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Early spring – before the harvest of winter wheat and the planting of spring wheat – is a perfect time to highlight tools U.S. Wheat Associates (USW) provides to inform U.S. wheat farmers and their customers around the world.

It’s also a good time to remind readers of this blog how to access those USW tools.

USW Price Report       

USW gathers information from market sources to compile timely reports on prices and export sales of U.S. wheat. The USW Price Report, which is sent to subscribers each Friday, also includes updates on market conditions and input from people involved in each step of the wheat trading process.

Monitoring the Chicago Board of Trade (CBOT), Kansas City Board of Trade (KCBOT) and Minneapolis Grain Exchange (MGEX) wheat futures is only part of the process.

“A huge component is talking with the grain trade, farmers and other industry representatives to get a firsthand account of what is going on in the market and how it is impacting wheat prices,” explained USW Market Analysis Tyllor Ledford, who is responsible for the USW Price Report. “By reaching out to each segment of the trade process, I try to get as balanced view as I can of what is going on in the wheat marketplace and really understand what is driving movements.”

Click HERE to sign up to receive USW’s Price Report.

Whether it's harvest season, planting season or the brief windows of time in between, USW provides several vehicles and platforms to keep wheat farmers and customers informed.

Whether it’s harvest season, planting season – or the brief windows of time in between – USW provides several products and platforms to keep wheat farmers and customers informed. All you need to do is sign up.

USW Commercial Sales Report

While the USW Price Report includes an update on commercial sales of U.S. wheat, more detailed information is available in the USW Commercial Sales Report, published each Thursday on the USW website and also compiled by Ledford.

Using data sourced from the USDA Foreign Agricultural Service Weekly Export Sales Report, the Commercial Sales Report contains wheat export sales-to-date by country and class for the current marketing year compared to the previous marketing year on the same date. The report also includes a 10-year commercial sales history by class and country.

USW Supply and Demand Report

USW’s Supply and Demand Report is published monthly on the USW website. Based on USDA’s World Agricultural Supply and Demand Estimates (WASDE), it includes U.S. wheat supply and demand summaries by class, as well as market factors and country- and region-specific export history.

Harvest Reports

Beginning in May and running through mid-October, USW and partner organizations compile updates on crop quality, harvest progress and crop conditions for hard red winter (HRW), soft red winter (SRW), hard red spring (HRS), soft white (SW) and durum wheat.

Each week, the USW Harvest Report is emailed to those who have signed up to receive it.

“The weekly harvest report is an example of how we keep everyone in the industry regularly updated on the wheat crop and current market conditions,” said USW Vice President of Programs Erica Oakley, who handles compilation of the Harvest Report. “We gather information about each class and each state that is in the process of harvest. It’s a very helpful way to monitor production throughout the harvest season.”

Click HERE to sign up to receive USW’s Harvest Report.

Wheat Letter

If you are reading this, you likely already subscribe to USW’s Wheat Letter, a blog and news source that focuses on issues facing U.S. wheat farmers – trade policy, crop quality and other pertinent wheat industry news.

The blog is updated regularly throughout the week, with a newsletter-style collection of those blog posts emailed to subscribers every other Thursday.

Click HERE to sign up to receive USW’s Wheat Letter. You can also pass this link along to someone who would be interested in subscribing.

Articles of Interest

Early each morning, USW Director of Programs Catherine Miller compiles Articles of Interest, a daily news report by conducting web searches to identify industry-related news articles. The goal is to help keep everyone updated on issues and events that may affect the U.S. wheat industry.

“It’s a news brief that highlights a variety of topics, including trade policy issues, supply and demand situations, wheat research and breeding crop conditions and news that involves the people who work in the industry,” said Miller. “We see it as a food way to start the day with the latest news and serves as a platform to share important stories an articles from all over the world.”

To be considered for the USW Articles of Interest mailing list, email [email protected].

Social Media

The newest platform in USW’s social media offerings is the USW YouTube Channel, which holds a growing number of USW-produced videos featuring USW staff, activities and partners.

USW is also has its own Facebook page, Twitter Account and Linked-In profile, each used to share information and quickly and efficiently.

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Taeyoung Grain Terminal’s CEO took time from his busy schedule March 8, 2023, to meet with U.S. farmers from Idaho, Montana and Nebraska and explain what happens when a shipment of imported U.S. wheat arrives in South Korea (photo above).

It was a fitting way for the U.S. Wheat Associates’ (USW) 2023 North Asia Board Team to wrap up its 10-day exploration of top Asian markets.

“We’ve been able to see every step, where demand for our wheat is created at the consumer level, to the baking process where flour is used as the ingredient, to the milling process where flour is made with our wheat, and now to the import process, which is how our wheat gets to the market in the first place,” explained Bob Delsing, a Nebraska wheat producer and Nebraska Wheat Board member.

Delsing took note of another important detail, too.

“The other farmers and I on the trip really noticed the respect people have shown us,” Delsing added. “The end of the Korea visit was a perfect example. Tae Hyun Yeo, who leads grain terminal as CEO, seemed happy to spend time with us and get to know us. We saw that over and over on this trip.”

Along with Delsing, team members are Bill Flory, of the Idaho Wheat Commission (IWC); Keven Bradley, of the Montana Wheat and Barley Committee (MWBC); Kent Kupfner, Executive Vice President of MWBC; and USW Director of Communications Ralph Loos.

USW Country Director Rick Nakano discusses Japan's milling and baking industry to members of the 2023 USW North Asia Board Team.

USW Country Director Rick Nakano discusses Japan’s milling and baking industry with 2023 USW North Asia Board Team members (l to r) Bob Delsing, Keven Bradley, Bill Flory and Kent Kupfner.

