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A Good Day to Share the Good Quality of the 2018 U.S. Durum Crop

Happy World Pasta Day! What a perfect day for U.S. Wheat Associates (USW) to share an overview of the 2018 U.S. Northern Durum and Desert Durum® crop quality results. Analysis shows the Northern durum crop is sound with high protein and excellent kernel characteristics. Vitreous kernel count and average kernel size are high and quality is balanced across the region. Desert Durum® production is down this year, though the 2018 crop will deliver the valuable milling, semolina and pasta quality traits that customers have learned to expect and appreciate.

Here is a summary of test results for Northern durum and Desert Durum®. As always, USW reminds buyers to be diligent with contract specifications to ensure they receive the quality they need.

Northern Durum

Weather and Harvest: A favorable growing season pushed yields to near record levels; production was up almost 60 percent compared to 2017. As with the hard red spring crop, mid-season rain boosted crop conditions and yield potential. Harvest was complete in most areas by late September.

Wheat and Grade Data: The crop average grade is U.S. No. 1 Hard Amber Durum (HAD) with average test weight of 61.4 lbs/bu (79.9 kg/hl) and average total kernel defects of 1 percent. The average vitreous kernel content is 90 percent, up from both last year and the 5-year average, with more than half of the crop above 90 percent vitreous compared to 45 percent in 2017.

Regional average protein is 14.5 percent on a 12 percent moisture basis (12% mb), equal to 2017 and slightly above the 5-year average. The crop average thousand kernel weight (TKW) is 41.2 g, the heaviest in six crop years, and the percent of large kernels is notably higher than a year ago. The average falling number is 425 sec. Although disease pressure was slightly higher in 2018 compared to 2017, DON was undetectable or <0.5 ppm in the samples analyzed.

Semolina and Processing Data: The Buhler laboratory mill average total extraction of 74 percent and semolina extraction of 69.3 percent are both higher than last year and the 5-year averages. The milled product ash and speck counts are also higher than last year and the 5-year averages. The gluten index average is 57.1 percent compared to 86.3 percent in 2017. Last year’s drought conditions supported exceptionally high gluten index values, while the 2018 values are more typical.

Semolina and cooked spaghetti evaluations show similar semolina color values to a year ago, but lower dry pasta color. Mixing properties are slightly weaker and cooked firmness values are similar to the 5-year averages. The higher extraction levels and higher ash levels on the Buhler lab mill may have contributed in part to the lower color scores on the dry pasta. Evaluation of the cooked spaghetti shows slightly lower firmness than 2017, but higher than the 5-year average.

Desert Durum®

Wheat and Grade Data: In 2018, the average grade is No. 1 Hard Amber Durum (HAD). Test weight average was 62.8 lbs/bu (81.8 kg/hl). The average vitreous kernel content (HVAC) is 98.0 percent, a high average typical of Desert Durum®. Average damaged kernels are 0.2 percent and total defects are 0.6 percent. Desert Durum® is characterized by its kernel low moisture content, and this year’s average was 6.7 percent. Protein content average was 13.4 percent (12% mb).

Semolina and Processing Data: The semolina b* value was 30.5, similar to 2017 b* value of 30.9.  Wet gluten of 32.3 percent and gluten index of 75 percent. Semolina Mixograph score was 8 and Alveograph W value was 231 (10-4 Joules), both of which indicate high strength.  Pasta color b* value was 44 and score was 9.6. Pasta cooked firmness was 6.9, significantly higher than 2017.

View the full report for Desert Durum® here.
View the full report for San Joaquin Valley Durum here.
View the full report for Sacramento Valley Durum here.

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USDA Confirms Ample U.S. Wheat Supply in 2018/19, Reassures Customers About Availability

By Stephanie Bryant-Erdmann, USW Market Analyst

On Sept. 28, USDA released its Small Grains Summary noting that 2018/19 U.S. wheat production increased to 51.3 MMT, up 8 percent from last year due to improvements in both average yield and harvested area. While this is still 8 percent below the 5-year average of 55.8 MMT, the 2018/19 production coupled with significant carry-in stocks ensure that the U.S. wheat store will remain open and well-stocked throughout 2018/19. Here is a look at 2018/19 U.S. wheat production by class.

