk pace of HRW and HRS exports and anecdotal reports from traders indicate buyers are breaking from the hand-to-mouth buying pattern that has been prevalent this past year to secure supplies of higher protein wheat. Forward contracting for high protein needs now makes sense.

When evaluating competing prices of high protein wheat, buyers should be sure to convert protein values quoted to a common moisture basis. Because water can be readily removed (by drying) or added (by tempering), exporters quote protein using a fixed moisture basis, but they do not all use the same basis. The United States specifies protein on a 12 percent moisture basis. The European Union and the Black Sea region typically use a dry-matter (0 percent) moisture basis. Australia uses an 11 percent moisture basis and Canada uses a 13.5 percent moisture basis. Below is an example of how moisture basis impacts actual protein received, and the conversion equation.

Please call your local USW representative if you have any questions about the U.S. wheat marketing system, U.S. wheat supply or moisture basis calculations.

Country Moisture basis used Example: 13% Protein Protein Converted to

Dry-Matter Basis
Australia 11.0 13.0 14.6
Black Sea 0.0 13.0 13.0
Canada 13.5 13.0 15.0
European Union 0.0 13.0 13.0
United States 12.0 13.0 14.8

Equation to calculate protein content based on different moisture basis:

Example: You have a sample of wheat with 10 percent protein on a 13 percent moisture basis (mb) and want to convert to 12 percent mb.

Equation:    Protein1/(100-mb1) = Protein2/(100-mb2)

10/(100-13) = Protein2/(100-12)

10/87=Protein2/88

Protein2= (88*10)/87 = 10.1%

/by

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