Representing the USW Board of Directors, the team arrived in the Philippines on Feb. 28, then made stops in Japan and South Korea to meet customers of U.S. wheat. A return to the U.S. is scheduled for March 10.

“It was exciting to have the Board Team in Tokyo, and in fact it is the first team we’ve hosted since before the pandemic,” said USW Japan Director Rick Nakano. “The goal was to give the farmers a look at the market and how USW works to create demand for U.S. wheat. Our customers were eager to meet face-to-face with this team and get a perspective from wheat growers. Our customers also wanted to share what they need to help their businesses. We had some exceptionally good discussions.”

Compliments on Quality, Questions About Supply

Two overlying themes dominated each meeting between the USW team and flour millers in each of the three Asian markets: quality and supply.

“Our members are always very satisfied with U.S. wheat’s quality – never a question,” Jeong-seop Park, director of the Korea Flour Mills Industrial Association (KOFMIA), offered during a meeting between the team and his organization. “We have come to rely on that quality and we wish to show appreciation for the work U.S. farmers do to assure it in every crop.”

The 2023 USW North Asia Board Team meeting with members of the Korean Flour Millers Industrial Association in Seoul, South Korea

The 2023 USW North Asia Board Team met with members of the Korean Flour Millers Industrial Association at the KOFMIA headquarters in Seoul, South Korea.

Like other customers the USW team met in the Philippines, Japan and Korea, KOFMIA asked each farmer about the status of his current wheat crop and projections for 2023 success come harvest time.

Questions in each market were centered on the supply of wheat from the United States.

“Those are difficult questions to answer this time of year because we won’t know about our winter wheat crop until later in the spring, but I feel they were satisfied with our answers and I feel they understand,” said Bradley, who has roughly 5,400 acres of hard red winter wheat (HRW) wheat in the ground on his Montana farm. “This was my first visit to a foreign market, so I learned a lot about our customers in each of the countries we visited. It’s an eye-opening experience and you see the value of the U.S. Wheat Associates offices in each market. The [USW] staff does a great job interacting with our customers.”

In addition to the Taeyoung Grain Terminal in Pyeongtaek , the South Korea leg of the journey included a tour of the Sajodongaone Dangjin Flour Mill. The day prior was packed with productive meetings in Seoul with Agricultural officials from the U.S. Embassy, the KOFMIA members, Samhwa Flour Mills, Daehan Flour Mills and the CJ Cheiljedang Corporation.

Members of the 2023 USW North Asia Board Team toured the Sajodongaone Dangjin flour mill March 7, 2023.

Members of the 2023 USW North Asia Board Team toured the Sajodongaone Dangjin flour mill March 7, 2023. Here, USW Seoul Food/Bakery Technologist Shin Hak “David” Oh translates the mill manager’s explanation of this display of  flour streams the mill creates for Korean bakeries.

Japanese Stress ‘Trust and Understanding’

In Japan, the farmers met with the Japan Flour Millers Association (JFMA), as well as Agricultural Affairs and Agricultural Trade Offices of the U.S. Embassy and Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF). A tour of the Nippn Corporation’s Chiba Flour Mill provided insight into Japan’s use of U.S. wheat.

JFMA members pointed to the long relationship Japanese millers have had with U.S. producers. Recent high prices for U.S. wheat have been a concern, along with future production. However, officials made it clear they understand how weather affects the wheat crop and that they trust U.S. farmers.

JFMA Executive Director Yasuo Sasaki sought input from the USW Team about their farms and the business challenges they face.

In Tokyo, the 2023 USW North Asia Board Team met with members of the Japan Flour Millers Association.

USW Tokyo Country Director Rick Nakano (far right) introduces the the 2023 USW North Asia Board Team to members of the Japan Flour Millers Association.

“High-quality wheat is what we need in Japan to satisfy our customers and consumers and we also need a reliable supply of that high-quality wheat,” said Sasaki. “We know we can count on U.S. farmers to come through.”

Kupfner, a former wheat trader and grain company manager, went into the Japan part of the trip interested in growth opportunities for U.S. wheat.

“What we saw in Japan was a large urban population with an appetite for all kinds of food, but especially top-quality foods,” he said. “It’s a very consistent market and we want to maintain U.S. wheat’s place in it.”

Bakery Fair Connections

Highlights of the Philippines portion of the trip were a tour of the Gardenia Baking Facility and participation on the Filipino-Chinese Bakery Association’s 2023 Bakery Fair in Manila.

While not a “North Asian” market, the Bakery Fair provided a special opportunity for this Board Team. During the Fair’s opening ceremony, Flory was invited to provide remarks on behalf of the U.S. wheat industry. He shared his appreciation for the long relationship between U.S. wheat and the Philippines.

“From our farms to you” is the salutation Flory used to end his address to bakers and industry partners gathered. He shared his appreciation for the long relationship between U.S. wheat and the Philippines.

“We have had a long connection and we have had a long record of success together,” said Flory, a member of the USW Board of Directors and current Chair of the Wheat Marketing Center board. “We know that you rely on us to supply you with the wheat you need and desire. We want you to know that we take pride in that.”

By USW Director of Communications Ralph Loos

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Wheat growers do not need a USDA report in one hand and a slide rule in the other to conclude that escalating production costs are outpacing increases in crop revenue.

Nor do they need an economics degree to locate the heart of the matter.

“The numbers we are putting in are racing past the numbers we are getting out,” is how Oklahoma farmer Michael Peters sums it up.

