Hard Red Winter Archives - Page 2 of 12

durum, Hard Red Winter, Mexico, Soft Red Winter, South America

USW Board Team Trip Helped Producers Explore Opportunities for U.S. Wheat in Colombia, Ecuador and Mexico

Exploring opportunities for hard red winter (HRW), soft red winter (SRW) and durum wheat in both established and emerging markets, U.S. Wheat Associates (USW) led a team of wheat producers and industry representatives to meet with customers and learn about milling and baking processes in Mexico, Ecuador, and Colombia.

USW’s Latin America Board Team included Chet Creel of Texas, Michael Edgar of Arizona, and Keith Kennedy of Wyoming.

“We had a really good group with diverse interests that visited some very important markets to see how millers and bakers use the quality wheat produced back home – and why the quality is important to them,” said USW Director of Trade Policy Peter Laudeman, who led the team on the 10-day mission. “The goal of these Board Teams is to provide a broad canvas of a region, on-the-ground, face-to-face experiences in the mills, in the bakeries, and at the transportation facilities that support movement of U.S. wheat into the countries.”

USW's Latin America Board Team poses for a photo in front of a Grupo Trimex Facility in Mexico following a tour and discussions about U.S. wheat

USW’s Latin America Board Team poses for a photo with USW staff and milling staff in front of a Grupo Trimex facility in Mexico following a tour and discussions about U.S. wheat.

Mexico: U.S. Wheat’s Top Customer

Stops in Mexico included Guadalajara and Mexico City. Outside of Guadalajara, the team visited the Grupo Kasto mill, shuttle train and elevator facility that receives direct rail shipments of U.S. wheat. shuttle train and elevator facility that receives direct rail shipments of U.S. wheat. From there, the team traveled to the Guadalupe Flour Mill to meet with owners of the mill. The Guadalajara portion of the trip also included a tour of the OhLaLa! baking facilities.

In Mexico City, team members visited the USW office, where they learned more about Mexico’s milling industry and efforts to promote wheat foods in the country. Visits to Grupo Trimex and Harinera Anahuac flour mills followed, helping the team explore opportunities for U.S. wheat.

“It was clear U.S. Wheat’s staff has a great relationship in Mexico and there is a lot of trust,” said Creel, Vice Chairman of the Texas Wheat Producers Board and a HRW wheat producer. “We were able to see how activities like technical servicing and educational courses have helped the Mexican milling businesses. We also saw the value of the relationships the representatives in Mexico been built and maintained over the years.”

Ecuador and Colombia: Markets With Great Potential

After Mexico, the team moved on to Ecuador, where it met up with USW representatives serving South America from an office in Santiago, Chile. In Quito, Ecuador, the team visited flour mills and a cookie factory before moving on to Cali, Colombia, for a mill visit. The next day, in Bogota, the team toured a bakery and a pasta plant that uses U.S. durum wheat.

The USW Board Team during a tour of Grupo Superior in Ecuador.

“We had some very good interactions at each stop and had some chances to discuss opportunities for U.S. wheat as a whole,” said Edgar, a USW Board Member and member of the Arizona Grain Research and Promotion Council. “For me, a durum grower, it was valuable to specifically see where my class of wheat stands and the places where it could carve out a bigger share.”

While Mexico is the top customer of U.S. wheat, both Ecuador and Colombia have great potential to increase imports.

“We were able to meet with some companies that really prefer the quality that they’ve seen in U.S. wheat and want to continue to buy,” said Kennedy, Executive Director of the Wyoming Wheat Marketing Commission. “They have definitely seen some pricing pressures, and the competition is there, but customers in both Ecuador and Colombia were very clear that the quality of the U.S. crop is second to none.”

Developing Customers

Laudeman noted that Colombia and Ecuador have a huge amount of room for per capita wheat consumption growth.

“We are looking toward the mid- to long-term opportunities to be able to sell more wheat and boost wheat foods as part of the diets in each country,” said Laudeman, who added that the team noticed interest in soft red winter (SRW) wheat in Ecuador. “As we see bigger crops and healthier crops in the future, it is going to be an easy decision for them to continue to buy U.S. wheat. Meanwhile, we will continue to work on any policy challenges that might be barriers to our market access in these countries. We will certainly keep monitoring and make sure that we can keep the policy landscape healthy. We will also continue to explore opportunities for U.S. wheat.”

September 13, 2023/by Ralph Loos

Hard Red Spring, Hard Red Winter, Hard White, Soft White, Sustainability

Washington Farmer’s Job Titles Are Many; Add ‘Sustainable Producer’ to the List

A business card to describe the jobs Art Schultheis fills in a typical year would be too big for any pocket.

“I drive a tractor and harvest with a combine – all the things people think a farmer does,” explained Schultheis, a fifth-generation farmer from Colton, Washington. “But behind the scenes I’m also a mechanic, I’m a bookkeeper, and, like most farmers, I have a whole long list of other jobs.”

Planning Ahead

On a late August afternoon, in a wheat field a dozen or so miles north of his home, Schultheis greeted a film crew (photo above) with a glance to the sky and a shrug. A soft rain had begun to fall, bringing that day’s harvest to a reluctant halt.

“I am not going to even try to predict it,” he announced to the film crew, while taking another glance upward. “But I think we may as well plan to get back at it tomorrow.”

Yet another job for Schultheis: planning strategist.

The film crew was commissioned by U.S. Wheat Associates (USW), which is collecting “Stories of Stewardship” from wheat farmers across the country to highlight their efforts to produce high-quality crop using sustainable practices.