The same sentiment is shared by Denise Conover, a Montana farmer who recently finished planting winter wheat. With a chance to sit down and look at her numbers, she offered “fresh off the press” examples of how input costs have swollen:

  • The starter fertilizer Conover applies went from $696.10 per ton in 2021 to $1,006.35 per ton in 2022.
  • She paid $712.50 per ton of Urea (nitrogen fertilizer) last year compared to $843 this year.
  • The diesel fuel used to harvest and plant wheat on her farm rose from $2.87 a gallon to $4.80 a gallon.

    Oklahoma farmer and USW Vice Chairman MIchael Peters (left) inspects emerging hard red winter wheat. Like wheat producers around the country, Peters is working to be more efficient with his operation to overcome rising costs in fuel, fertilizer and other inputs.

    Oklahoma farmer and USW Vice Chairman Michael Peters (left) inspects emerging hard red winter wheat. Like other wheat producers around the country, Peters is working to be more efficient with his operation to overcome rising costs in fuel, fertilizer and other inputs.

“The input costs are having an effect on our whole operation,” Conover, a member of the U.S. Wheat Associates (USW) Board of Directors who farms with her two sons, said. “Yes, wheat prices are up, but not enough to cover the rising input costs.”

‘When the Price of Everything is Up’

According to USDA’s Farm Sector Income & Finances report, farm production expenses for 2022 are expected to increase by 17.8%, representing the largest year-to-year dollar increase on record. USDA forecasts expect all expense categories to move upward, with some of the most significant spikes in fertilizer-lime-soil conditioner expenses, which are forecast to increase by 52.3%, and interest expenses, which are expected to increase by more than 39%.

Ben Brown, University of Missouri senior research associate for the Food and Agricultural Policy Research Institute, said fertilizer is “by far the most complex market that farmers encounter currently.” Brown reported 200% to 300% increases in fertilizer costs in 2021 and the first half of 2022 due to reductions in supply and strong demand. Many of the same factors look poised to return in 2023, Brown added.

Peters, USW’s Vice Chairman, grows wheat and raises cattle. He noted that farm input costs go beyond fertilizer, seed and fuel. He pointed to rising interest rates that can be a punch to the gut for farmers who depend on loans each spring and fall to produce wheat and other crops. Supply chain woes hurt, as well. To put wheat in the ground this fall, Peters needed a part for his seeder.

Farmer Denise Conover recently completed planting wheat on her Montana farm. She said higher input costs "cancel out" any gains farmers may experience from higher wheat prices.

Farmer Denise Conover recently completed planting wheat on her Montana farm. She said higher input costs “cancel out” any gains farmers may realize due to higher wheat prices. (Photo courtesy of Scripps Media)

“Two years ago, I had to buy the same part and it came to about $170 – this time it was well over $300, which means the price basically doubled in two years,” he explained. “All of this bites into the bottom line, and I don’t think a lot of people outside of agriculture realize it.”

Indeed, that disconnect is real.

“Everybody goes, ‘$9 wheat, you farmers must really be making tons of money,” Conover said. “But at the end of the day, when the price of everything is up, too, it turns out not to be a good economic situation.”

Value of Export Markets Emphasized

American Farm Bureau Federation Economist Shelby Myers provided an overview to confirm what farmers like Peters and Conover are experiencing.

“This is leaving many farmers to question their ability to just break even this year, despite high crop prices,” Myers noted. “While increased investment and capacity may help in the long run, in the near term, farmers are concerned about making sure they have the inputs they need to put a crop in the ground?”

Despite challenges, U.S. wheat farmers have consistently produced a high-quality crop desired by many international buyers. While export prices and lower overall production have reduced demand, U.S. wheat exports have remained in step with production – roughly 50% of the wheat grown is being shipped overseas each year.

And studies have confirmed that export market development provides a high return on investment, a fact wheat farmers recognize in difficult times.

“It is important to remind ourselves where we would be without exports and what would happen if we suddenly didn’t have export markets,” said Peters.

Still, rising input costs are – or will – force wheat farmers to make tough decisions in future planting seasons. Along with rising costs, there is also pending competition for acreage caused by growing demand for other corn and crops. For example, it is estimated there will be a need for an additional 20 million acres of soybeans in coming years to meet the needs of companies that manufacture renewable fuels.

The ultimate concern is that farmers will cut back on wheat production, threatening U.S. wheat’s worldwide reputation as the most dependable supplier.

Think Harder, Be More Efficient

Unlike other industries, the job of growing wheat has little wiggle room when it comes to production. The difference between a positive bottom line and a negative bottom line often comes down to timing and things that are out of a farmer’s control.

But farmers are pretty good at squeezing as much as they can out of that “wiggle room.”

“You can’t really cut back on inputs like fertilizer, fuel or seed – these are all things you need to plant and harvest a quality crop,” said Peters. “The good thing is that farmers are good at being efficient. In these situations, we really must think about the timing of applying fertilizer to get the best result. There was a time when we would just go out and broadcast fertilizer and not think about it all that much. But now, we put a lot of thought into the process. Not every farmer can no-till, but in areas where no-till can be done, that is a way to cut back on fuel. It’s just adjusting when and where you can.”

 

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Building upon its long relationship with Brazilian flour millers while also learning about current market conditions across South America, U.S. Wheat Associates (USW) recently took part in the Abitrigo Congress in Foz de Iguazu, Brazil.

During this year's Abitrigo Congress, USW presented a course completion certificate for its Online Baking Certification program to the owner one of Brazil’s largest milling companies

During this year’s Abitrigo Congress, USW presented a course completion certificate for its Online Baking Certification program to the owner one of Brazil’s largest milling companies.