In August, the 61-year-old Schultheis was harvesting his 40^th wheat crop. His diversified operation typically grows hard red winter (HRW), soft white winter (SRW), hard red spring (HRS), and hard white spring wheat. The farm has also produced barley, garbanzo beans, lentils, Kentucky bluegrass seed, oats, canola, and alfalfa. There are also 10 beef cows to take care of.

Photo shows two men, farmers, standing next to each other and looking to the left side of the photo; in the background there is a tractor pulling a wagon through a golden wheat field.

Colton, Washington, farmers Art Schultheis, right, and his son Kyle Schultheis.

An Eye to the Future

Schultheis took over Diamond S Farms from his father more than three decades ago. With an eye to the future, his son Kyle has returned to the farm and is being mentored to one day take over all his father’s jobs. Bringing Kyle into the mix is part of the family’s approach to sustainability.

“To me, there are three parts to sustainability,” Schultheis explained. “Number one is I want to leave the land in better shape than when I started farming. Number two is my farm must be profitable. If you are not profitable, you are not sustainable. Number three is that you need a succession plan for your farm to continue to operate through generations.”

As the film crew set up the next morning to capture his story, Schultheis pointed out that sustainability is second nature to him and all other farmers.

“We have always cared for the land, but now we have tools that we never had decades ago,” he said. “We can do things today that we could not do in the past, and the soil keeps producing at higher and higher levels. One of my hopes for Kyle is that when I’m gone, he can stand here and say he learned things from me and makes the land even better than it will be once I call it quits.”

USW’s Stories of Stewardship series will be available for all to see and explore. It is expected to be of special interest to customers of U.S. wheat around the world.

Responsible as Possible

“I think consumers here in the United States and across the world are asking questions about where their food comes from,” said Schultheis. “On our farm, we do not raise commodities, we are raising food. And we need to be as responsible as possible because we know the end-consumer is making that connection between where food comes from and how it is produced. To be honest, it makes my job a lot more fun.”

And by his “job,” Schultheis means every single one of them.

August 29, 2023/by Steve Mercer

Hard Red Spring, Hard Red Winter, Hard White, Kansas Wheat

African Trade Team Explores U.S. Wheat Supply Chain, Meets Farmers in Kansas, North Dakota and Minnesota

Wheat buyers from Nigeria and Kenya join North Dakota farmer Scott Huso in one of his fields to get a look at this year's crop.

Wheat buyers from Nigeria and Kenya join North Dakota Wheat Commissioner and farmer Scott Huso in one of his fields to get a look at this year’s crop.

Pictured above at the Port of Duluth in Minnesota: Chad Wiegand, USW Regional Director for Sub-Saharan Africa; Vigneswaran Sinnathurai, Vice President of Milling at Olam; Alok Khator, Vice President and Regional Manufacturing Head at Olam; Savan Sunil Shah, Director at United Millers LTD; Coreen Berdahl, Vice President of Operations at Minnesota Wheat.

Buyers from two African markets that are very different – yet equally important to U.S. wheat farmers – recently took a close look at the hard red winter (HRW), hard red spring (HRS) and hard white (HW) wheat supply chain by visiting farms and facilities in Kansas, North Dakota and Minnesota.

Led by U.S. Wheat Associates (USW), the trade team included representatives of companies in Nigeria and Kenya. Nigeria is an established customer and the fourth-largest importer of U.S. wheat. Kenya, a developing market that has seen a steady increase in wheat foods consumption, holds great potential for U.S. wheat.

Farm to Export Elevator

The team was able to follow the entire process of how U.S. wheat moves from farm to export elevator.

“Our goal was to show them the U.S. supply chain. We also wanted to explain how the quality of wheat grown in the states is monitored through the inspection process,” said Chad Weigand, USW Regional Director for Sub-Saharan Africa. “These visits are very important to customers in Africa who want to be assured they are getting the quality they want. We have competition in these markets, and face-to-face visits go a long way in providing trust and confidence in wheat from the U.S.”

Those face-to-face visits included meeting farmers. Kansas Wheat, an important USW partner, hosted the African team for visits with wheat growers and stops at the Kansas Wheat Innovation Center and USDA’s Center for Grain and Animal Health Research. During a visit to the IGP Institute, the team learned about technical training and assistance programs. A commercial flour mill in McPherson was also a key aspect of the visit.

Kansas Wheat hosted the African team for meetings and visits to learn about the U.S. wheat supply chain.

Kansas Wheat hosted the African team to showcase the U.S. wheat supply chain. Pictured (left to right) are Kansas Wheat Vice President of Research and Operations Aaron Harries; Savan Sunil Shah; Vigneswaran Sinnathurai; and Chad Weigand.

Building Upon a Solid Base

Flour milling training is an important part of USW’s efforts in Africa.

“We provide a lot of help to the flour milling industry there, particularly by working with up-and-coming millers who are just learning the trade,” explained Weigand. “By providing technical assistance in grain analysis, test milling, flour analysis and test baking, U.S. Wheat is helping grow the milling industry. It increases millers’ knowledge of U.S. wheat classes. Ultimately, the purpose is to show advantages of each U.S. class over competitors’ wheat. We also work with the flour industry to address trade policies – things like import requirements and other market access issues.”

In Kansas, the team also made a stop at the Federal Grain Inspection Service (FGIS) facility in Kansas City.

Before Kansas, the team met with wheat farmers and received an update from the Northern Crops Institute (NCI) in North Dakota. The Minnesota portion included meetings with grain traders at CHS and a tour of port loading facilities in Duluth. Coreen Berdahl, Vice President of Operations at Minnesota Wheat, participated in the Minnesota.

Supply Situation Updates

Farmers and representatives from Kansas Wheat acknowledged that Nigeria and Kenya will be limited by the short supply of HRW wheat this year. But building and maintaining relationships is important to global customers.

“Harvest results may differ from year-to-year, but coordinating local visits directly connects our customers with farmers committed to growing high-quality wheat,” said Aaron Harries, Vice President of Research and Operations for Kansas Wheat. “Wheat buyers, millers, and bakers track the progress of our wheat crop each year. Moving past the headlines is important to communicating the quantity and quality of each year’s harvest.”

On its final night in Kansas, the African trade team was hosted at a dinner, where buyers from Nigeria and Kenya were able to meet with Kansas Wheat staff and U.S. wheat farmers, including USW Chairman Michael Peters of Oklahoma.

Markets Differ, Both Have Potential

The U.S. has been the top wheat supplier to Nigeria in two of the past five years. Nigeria has been the largest buyer of HW and second-largest buyer of HRW.

In 2021/22, U.S. wheat exports to Nigeria increased to 1.63 million metric tons (MT) and the U.S. market share was 30%. But high prices have hurt trade in 2023.

Kenya, on the other hand, is seeing growth in wheat demand due to increased urbanization. New products are being introduced and branded for specific end-uses: chapati flour, mandazi flour, self-rising flour, and others.

Most of the wheat flour in Kenya is used for home baking of chapatti (flat bread).

As both the Nigerian and Kenyan markets evolve, USW plans to share information about U.S. wheat’s quality and reliability.

“We will continue working on relationships and sharing information about the quality and reliability of U.S. wheat,” said Weigand. “We will also demonstrate to millers, bakers and end-product manufacturers the advantages of all six classes of wheat as stand-alone or blending wheats to reduce costs by displacing competitor wheats.”

This article includes information previously shared in an article by Kansas Wheat.

August 24, 2023/by Ralph Loos

Hard Red Winter, Sustainability

Stories of Stewardship: Generations of Care in Central Kansas

As a 5th generation farmer and father of three working alongside his own father and brother, Justin Knopf (above) recognizes his responsibility as a steward of the land for the next generation both on and off the farm. On the farm in central Kansas near the town of Gypsum, the Knopf family grows hard red winter (HRW) wheat, alfalfa, grain sorghum, soybeans, and corn on the same land the family originally homesteaded in the 1860’s.

Justin is passionate about being involved in the industry and says outreach is an important part of agricultural sustainability.

“What I do impacts consumers, so it is important to take time and energy to be transparent with them and share the bigger story of what is happening in our landscape,” he says. “I have been given a gift to be able to work with the land and that comes with responsibility.”

Cover Crops

Justin is always learning new farm management skills and how he can apply the latest technology. After attending a no-tillage farming conference, he learned that an evolving no-till system includes having a crop always growing in the soil. After experimenting with cover crops in his rotation, the results show this boosted biological diversity in his soil and at times allowed him to reduce the use of weed, disease, or insect control products where cover crops are grown.

Improving the Soil

Quality soils are crucial for crops to reach their full potential, but abuse can quickly lead to nutrient loss, erosion, and reduced productivity. Farmers on the Plains witnessed the cost of over-plowing their soil in the Dust Bowl of the 1930s and since then have fought hard to protect their most precious resource.

The Knopf family has invested in soil health through cover crops, no-till farming, and crop rotations. The changes have improved soil health. The soil is better able to retain moisture and is more fertile, which helped reduce inputs like fertilizer and fuel and increased yields. But these changes did not happen easily or overnight. Adding these new management practices required a financial investment, continued education and dedication from Justin and his family.

Panaramic image of the Knopf family farm in central Kansas including a farm stead, green fields and ripe wheat field in the background on a cloudy day.

The Knopf family grows hard red winter wheat, alfalfa, grain sorghum, soybeans, and corn on the same central Kansas land the family homesteaded in the 1860’s. Photo courtesy of Kansas Wheat.

Keeping the Soil

There is no irrigation or tillage on the entire Knopf family farm. Since the family transitioned to no-till farming in the early 2000s, Justin says he has seen a physical change in their soil. The soil is darker, richer and has more organic matter than before. These rejuvenated soils are more productive and resilient, making it easier to grow crops with fewer inputs and less rain (something that has been even more important given the recent long drought in the region), and are less likely to erode.

“The land will go on for much longer than I will be here, and it’s a much bigger story outside of myself,” Knopf says. “So I feel a responsibility to share that bigger story of what is happening with other people as a part of our stewardship.”

Knopf participated in the U.S. Wheat Associates (USW) film “Wholesome: The Journey of U.S. Wheat” discussing the care he takes in his wheat crop with sustainable practices.

U.S. Wheat Associates (USW) is reaching out to wheat farmers across the United States to learn how they strive to improve their land and manage resources. Each is committed to adapting to the many challenges they face and making choices that are best for the environment, their individual farms, and their customers. We are proud to share their “Stories of Stewardship.”

July 31, 2023/by Steve Mercer

Freight Rail Service, Hard Red Winter, Market and Crop Analysis, Supply and Demand, Wheat Production and Harvest

War Disruptions and Logistics Incentivize Imported European Wheat

The news that U.S. flour milling companies have imported European wheat has raised concerns and frustrations for U.S. wheat stakeholders. To an organization like U.S. Wheat Associates (USW) that with our state wheat commission members promotes exports on behalf of U.S. wheat farmers, such news is particularly disappointing. After all, U.S. farmers produce enough wheat each year to meet domestic demand and still offer about half the crop to export markets.