Abitrigo, the association representing the Brazilian wheat milling industry, had not held an in-person annual meeting since 2019. USW President Vince Peterson said attendees from all industry sectors were thrilled to finally be able to engage in business face-to-face.

“Everyone we spoke with noted how nice it was to be back together,” said Peterson, who was joined by USW Vice Chairman Michael Peters and staff members from the USW Santiago Office. “Our presence is a way to show how important Brazilian millers and buyers are to U.S. wheat producers and the entire U.S. wheat industry. It gives us an opportunity to interact with key wheat buyers and have discussions with both new and long-time representatives of the mills.”

Peters, who was attending his first Abitrigo meeting, was impressed with the work of the USW Santiago office, which was represented by Regional Director Miguel Galdos, Assistant Regional Director Osvaldo Seco, Technical Specialist Andres Saturno and Senior Marketing Specialist Claudia Gomez.

“It was very clear that our staff has tremendous relationships with millers in that part of the world and have earned the respect of the industry,” said Peters, a wheat producer and cattle rancher from Okarche, Oklahoma. “It is a tough and competitive market for U.S. wheat, but we’ve remained connected and have done a great job of maintaining U.S. wheat’s reputation for providing a high-quality product.”

USW took center stage during one segment of this year’s meeting when it presented a course completion certificate for its Online Baking Certification program, a new USW technical project that promotes baking methods using all six U.S. wheat classes. The recipient owns one of Brazil’s largest milling companies.

“Having a significant business owner take her personal time to take the USW baking course is quite a compliment,” Peterson noted.

Abitrigo provides more information about its endorsement of the USW Online Baking Certification program on its website.

While Brazil has been importing U.S. wheat for more than 40 years, it still is an extremely competitive market due to Brazil’s domestic production and advantages enjoyed by some U.S. competitors, including Argentina and other countries that have mostly duty-free access under the Mercosur Agreement. In 2019, Brazil agreed to implement an annual duty-free tariff rate quota (TRQ) of 750,000 metric tons of wheat imports from countries not part of the Mercosur Agreement.

Peterson pointed out that the quality of U.S. wheat remains desirable to many Brazilian buyers.

“The core of the Brazilian milling industry recognizes that U.S. hard red winter (HRW) and soft red winter (SRW) wheat – and even hard red spring (HRS) wheat, which has been purchased by Brazilian customers this year – are the most applicable wheat sources to produce the best quality Brazilian wheat food products. Because of this, the market continues to be a long-term priority. And we will continue providing the best service and support we can to Brazilian millers and bakers.”

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A dramatic increase in demand for oilseeds could impact U.S. wheat production in coming years, with significantly more acres expected to be planted in soybeans destined for new and expanded crushing facilities.

Between 20 million and 25 million additional acres of soybeans will be needed to meet requirements of the renewable diesel industry, some analysts are predicting.

At the same time, global demand for wheat is also expected to rise, setting up dynamic competition for acreage in states where both crops are grown. For the U.S. wheat industry, the situation creates important questions: How much wheat acreage could potentially be lost to soybeans? Will lost acres impact the U.S.’ standing as the world’s most dependable wheat supplier? Can wheat and soybeans co-exist in a competitive environment?

This chart shows acreage planted in soybeans and wheat in 2022 in the country's top 10 soybean states, according to USDA's National Agricultural Statistics Service.

This chart shows total acreage planted in soybeans and total acreage planted in wheat in the country’s top 10 soybean states in 2022, according to USDA’s National Agricultural Statistics Service (NASS).

Where possible, farmers may adapt and double-crop more wheat and soybeans to maintain supplies of both crops. It is already a common practice in top soybean states like Illinois, Indiana and Ohio, where soft red winter wheat is the dominant class. But in soybean states that produce hard red winter and hard red spring wheat – Kansas, Nebraska, South Dakota and North Dakota, for example – allotting acreage is more complicated due to average rainfall and shorter growing seasons.

The ultimate question is if U.S. farmers will be able to meet the demand for both wheat and soybeans by doing what they have always done – figure out a way to do more with less.

Many Options, Limited Acres

Mike Krueger, a grain industry consultant with Lida Communications, put a spotlight on the emerging “competition for acreage” during last month’s U.S. Wheat Associates World Staff Conference.

While describing volatility in global wheat and grain markets due uncertain market conditions, Krueger noted a more predictable factor that will affect markets and decisions made by U.S farmers.

“Renewable diesel is projected to increase eight-fold by 2030 and significant investments of more than $2 billion are being put into new and expanded soybean processing plants in the U.S. right now,” Krueger explained. “The U.S. soybean crush will expand by 10%, or more. We are talking vast numbers, and while sunflower and canola should be big beneficiaries of renewable diesel, soybeans are certainly going to be in even higher demand.”

A boost of 20 million acres would catapult soybean and go a long way toward meeting the projected oilseeds demand.

But at what cost?

The U.S. has consistently ranked as one of the top five wheat producing countries in the world and one of the top three wheat exporting countries. Would a major shift in acreage affect U.S. production, thus its place as a supplier?

“We must remember there’s also a global demand for wheat, as well as corn, and we have to consider ongoing drought and weather patterns, not to mention political conflicts that are impacting grain production and supplies all over the world,” Krueger said. “All of this, all the things going on that affect global trade, will put major emphasis on overall crop production in the U.S. and the entire Northern Hemisphere. To be honest, no crop can afford to give up or lose acres.”

Can Double-cropping Help?

Higher prices caused by global demand for wheat and soybeans appears to be motivating more farmers in the Midwest to consider seeding soft red winter wheat in the fall and soybeans in the same field following wheat harvest.