The concern is not about imported wheat per se. Flour millers do import varying amounts of Canadian spring wheat every year. And conditions have in the past made it possible for feed-grade wheat to be imported into coastal pork and poultry production markets. It is important to state that there is more than enough high-quality U.S. wheat available to produce all the flour we need in this country, and the 2023 harvest is already underway.

However, imported European wheat to produce domestic flour is a highly unusual situation. USW wanted to share what is behind these imports and perhaps answer the questions from stakeholders.

Dynamic market factors have created a large price spread between similar classes of European and U.S. wheat. In May 2023, according to AgriCensus data, the published FOB export price for Polish wheat was more than $107 per metric ton less than the U.S. hard red winter (HRW) Gulf FOB export price. German wheat export price in May showed a similar discount to Gulf HRW FOB.

In looking at this difference between the bargain purchase price in Europe versus the current U.S. domestic market replacement values, USW President Vince Peterson recently said that “this may be the biggest trade margin that I’ve ever heard of” in all his years in the grain trade.

Supply Shock

This remarkable difference in prices happened mainly because the relative volume of exportable wheat supplies in Eastern Europe has exploded this year. Putin’s invasion of Ukraine drastically curtailed Ukraine’s ability to export by vessel from its Black Sea ports, in turn sending war-distressed Ukrainian wheat and other commodities pouring across their land borders into Eastern European countries. That movement severely depressed local wheat prices, harming EU farmers and causing five EU countries to implement bans on imported Ukrainian grain staying within their countries. Russia’s record 2023 wheat crop and unfettered exports (now projected at 45 million metric tons (MMT), also a record) created more regional price pressure.

Even though the EU-27 is the world’s second largest wheat producer after China and second largest exporter after Russia, EU wheat imports increased by 6 MMT in the 2022/23 marketing year. Combined with the unprecedented disruption of regional grain movement, USDA estimates the EU’s ending wheat stocks will rise from 10.1 MMT in 2020/21 to 16.2 MMT in 2022/23. And USDA expects European wheat production to increase this year over 2022 even though there is dryness in western Europe.

Yet over the same 3 years, U.S. wheat supplies have gone in the opposite direction, especially supplies of HRW wheat. Drought has hurt total U.S. supplies for three years in a row, first reducing hard red spring and soft white crops. Then drought cut HRW production in 2021/22 and intensified in 2022/23, resulting in a high number of abandoned wheat fields and short overall production. U.S. exportable wheat supply concerns, combined with the disruptive news constantly flowing from the Black Sea conflict, are supply shocks that continue to support the surprisingly high gap between U.S. and EU wheat prices.

Ocean v. Rail Rates

Considering imported European wheat, the question must be asked about the difference in cost between bulk ocean freight rates from Europe to the United States and U.S. rail rates to move wheat to its flour mills. Comparing those rates today, U.S. rail tariffs and fuel charges to transport wheat are close to twice the ocean freight cost on a per-metric-ton basis.

Unfortunately, this transportation cost spread indicates that rail rates have been and continue to be a burden on the value of delivered wheat for domestic and export markets.

A 2020 study by USDA found that rail rates increased by 30% for wheat, 32% for corn, and 30% for soybeans from 2000 to 2014, and wheat rail tariff rates have increased by an additional 18% since 2014. Rising and unfair rail rates for wheat erode its competitiveness for domestic as well as overseas buyers.

That is why USW’s Transportation Working Group is focused on addressing uncompetitive wheat rail tariff rates to make sure that when global market conditions readjust – and they will – domestic rail rates for wheat do not diminish U.S. wheat’s value at home and abroad.

Image shows grain rail cars by a country elevator to illustrate USW comments to the Surface Transportation Board.

Rail rates have been and continue to be a burden on the value of delivered wheat for domestic and export markets.

An Unwanted Hit

Without doubt, the import of European wheat and the market factors that encouraged it are most unfortunate. As Kansas Wheat Vice President of Research and Operations Aaron Harries said, this situation is “another hit against our domestic farmers” who are battling drought, increased operating costs and other headwinds to produce high quality wheat that is more than sufficient to supply all U.S. flour mills and export demand.

USW and others in the industry believe the imported European wheat will likely move to coastal U.S. flour mills – in part because of the high rail rates milling companies would have to pay to transport it to interior mills.

The supply challenges in today’s global wheat market are likely to continue at least through the 2023 harvest. USW sincerely believes that absent the illegal and highly disruptive invasion of Ukraine, the price spread incentivizing U.S. imports would be much closer. Sadly, the conflict rages on.

Domestically, higher wheat prices also encourage increased production, seen in the significant increase in U.S. HRW planted area for the 2023 crop. Unfortunately, the devastating drought undercut that positive trend this year, but prices remain an incentive for U.S. farmers.

If there is a grace note to this situation, USW President Peterson points out that the price spread between EU wheat and U.S. HRW wheat has recently narrowed. The potential for recent rainfall in Northern Plains HRW and hard red spring production regions to push 2022/23 production higher than expected would help fill the price gap – and offers hope for a better outcome in 2023/24.