About 40% of producers responding to a Purdue University Ag Economy Barometer survey in June indicated they have utilized a wheat and soybean double-crop rotation in the past. About 28% of those producers planned to increase the amount of cropland devoted to this rotation by seeding more wheat this fall followed by soybean plantings on the same acres in spring 2023.

Some analysts have predicted that renewable diesel demand in coming years will require the planting of at least 20 million additional acres of soybeans. This chart from USDA shows soybean acreage over the past decade.

Some analysts have predicted that renewable diesel demand in coming years will require the planting of at least 20 million additional acres of soybeans. This chart from USDA shows soybean acreage and harvest over the past decade.

Ultimately, the biggest factor behind whether farmers begin growing an extra crop of wheat is what price they can get for the crop.

“The shift toward increasing soft red winter wheat acreage is likely the result of the expected profitability improvement of the wheat and double-crop soybean rotation,” James Mintert and Michael Langemeier, authors of the Purdue survey, noted.

A move by the federal government earlier this year to increase the number of counties eligible for double-cropping insurance was a move aimed at boosting U.S. production of wheat and soybeans by reducing the risk for farmers who decide to take the double-crop route.

Producers are well-aware that there are drawbacks to double-cropping wheat and soybeans.

“Compared to single-crop soybeans, double-crop soybeans have a shorter growing season due to the delay in planting until the wheat is harvested, which often result in reduced yields,” said Scott Gerlt, Chief Economist for the American Soybean Association (ASA). “Despite this drawback, double-cropping does allow increased production.”

Wheat Demand to Grow

Despite questions about acreage and production, U.S. wheat continues to be in demand by international customers because of its consistent quality and reliability.

Krueger expects the demand will continue to expand.

“A primary reason is that global wheat supplies are likely to shrink due to a renewed focus on soybeans, and to a lesser extent, corn,” Krueger said. “Another factor favoring U.S. producers involves shipping and logistics limitations that hamper competing wheat-growing countries, including Russia and Ukraine.”

Effects from a third consecutive La Nina would further pressure global supplies.

“These things will undoubtedly lead to more export demand for wheat,” Krueger said. “Can the U.S. meet the demand? That is the puzzle that’s still being put together. Farmers make decisions every single planting season. They only have so many acres to work with.”

 

 

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By Michael Anderson, USW Assistant Director, West Coast Office

On Nov. 13, 1991, the Chicago Tribune ran this headline: “Soviet Bread Prices Skyrocket By 600%.” Bread was already in short supply and if you bought it that morning, you would have paid 60 kopeks, by that afternoon it was 3.60 rubles.

Apparently, the memory of such an event nearly three decades ago is still fresh in the mind of Russia’s President Putin. After he criticized the high price of flour and bread recently, the government quickly announced plans for wheat export taxes and an export quota, even though Russian farmers produced a massive wheat crop for this marketing year.

U.S. Wheat Associates (USW) is not surprised. Despite making up a quarter of the worldwide wheat market, Russia continually insists on controlling exports to keep domestic food prices under control.

Over the last 13 years, Russia has placed some form of restriction on wheat exports six times, including twice in the last year. And, as a result, that choice always led to unnecessary disruptions to wheat buyers from the run up in world wheat prices and uncertainly over supplies.

In 2007, for example, Russia had one of its best crops ever to that point, harvesting just under 50.0 million metric tons (MMT) of wheat. Despite the steady increase in Russian production, a steep rise in the domestic price of wheat was remedied by a 10 percent export tax followed by a 40 percent export tax in January 2008, that continued until July of that year.

Drought and record high temperatures caused severe damage to the 2010 Russian harvest. While global wheat prices tripled, Russia enacted a complete ban on Russian wheat exports that lasted from Aug. 15, 2010, through July 1, 2011.

In early 2015, a depreciation in the Russian ruble led to attractive Black Sea wheat prices. Traders exported a record amount that season. To slow down exports, Russia once again applied an export duty. The tax was lifted in May but implemented again in July (the Russian trade calendar runs from July 1 to June 30).

When uncertainty over the impact of COVID-19 erupted in the spring of 2020 a Russian export quota of 7.0 MMT was applied to the April 1 to June 30, 2020, shipping window. By the end of April, that quota was exhausted and put a stop to all Russian wheat exports until July 1, 2020, the beginning of the new export calendar.

Which brings us to today. Russia has once again announced plans for an export quota that will run between Feb. 15 and June 30, 2021. The plan calls for a €25 per metric ton (MT) export tax on wheat ($30.40/MT) until a 17.5 MMT quota is met – at which point wheat exports will be stopped.

Aside from export taxes and outright bans, the Russian grain industry has also seen rail shipments slow the movement of wheat to export terminals, increased scrutiny on approval paperwork on exporting vessels and a slowdown in receiving phytosanitary certificates to as many as six days.

In fact, grain traders have told news services that they are already experiencing delays in obtaining export documents from Russia’s customs service.

Fortunately, the U.S. wheat industry offers reassurance in the fact that our doors are open for business 365 days per year. In our collective efforts to efficiently supply the widest range of the highest quality wheat in the world, we live up to our claim as the world’s most reliable supplier.

The U.S. government by law cannot block exports except in the cases of a declared national emergency. Further, export taxes are expressly forbidden by the U.S. Constitution.

 

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By Erica Oakley, USW Director of Programs

It has been a busy couple of weeks for the U.S. wheat industry in Japan. On Nov. 14, 2019, the Governor of Oregon, Kate Brown, held a “Friends of Oregon” reception where our friend and recently retired colleague, Mr. Wataru “Charlie” Utsunomiya was recognized for his long-term contribution to wheat trade between Oregon and Japan. Charlie’s relationship with Oregon began 40 years ago and included living in the state for more than a decade. The Governor thanked Charlie for “his extraordinary service to wheat growers and to Oregonians” and acknowledged the ties “between the U.S. and Japan around wheat that he [Charlie] has built and maintained.” With more than 100 in attendance at the reception, the strong relationship between Japan and Oregon and Charlie’s contribution to that relationship was palpable and heartwarming.

 

Wataru “Charlie” Utsunomiya accepts the “Friends of Oregon” award from Governor Kate Brown.

Charlie with Governor Kate Brown, friends and staff from USW, the Governor’s office, Oregon Department of Agriculture and the Japanese milling industry.

The reception was fortuitously timed as days later the USW Tokyo Office, now led by Mr. Kazunori “Rick” Nakano, held their annual Crop Quality (CQ) seminar on Nov. 18 and the Japan Buyers Conference on Nov. 19. This year’s CQ seminar had more than 140 in attendance – a record for the annual seminar held in Tokyo.

As the Japan Buyers Conference took place on Tuesday, the Lower House of Japan’s legislative body was passing the U.S.-Japan Trade Agreement, which moves U.S. wheat growers one step closer to the same preferential advantage as Canada and Australia. The flour millers that attended the conference in Tokyo represented more than 80% of the 2.78 million metric tons (MMT) of total 2018/19 commercial wheat sales to Japan reported by USDA as of May 31, 2019. There were 22 U.S. representatives, including 11 farmers and state wheat commission representatives from five states.

The conference focus differed slightly between the morning and afternoon sessions, with the morning audience largely comprised of milling personnel. Mike Spier, USW Vice President of Overseas Operations, kicked off the morning with welcome remarks. Drs. Michael Pumphrey of Washington State University and Senay Simsek of North Dakota State University both emphasized the focus on quality. Pumphrey discussed quality-first breeding techniques in the Pacific Northwest (PNW) and Simsek focused on the growing trend for clean labels and how can traits in most desirable varieties can provide the quality characteristics needed to forego additives. Bon Lee of the Wheat Marketing Center (WMC) rounded out the morning by highlighting WMC’s programmatic efforts and services for Asian customers.

Bill Flory, Idaho wheat farmer and commissioner, and Bon Lee, Wheat Marketing Center, at the 2019 USW Japan Buyers Conference. Photo courtesy of Idaho Wheat Commission.

The afternoon session shifted to a broader audience with Zeke Spears, Agricultural Attaché USDA Foreign Agricultural Service, providing opening remarks. Doug Goyings, USW Chairman and a wheat farmer from Paulding, Ohio, thanked the attendees for their long-standing relationship and shared the history and pictures of his family operation. Dr. Bill Wilson, North Dakota State University, discussed dynamic changes in the wheat marketing system, including changing consumer demands, logistics and technology, as well as increased risk and overall industrial changes. Greg Guthrie, BNSF Railway, provided an overview of BNSF’s efforts to meet demand and how technological advancement will benefit the Japanese wheat supply chain. Steve Wirsching, USW Vice President and West Coast Office Director, brought the conference full circle highlighting the superior value of U.S. wheat and efforts to ensure our Japanese customers receive the quality wheat they deserve.

2019 USW Japan Buyers Conference. Photo courtesy of Idaho Wheat Commission.

The day ended with a reception at the Palace Hotel with remarks from Goyings; Mr. Makoto Osawa, Ministry of Agriculture, Forestry and Fisheries, Vice-Minister for International Affairs; Mr. Gary Meyer, U.S. Embassy Minister-Counselor for Agricultural Affairs; and Mr. Yoshihisa Fujita, Japan Flour Millers Association. The reception rounded out a very welcome and successful conference.

Header Photo Caption: Doug Goyings, USW Chairman, welcomes the Japan Buyers Conference attendees.

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By Claire Hutchins, USW Market Analyst

Every year, U.S. Wheat Associates (USW) hosts educational seminars around the world to engage with overseas customers and share information on the unique quality and marketing characteristics of that’s year’s U.S. wheat harvest. In early November, I had the opportunity to join my USW colleagues for the first time in Dubai, U.A.E. and Cairo, Egypt for two crop quality seminars and the 30th anniversary celebration of the International Association of Operative Millers (IAOM). These events were substantially different, but equally important opportunities to engage with U.S. wheat customers around the world.

Crop quality seminars give customers an in-depth look at the quality of each class of U.S. wheat following that year’s harvest and an overview of broad supply and demand conditions affecting global wheat markets. Led by USW milling, baking and marketing specialists, as well as outside consultants, these seminars feature presentations not only detailing the growing conditions for each U.S. wheat class, but each class’s grading characteristics, flour testing results and baking data. Topics also range from competitor production highlights to foreign policy issues affecting international trade.

At the seminars that I attended, USW’s Ian Flagg, Regional Vice President, European, Middle Eastern and North African Regions’ Chad Weigand, Assistant Regional Director, Sub-Sahara African Region; and Tarik Gahi, Milling and Baking Technologist, Middle Eastern, East and Northern African Region; lead the crop quality, global supply and demand and marketing presentations. I had the opportunity to present “Understanding the USW Price Report and Basis,” an intuitive, how-to-read exploration of the USW Price Report we publish each week. Navigating U.S. export markets and making purchasing decisions is a complicated, risk-involved process and USW wants its customers to have as much information as possible for all wheat buying decisions.

USW Market Analyst, Claire Hutchins, presents on USW’s weekly Price Report at a 2019 crop quality seminar in Cairo, Egypt.