June 8, 2023/by Steve Mercer

Hard Red Winter, Market and Crop Analysis, Wheat Production and Harvest

USDA Reports Provides First Look Into 2023/24 Crop Year

On May 12, USDA released its initial estimates for the 2023/24 marketing year (MY) year, providing the first glimpse into how the world wheat situation has shifted in response to political instability, inflation, climate variability, and the volatility seen in the last year. This article will examine key takeaways from the World Agricultural Supply and Demand Estimates (WASDE) and the USDA Crop Production Report, and what it may mean for the 2023/24 crop year.

Global Outlook: A Focus on Weather

Despite recording record wheat production of 789.7 MMT, up 1.5 MMT from 2022/23, world wheat supplies have tightened. Consumption surpasses production by 2.0 MMT for the fourth consecutive year, leading to a decline in global ending stocks. Projections indicate the lowest global ending stocks in eight years at 264.3 MMT. Ending stocks in the five non-Black Sea exporting countries (U.S., Canada, Australia, Argentina, and the EU) have hit their lowest level since 2007/08 at 38.2 MMT.

Production in major exporting countries is also forecast to be down 10.0 MMT to 367.6 MMT from a record 377.5 MMT in 2022/23. Production is predicted to increase in Argentina (+7.0 MMT), Canada (+3.2 MMT), and the EU (+4.7 MMT). However, these increases do not offset flat production in the U.S. (+0.3MMT) and reductions for Ukraine (-4.4 MMT), Russia (-10.5 MMT), and Australia (-10.0 MMT).

Weather poses risks to many production regions, including anticipated dryness in Australia associated with an El Niño weather event and reports of dryness in Canada. USDA predicts improved production in Argentina that hinges on recovery from the 2022/23 drought there. With ending stocks already hovering at 15-year lows, any change in production in major exporting countries could have a direct influence on world wheat prices.

A bar chart from the International Grains Commission (IGC) shows change in wheat production in major exporting countries by year over year and change compared to the 5-year average production.

2023/24 Major Exporter Production Change. With significant production reductions anticipated in Ukraine, Russia, and Australia, any change in the outlook for other major exporters will impact the already tight ending stocks held by exporters. Source: IGC.

U.S. Situation- Bullish Supply Meets Bearish Demand

Much like production in other major exporting countries, the weather has driven the U.S. wheat harvest conversation. As the drought in the U.S. Southern Plains persists, the May 12 USDA crop production figures put Kansas HRW production at 14.0 MMT, the lowest output since 1957/58. Similarly, USDA projections put Kansas (the largest HRW-producing state) wheat production at 181.0 million bushels. The annual Wheat Quality Council (WQC) winter wheat tour confirmed this outlook.

Despite the bullish outlook from the May Crop Production report and the subsequent futures rally, HRW futures prices declined, losing 73 cents in the week ending May 22. Likewise, hard red spring (HRS) and soft red winter (SRW) also softened, down 64 and 55 cents respectively from last week. A key factor contributing to this bearish trend is demand rationing in the face of high prices and seasonal pressures.

Bar chart showing U.S. wheat export sales by class, year-to-date as of May 11, 2023. HRW sales are significantly lower than 2021 at this date.

U.S. HRW commitments as of May 11, 2023, are 32% behind last year’s pace at 5.1 MMT. Meanwhile, HRS sales are up 4% at 5.7 MMT, white wheat is up 39% at 4.7 MMT, SRW is up 1% at 2.9 MMT, and durum has increased 131% to 452,000 MT. Source: USW Commercial Sales Report.

Bright Spots

Despite the complexity of the HRW situation, the outlook for other U.S. wheat classes, especially soft wheat classes, remains optimistic. The Crop Production Report put SRW estimates at 11.0 MMT, a 21% increase from 2022/23, and prices for SW and SRW continue to trend lower to remain competitive with other origins. Likewise, as of the May 21 Crop Progress Report, the winter wheat conditions have begun to see improvement, with a season-high of 31% ranking good to excellent. Spring wheat farmers have also made tremendous planting progress, with a 24% increase in plantings over the week, reaching 64% planted, only 9% behind the five-year average, alleviating concerns about late planting.

A More Detailed Look to Come

In the coming weeks I will recap the 2022/23 U.S. wheat export trends and highlight what to watch as new crop sales increase. In June, USDA will begin revising its initial estimates for the 2023/24 world supply and demand and the July WASDE will provide the first by-class wheat projections for the 2023/24 crop year.

May 24, 2023/by Steve Mercer

Hard Red Winter, Hard White, Wheat Production and Harvest

Perspectives From the Field on 2023 Drought

The impact of drought in the Central and Southern U.S. Plains is the dominant topic of conversation about the 2023/24 hard red winter (HRW) crop. Industry participants agree there will be a lot of HRW fields abandoned before harvest from Texas to South Dakota. Rain expected this week is a hopeful sign but likely comes too late to provide extensive recovery.

Following are the latest perspectives on the now two year long drought from state wheat commission executives and media covering the market.

In his April 21 weekly report, Kansas Wheat Chief Executive Officer Justin Gilpin compared past drought year abandonment, specifically in 1989, to 2023. That year unharvested planted acres hit 28.2% following drought conditions that Gilpin and others said are very similar to the current situation.

This chart shows historial perspective on the effect of drought on harvested area and abandonment of wheat acres over 30 years in Kansas.

Another Year of Abandonment? Data shared by Kansas Wheat CEO Justin Gilpin compares planted wheat acres, harvested acres, and the percent of abandonment since 1973. Gilpin said many industry folks compare the drought of 2023 with a very similar situation in 1989 when abandonment reached more than 28%.