USW believes in complete supply chain transparency and hosts these crop quality seminars to educate buyers on the quality, end use versatility, and value of U.S. wheat. The USW Price Report adds to the philosophy of supply chain transparency because it gives the world’s buyers an independently derived baseline of export prices for U.S. wheat by class, protein level, export region and delivery month.

From these crop quality seminars, I learned how to better explain the distinct challenges and opportunities for buyers contracting for wheat value following this year’s harvest. USW tries to make the vast array of quality and pricing information accessible and intuitive to buyers and I am proud to be involved in these efforts.

The IAOM conference for the Middle East and Africa region in Dubai gave me the unique opportunity to interact with a global array of millers, bakers, technology specialists and grain traders. USW was instrumental in helping found IAOM in the Middle East in 1989 when the organization, a handful of millers and several industry specialists came together to create a professional and educational space to interact every year. Today, IAOM boasts over 1,000 members from all over the world and from all corners of the grain trading, storing, shipping, milling, processing and baking industries.

The conference gives members the opportunity to network, build relationships and learn about new topics critical to the wheat milling industry. USW is also an educational sponsor, providing funding and staff speakers at most IAOM conferences. This year, Ian Flagg presented on U.S. supply and marketing conditions while Tarik Gahi moderated a panel of topics varying from grain storage to technologies for flour and whole flour production to general innovations in flour milling. USW also sponsored a booth at the event which allowed customers and colleagues to ask USW staff about technical trends in milling and lab studies, global marketing conditions, how to communicate with U.S. grain traders and U.S. wheat supply and quality characteristics.

USW’s Europe and MENA Regional Vice President, Ian Flagg, presents on U.S. supply and demand conditions affecting global markets at the 30th annual IAOM Middle East and Africa conference in Dubai, U.A.E.

The IAOM conference, like the crop quality seminars, gave me an excellent look into USW’s role as a trade servicing organization for overseas customers. USW believes in supply chain transparency and creates every opportunity it can to educate buyers about the quality, versatility and value of U.S. wheat.

Staff from USW’s Rotterdam, Cape Town, and Casablanca offices ready to engage with customers and industry specialists at the 2019 IAOM Middle East and Africa conference in Dubai, U.A.E.

View the latest USW Price Report here and subscribe here to receive the USW Price Report via email every Friday.

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By Steve Mercer, USW Vice President of Communications

When U.S. Wheat Associates (USW) was planning to hold its 2019 Mexico Wheat Trade Conference June 2 to 4, 2019, no one anticipated that the threat of new tariffs on Mexican imports would come just two days before the meeting started.

“What we thought was an unfortunate coincidence turned out to be a fortunate opportunity to address the trade policy concerns face to face with our Mexican customers,” said USW President Vince Peterson. “Talking through the potential concerns that way allowed us to move on to talk about how we can work together to navigate the policy issues and increase the efficiency and value of Mexico’s U.S. wheat purchases. We found that our shared challenges bring us closer together.”

2019 Mexico Wheat Trade Conference Cancún

 

In the just ended marketing year 2018/19, Mexican flour millers imported more U.S. wheat than any other country. The flour millers that attended the conference in Cancún represented about 80% of the 3.3 million metric tons (MMT) total 2018/19 commercial sales to Mexico reported by USDA as of May 30. USW Chairman Chris Kolstad, a wheat farmer from Ledger, Mont., thanked the millers for this and past business, and assured them that “USW and the National Association of Wheat Growers will do everything in our power to ensure that the USMCA Agreement on Trade is approved.”

Kolstad said the North American Free Trade Agreement (NAFTA) served both countries well and the United States-Mexico-Canada Agreement (USMCA) will continue to benefit the three countries with increased trade and new economic opportunity. His focus set the stage for insight from other conference speakers into why approval of USMCA is so important. They all agreed that the agreement will be implemented — but they do not know when it will happen.

Interviewing conference attendee, Francisco Salas Romero, Harinas.

Interviewing conference attendee, Francisco Salas Romero, Harinas.

“NAFTA has integrated the U.S. and Mexican economies steadily over 30 years,” said speaker Juan Carlos Baker, who served on the Mexican government’s USMCA negotiating team and now is a private trade consultant in Mexico. “But recently, the negative voices about NAFTA and USMCA have been the loudest. We must tell the positive stories about our trade benefits and the USMCA. I believe we will have a new agreement and will be able to continue trade, but how open it will be is up to us to determine.”

José Luis Fuente, President of Camara Nacional de LA Industria Molinera de Trigo (CANIMOLT), offered an inspired appeal to work together to tell officials in both countries that export opportunities must be improved, not restricted.

José Luis Fuente, President of Camara Nacional de LA Industria Molinera de Trigo (CANIMOLT)

José Luis Fuente, President of Camara Nacional de LA Industria Molinera de Trigo (CANIMOLT)

“We know that U.S. wheat farmers and U.S. Wheat Associates have done many things to tell this story,” Mr. Fuente said. “We have a partnership based on affection that is backed by actions. But actions are more needed now in this unusual trade environment.”

A large portion of the conference focused on other actions that can help facilitate U.S. wheat trade between Mexico and the United States. Two speakers focused on how millers can manage price risk. Christopher Lawrence, Senior Market Strategist with Rabobank, covered how best to hedge exchange rate exposure between U.S. dollars and Mexican pesos. Austin Damiani, an independent wheat futures trader from Minneapolis, Minn., provided valuable insight into hedging price risk.

<em>Austin Damiani, independent trader, Minneapolis Grain Exchange</em>

Austin Damiani, independent trader, Minneapolis Grain Exchange

“It is very important to consider locking in prices with futures,” Damiani said. “I am a speculator who bets on how the market will move. That is a risky activity. But I believe that as wheat buyers, if you are not hedging you are speculating.”