A Crazy, Common Theme

“What is crazy in reading through high abandonment years, there is a common theme,” Gilpin said, “poor conditions through March into April…then, heavy rains began in May through June impacting harvest, but too late to help the western Kansas wheat crop.”

USDA’s April 24 crop conditions report echoed Gilpin’s comparison. It rated 26% of U.S. winter wheat in good to excellent condition, the lowest for this time of year since 1989. Reuters also noted “wheat in portions of central Kansas may have suffered damage from cold temperatures over the April 22-23 weekend. It is important to recognize that USDA’s winter wheat report includes the 2023 soft red winter (SRW) and soft white (SW) winter crops that are generally in much better condition.

In a call with state wheat commission representatives April 20, Darby Campsey with the Texas Wheat Producers Board reported that 30% of the state is in exceptional to extreme drought. In the Texas Panhandle, “much of the dryland wheat has failed.” Only 16% of Texas wheat is in good to excellent condition, mainly in the “black soil” region where mainly SRW is grown.

Dry as Death Valley

“In those regions that are in exceptional and extreme drought, you can certainly see why things are not favorable in northwest Oklahoma and the panhandle regions where we have the majority of our top wheat producing counties,” said Oklahoma Wheat Executive Director Mike Schulte.

There has been less than 0.8 cm of rain in that area of Oklahoma the last 220 days. Mark Hodges of Plains Grains noted that the Oklahoma Panhandle has received less moisture than Death Valley, California, the past 12 months.

“I don’t know that the rest of the world is taking into account how bad it is in the Southern Plains,” Schulte said in an interview with Oklahoma Farm Report. “I am hoping at some point in time the market is going to react to that.”

This map and data indicates that 2023 is the driest year on record for many counties in Oklahoma's western and panhandle regions following a two-year drought.

Driest in More Than 100 Years. The two-year-old drought has hit Oklahoma’s main wheat producing regions hard. In 3 counties, August 2022 through March 2023 was the driest on records going back to 1895.

Colorado, Nebraska and South Dakota

Southeastern Colorado is also within the exceptional, long-term drought area. HRW and hard white (HW) wheat grown in northeastern Colorado has fared better with more rain and snow, but “needs more rain in May” to get closer to its yield potential. The state commission there reported that while 23% of wheat is in good to excellent conditions, 38% is rated poor to very poor.

Sub-soil moisture in the western and panhandle regions of Nebraska remains low with HRW and HW wheat in similar condition as in Colorado. Fields are “patchy” with 40% rated poor to very poor.

Abandonment of HRW in South Dakota is also a concern reported South Dakota Wheat Commission Executive Director Reid Christopherson. He said it was so dry last fall a significant portion of seeded fields did not emerge. After receiving more moisture over the winter, South Dakota HRW is now emerging, but if stands are not good, farmers may make crop insurance claims and replant to corn, Christopherson said.

Rain Too Late for Wheat

Returning to Justin Gilpin’s note that past drought years have seen rain coming too late for wheat crops, sure enough widespread rain was in the forecast for the Central and Southern Plains the week of April 24 “and could be substantial in some areas,” according to a weather brief by DTN Meteorologist Jon Baranick. “That will help to reduce the impact of the drought but will not make much of a dent in it. Additional showers could be possible late this week with another system. Wheat may not benefit from the rain too much due to poor conditions, but the increased soil moisture would favor corn [sorghum] and soybean planting.”

Farmers facing the difficult situation of losing a crop to drought that they worked hard to produce and the uncertainty of its impact on their family’s livelihood, have only the perspective of the generations before them to rely on.

“The key to remember here is that droughts are cyclical,” wrote columnist Brandon Case in the Pratt (KS) Tribune recently. “The land of Kansas has suffered from droughts long before it became a state and it will continue to experience droughts in the future. No one knows how long the current one will last and about the only thing any of us can do is pray for rain.”

April 25, 2023/by Steve Mercer

Exports, Hard Red Spring, Hard Red Winter, Soft White

VIDEO: USW Bakery Consultant Roy Chung on the Value of Frozen Dough Made with U.S. Wheat

Roy Chung has been teaching U.S. wheat’s international customers about the value of frozen dough for more than 30 years. During the COVID pandemic, many of his points about frozen dough’s importance in the marketplace were confirmed, as bakeries that were using it were able to continue operations despite staffing shortages. Chung, a U.S. Wheat Associates (USW) bakery consultant, predicts that frozen dough demand around the world will continue to grow, which is good news for U.S. hard red spring (HRS), hard red winter (HRW) and soft white (SW) wheat. In this short video, Chung provides an overview of frozen dough and its importance to businesses and bakeries that purchase U.S. wheat.

April 13, 2023/by Ralph Loos

Hard Red Winter, Soft Red Winter, Supply and Demand, Wheat Export Supply System

‘Up and Down, Down and Up’: Input Costs Vary for Wheat Farmers as Pivotal Spring Season Arrives

Farmers who spent the past year staring at charts and graphs that gauge costs and returns would certainly by now be quite familiar with the sensation of vertigo.

Up and down, down and up.

The proper term is “volatility,” and for those who make a living growing wheat and other crops, it can affect decisions made in spring – a time when farmers typically spend a lot of money on the front end of one crop while also waiting for the rear end on another.

As they arrive at that sensitive juncture in 2023, growers are finding a “mixed bag” compared to 2022. Analysis have revealed that most farmers are projecting their 2023 production costs to increase 6% to 15% compared to 2022. USDA’s most recent Farm Sector Forecast is slightly more optimistic, but still points to the expectation of higher input costs:

Production expenses are forecast to increase for a sixth consecutive year, growing in 2023 by 4.1%.
Fertilizers, lime and soil conditioners are expected to decrease 3%, from $43.42 billion to $42.17 billion. Typically, fertilizers represent about 15% of a crop farmer’s costs.
Fuels and oils are expected to experience the largest percent decline – 17% – from 2022.
These drops, however, are easily outpaced by increases in other expense categories including marketing, storage and transportation, which are forecast to increase 11%.

“Input costs are still quite elevated, but nitrogen fertilizer has decreased since its peak last year,” confirmed Jason Scott, a U.S. Wheat Associates (USW) Board of Directors member who grows soft red winter (SRW) wheat on the eastern shore of Maryland. “One of the larger issues we have been dealing with so far this year is availability of some specific inputs, as well as some parts for equipment.”

Indeed, national agriculture groups say input costs are once again the top concern among farmers in 2023, though there has been some “wiggling toward the positive” in recent months.

“Higher input costs remain the number one concern, chosen by 34% of producers in March, but concern about input costs has been falling since last summer’s peak when it was chosen by 53% of producers,” James Mintert, the Purdue University/CME Group Ag Economy Barometer principal investigator, noted in the most recent Barometer, which was released April 4. “Although producers still cite high input costs as their top concern in the upcoming year, they are becoming more worried about rising interest rates and the impact those higher rates will have on their operations.”

USW Vice Chairman Michael Peters, who farms in central Oklahoma, inspects an emerging hard red winter wheat crop a few years ago. As was the case back then, production input costs continue to be a major concern for wheat farmers all across the country. Weather and lack of rain, of course, is another point of worry.

But First, Here’s the Weather . . .

USW Vice Chairman Michael Peters, who grows hard red winter (HRW) wheat in Oklahoma, is the farmer who put the “mixed bag” label on his current inputs situation.

He has bigger problems with moisture, or lack thereof.

His farm being located on the Southern Plains, Peters has an added challenge he and other Oklahomans share with fellow producers in northern Texas, most of western Kansas and portions of Nebraska and Colorado.

“The problem for my area is the lack of rainfall,” he said. “Our winter wheat crop is looking a little tough at this point.”

According to USDA, approximately 51% of U.S. winter wheat is produced in an area currently experiencing drought, down from 69% as the year began.

For Oklahoma, in mid-March the USDA rated 34% of the winter wheat crop in “good-to-excellent” condition. For Texas, 18% of the crop was “good-to-excellent.” Roughly 22% of Nebraska’s winter wheat crop was “good-to-excellent.”

Equipment Inputs Rise

While fertilizer and chemical prices have mostly decreased heading into the 2023 spring planting season, sticker shock on parts and machinery have stepped in to replace them as causes for consternation.

“The prices for parts to fix our equipment have really spiked, as have prices for equipment that we would need to purchase new,” said Scott. “The supply chain has still not caught up on some key things.”

Part of the problem being recognized this spring is that there is a transition of sorts in the farming equipment arena. Fixing a broken-down combine or tractor used to take wrenches and a steady hand. Now repairs might require a mobile-device interface, online diagnostic tools and secure software updates. Those “parts” aren’t just hanging on someone’s wall.

As a result, breakdowns that might have been repaired in hours can now take days or weeks. During busy times such as spring planting and harvest, that can mean losing time and money.

“You really think about what you need to get you through the season and what you can do without,” said Peters. “There’s a lot of deferred maintenance on farms right now. When you see elevator prices seep down, you erase projects off your list. If prices start to spike, you add things to the list.”

Jason Scott, who grows soft red winter wheat in Maryland, stands in one of his fields during a spring tour of his farm.

Jason Scott, a member of the USW Board of Directors who grows soft red winter wheat in Maryland, stands in one of his wheat fields during a spring tour of his farm.

Chemicals Leveling Off

“It’s this and that, up and down,” said Peters. “Some fertilizer prices have fallen. Chemicals are mixed, with prices on products like Roundup falling substantially. Other chemicals seem steady.”

Farmers Business Network (FBN) recently released its 2023 Ag Chemical Price Transparency Report, which highlights the extreme price variation facing farmers from coast to coast.

“The last two years have seen extreme fluctuations in chemical pricing for farmers,” said Kevin McNew, chief economist for FBN. “We know, this season in particular, a lot of farmers have postponed or waited a little longer than normal to make purchases because prices have been declining. We’re close to the point of needing those pre-emergents and I don’t think prices are going to slide much more.”

McNew also acknowledges higher interest rates make some farmers hesitant to borrow against an operating loan for chemical purchases.

“The takeaway is a lot of the inputs we’ve come to rely on like fertilizer, ag chem, and energy are going to remain high priced for the foreseeable future,” he said. “For years to come, in some sense. It is really important for farmers to think strategically about investing in new technologies that improve or reduce those inputs.”

The Bottom Line

Enduring volatility is what farmers do, so those preparing to harvest winter wheat and those getting ready to plant spring wheat will adjust to conditions.

It won’t be long until fall arrives and the process repeats itself.

As far as profits, every farm is different. USDA expects inflation-adjusted net farm income to drop 18%. But it notes last year’s net farm income was well above the 20-year average.

The decline will be felt a little differently in each sector of agriculture, said Seth Meyer, the USDA’s chief economist, who spoke at the 2023 Agricultural Outlook Forum in Arlington, Virginia.