Panel discussion speakers: Justin Gilpin, CEO, Kansas Wheat; and Luis Olivera, Executive Vice President Sales, Ferromex, Mexico City.

Panel discussion speakers: Justin Gilpin, CEO, Kansas Wheat; and Luis Olivera, Executive Vice President Sales, Ferromex, Mexico City.

With so many logistical options for delivering wheat to Mexico, USW Regional Vice President Mitch Skalicky and his colleagues based in Mexico City who planned the conference emphasized commercial rail issues and opportunities in the program. A panel discussion on optimizing rail shipments and minimizing additional expenses included the President of Kansas City Southern Railroad-Mexico, and the Executive Vice President of Sales for Ferromex (Mexico’s national rail system). These two private sector companies are the principal railroads who operate Mexico’s rail lines through long term concessions that they have with the Government of Mexico. Representatives from the Mexican government and U.S. wheat grower organizations were also included on the panel. Gabriel Letona of Advan Sea in Panama City, Panama, also discussed the comparative advantages of FOB and CIF ocean freight contracting.

Presentations on contracting to receive U.S. wheat of superior value and how the U.S. farmer co-operative system has evolved as a major source of efficiently delivered wheat and grain exports rounded out what participants deemed as a very welcome and successful conference.

Chuck Conner, CEO, National Council of Farmer Cooperatives

Chuck Conner, CEO, National Council of Farmer Cooperatives

“We have 14 farmers here from 13 different states and U.S. Wheat Associates staff from 3 offices to show you that we take your business seriously,” Chris Kolstad told the millers. Those farmers, state commission members and USW, he added, “are all united in our desire and goal to earn your full trust in the United States as your primary source of imported wheat.”

*Header Photo Caption: Panel on “Optimizing Rail Operations of U.S. Wheat Shipments and Minimizing Additional Expenses for Mexican Importers.

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Seventy-nine people participated in the 2018 edition of the biennial U.S. Wheat Associates (USW) North Asia Marketing Conference (NAMC) Aug. 26 to 28 in Kota Kinabalu, Malaysia.

Top management from leading milling companies in Japan, Korea and Taiwan, as well as U.S. wheat producers, state wheat commission staff and industry partners gathered to discuss current market factors and trends, U.S. wheat industry activities and the 2018 U.S. wheat harvest. Topics from 21 different speakers included the Global Wheat Outlook, Producing More and Better Wheat in More Sustainable Ways, The Trump Trade Agenda, and The Southeast Asian Milling Industry.

Quality improvement was a reoccurring theme at this year’s conference.

“We want customers to know that we are continuing research and work toward quality improvement,” said Mark Fowler, USW Vice President of Overseas Operations, whose presentation focused on why U.S. wheat remains the best choice for North Asia customers. “It is something that U.S. wheat farmers believe in and continue investing in.”

USW Vice President and West Coast Office Director Steve Wirsching provided insight to how U.S. wheat quality continues to improve and was joined by Arron Carter, wheat breeder and Washington State University associate professor, in a discussion on plant breeding innovation. Carter also expanded on these topics in a popular, second presentation on how U.S. farmers are producing more and better wheat in more sustainable ways.

USW President Vince Peterson addressed the current trade policy climate, its current and future impact on the market and discussed what U.S. wheat industry is doing to support its customers.

“We understand and share our customer’s concerns on trade policy affecting the region,” said Fowler.

U.S. participants also provided a wide-ranging look at the supplies and quality of U.S. hard red winter (HRW), hard red spring (HRS) and soft white (SW) wheat classes during the conference.

Additional guest speakers and topics included: Kenji Takihara, Executive Officer, Nisshin Seifun Group, providing a Japan market outlook; Kuen-Ho Shih, President, CGPRDI, highlighting the development and prospect of the Taiwanese market; Chang Kyoon Park, Chairman, KOFMIA, providing a Korea market outlook; Michael Drury, Chief Economist, McVean Trading and Investments, LLC, discussing the U.S. market environment; Jeff McPike, Manager of Global Marketing, McDonald Pelz Global Commodities, highlighting mega trends in world grain markets and North American grain logistics infrastructure; Joong-Ho Ahn, Senior Managing Director, PanOcean, providing an overview of the world ocean freight market; Collin Watters, Executive Vice President, Montana Wheat & Barley Committee covering North American Grain Logistics Infrastructure; Matt Weimar, USW Regional Vice President, discussing the Southeast Asian milling industry; and Joe Sowers, USW Regional Vice President, providing a global wheat outlook.

“This conference is always an excellent opportunity to meet with buyers and millers from collectively the largest U.S. market,” said Glen Squires, CEO, Washington Grain Commission (WGC). “It allows us, the state wheat commissions, and U.S. Wheat Associates to hear and discuss important issues and to showcase efforts underway to better serve them as customers in providing high quality wheat.”

In addition to the wheat buyers from milling companies at the conference, U.S. wheat producers from seven states either attended or provided financial support for the conference. USW thanks the Idaho Wheat Commission, the Oregon Wheat Commission and the Washington Grain Commission for their sponsorship and additional participants from the Kansas Wheat Commission, Montana Wheat & Barley Committee, North Dakota Wheat Commission and Ohio Small Grains Marketing Program for their support to make the conference a continued success. Additional funding was provided by USDA’s Foreign Agricultural Service.

“It is important for us to be present and engaging with our customers and serve as a reliable resource,” said Fowler. “But it also means taking the time to listen to their needs and input.”

USW has posted presentations from the 2018 North Asia Marketing Conference on its website here: https://www.uswheat.org/marketing/2018-north-asia-marketing-conference/