Wheat acreage is expected to be its largest since the 2016-17 season, thanks to high prices and tight supply.

“After a period of trending lower (U.S.) wheat acres, this represents a sharp rebound, but is not likely to be a trend reversal for the long term,” Meyer said.

As always the biggest question about 2023 is grain prices, especially wheat prices, which are expected to remain strong, though lower than in 2022.

From a wheat farmer’s perspective, Peters summed it up in a simple manner.

“No matter who you listen to, everything is up and down, up and down,” he said.

April 6, 2023/by Ralph Loos

Hard Red Spring, Hard Red Winter, Market and Crop Analysis, Soft Red Winter, Supply and Demand

Perspectives on March 31 Prospective Plantings and Stocks Reports

Each year, on March 31, those who grow, trade or import U.S. agricultural commodities look to USDA’s annual Prospective Plantings and Quarterly Grain Stocks Report for indications of potential price movements. The consensus from analysts across the industry on how this week’s reports will affect wheat markets is generally bullish.

For reference, in its January 2023 Wheat Outlook report, USDA estimated total U.S. winter wheat planted area for 2023/24 at 37.0 million acres (14.9 million hectares), up 11% from last year to the highest level since 2015/16. The hard red winter wheat (HRW) area was up 10% to 25.3 M/ac (10.2 M/ha), while white winter wheat is up by 3% to 3.73 M/ac (1.5 M/ha). soft red winter wheat (SRW) experienced the most significant increase, jumping 20% from 2022/23 to 7.9 M/ac (3.2 M/ha). USDA’s February Grains and Oilseed Outlook projected an 8% increase in all wheat planted area to 49.5 M/ac (20.0 M/ha)

U.S. Wheat Associates (USW) compiled the following pre-report perspectives.

Analysts See Lower Planted Area

Bloomberg recently surveyed more than 30 agricultural analysts about their prospective plantings estimates for wheat, corn, soybeans and other crops. The average estimate for the total wheat area came in slightly below USDA’s January estimate at 48.9 M/ac. The average winter wheat estimate was 36.3 M/ac, also less than USDA’s 37.0 M/ac. Spring and durum wheat average among the analysts Bloomberg surveyed was 10.9 M/ac for HRS and 1.7 M/ac for durum.

Back in January, agricultural consulting firm Farmers Business Network surveyed U.S. winter wheat farmer members of the organization about their planting intentions. The results showed planted area increases for HRW and SRW, with all U.S. winter wheat planted area seen at 34.2 M/ac for 2023/24, up 900,000 ac compared to their 2022 survey. That is significantly lower than USDA’s 37.0 M/ac January estimate.

Balance Sheet Tightening?

USDA data in a pie chart showing the range of wheat crop conditions in Kansas.

Kansas wheat crop conditions in late March reflects the impact of on-going drought in the western and central areas of the state.

While both Bloomberg’s and FBN’s surveys estimate of winter wheat planted area are up compared to the 2022/23 estimates, FBN Senior commodity Analyst Rejeana Gvillo said U.S. planted is “not large enough to shift the undertone of shrinking global wheat supplies. Given the acreage outlook, the drought in the Southern Plains will need to be broken come spring or summer or the U.S. wheat balance sheet could tighten further.”

Sadly, the drought has not broken in southwest Kansas, southeast Colorado, the northern Texas Panhandle, and the western Oklahoma Panhandle. There has been some easing of drought outside that hard-hit area. Justin Gilpin, CEO of Kansas Wheat does not anticipate major adjustments to USDA’s winter wheat planted area, but he is looking to other farmer decisions ahead.

“Last year, USDA began inching Kansas winter wheat acreage lower in the March report. I expect any changes or adjustments this year to be in the other direction, with slightly higher planted winter wheat acres in Kansas,” Gilpin said, which includes SRW in eastern Kansas. “But any incremental changes at this point are overshadowed by what the harvested acres might be with expected higher abandonment due to the drought conditions and poor stands in southwest Kansas.”

Spring Wheat Planting Delay?

Drought is not the problem in the Northern Plains HRS and durum region. This has been a very wet and cold winter with persistent snow cover.

“Everybody’s pretty much thinking it is going to be a late start” to planting, said Randy Martinson of Martinson Ag Risk Management in a story posted by AgWeek, Fargo, N.D.

On the Agweek Market Wrap, March 24, Martinson said with two feet of snow or more in places in the region and a forecast for little warm up in sight, some farmers already are considering looking for earlier maturing varieties and “questioning whether they should still plan to plant spring wheat.”

Asked about the Prospective Plantings report on March 31, Martinson added that the consensus among farmers he has talked to is there will be more corn and soybeans planted and less spring wheat, though more winter wheat already has been planted. However, he said there likely will be changes depending on how the spring shapes up.

Map of the United States from the USDA Forest Service shows significant snow cover in late March 2023 in the northern plains.

Snow cover in late March is still 10 inches to almost 30 inches deep in parts of U.S. HRS growing regions of South Dakota, North Dakota and Montana. Delayed planting may shift some spring wheat area to other crops this year. Source: USDA Forest Service.

Buy Signals for Speculators

Commercial traders and futures speculators are getting the same information. Barchart analyst Sean Lusk wrote this week that the market is net short in Chicago SRW wheat futures as the plantings and stocks reports are coming on the same day as the month and quarter end. He expected managed money to take profits by buying wheat into the weekend.

In the end, USW believes Martinson is correct in saying the weather and the planting report will be the market movers this week.

March 29, 2023/by Steve Mercer