Hard red winter (HRW). Last fall, U.S. farmers increased HRW planting in the U.S. Southern Plains due to favorable moisture conditions. That slight increase was not enough to offset decreased planted area in the U.S. Northern Plains where a long-term drought delayed, and in some cases, prevented winter wheat planting. Planted area in Montana fell 6 percent year over year. USDA reported HRW planted area at 23.2 million acres (9.39 million hectares), down 2 percent from 2017. Unfortunately, most of the Southern Plains received little to no moisture until spring, with some areas going from October to April without measurable precipitation. The poor weather caused Oklahoma wheat farmers to abandon 43 percent of their winter wheat area, up from both the 5-year average and the 2017/18 abandonment rate of 36 percent. The average HRW yield in Kansas and Oklahoma, the top two HRW-producing states, decreased 21 percent and 18 percent from 2017/18, respectively. With the drought causing both harvested area and average yields to fall, USDA estimates total 2018/19 HRW production dropped 12 percent to 662 million bushels (18.0 MMT). Though smaller in volume, 2018 HRW quality i is excellent. Read more here.

Hard red spring (HRS). Wet conditions slowed HRS planting but replenished depleted soil moisture across the drought stressed Northern Plains. USDA says U.S. farmers planted 12.1 million acres (4.90 million hectares) to HRS, up 17 percent from the year prior. The beneficial moisture boosting average HRS yields and harvested area. In North Dakota, the top HRS producing state, the average yield climbed 20 percent year over year to a record high 49.0 bu/acre (3.29 MT per hectare), up 41 percent from 2017/18. Idaho farmers also produced record high HRS yields. USDA now reports HRS production at 587 million bushels (16.0 MMT), up 53 percent from 2017/18.

Soft red winter (SRW). Last fall, U.S. farmers planted 5.85 million acres (2.37 million hectares) of SRW, up 4 percent from the year prior, but still 23 percent below the 5-year average. While planting conditions were generally favorable, depressed prices kept planted area low. In early 2018, several U.S. SRW growing areas received excessive moisture that decreased yield potential and the wet weather continued through harvest. USDA reported SRW production totaled 286 million bushels (7.78 MMT), down 2 percent from 2017/18 and 33 percent below the 5-year average of 429 million bushels (11.7 MMT). Read more here.

White wheat (including soft white, club and hard white). U.S. white wheat planted acres stayed close to the 5-year average at 4.15 million acres (1.68 million hectares) in 2018/19. A wet winter boosted yield potential for both the winter and spring crops. The average spring white wheat yield in Washington increased 20 percent to 54.0 bu/acre (3.63 MT per hectare). The slight increase in harvested area and significant improvement in average yields pushed 2018/19 total white wheat production to 272 million bushels (7.41 MMT), a 5 percent increase year over year, and 8 percent above the 5-year average of 252 million bushels (6.86 MMT).

Durum. Farmers planted less durum area this year in response to lower prices and large carry-out stocks during spring planting. USDA estimates 2.00 million acres (810,000 hectares) were planted to durum, down 13 percent from 2017/18 but still 9 percent above the 5-year average of 1.84 million acres (745,000 hectares). USDA estimated total 2018/19 U.S. durum production at 77.3 million bushels (2.10 MMT), up 41 percent from last year. Generally favorable weather boosted yields in the U.S. Northern Plains, with average durum yields increasing to 39.3 bu/acre (2.64 MT per hectare), up 13.3 bu/acre from last year when drought severely impacted the crop. Desert Durum® production fell 8 percent year over year to 10.5 million bushels (385,000 MT) due to sharply lower planted area in both Arizona and California.

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Annual Spring Wheat Tour Sees Improvement from 2017 Drought Impact

By Amanda J. Spoo, USW Assistant Director of Communications

This week, the Wheat Quality Council hosted its annual hard red spring (HRS) and durum crop tour. Participants spent three days mainly in North Dakota surveying this year’s crop and estimating yield. The tour, which surveyed a total of 342 fields, estimated weighted average HRS yield at 41.1 bushels per acre (bu/a), slightly higher than last year’s HRS average of 38.1 bu/a, which was impacted by ongoing drought conditions in western areas. The durum weighted average yield was 39.3 bu/a, in line with last year’s average of 39.7 bu/a, which was a decline from 45.4 bu/a in 2016. While the overall crop looks better than last year, it is still below the tour’s 5-year average of 45.4 bu/ac.

Participants on the tour always represent a wide range of the wheat industry, including millers, traders, farmers, researchers, government officials and media who travel along eight distinct routes covering most of the state’s wheat production.

“The continuing success of this tour is that we make it a value-added experience,” said Wheat Quality Council Executive Vice President Dave Green. “We keep training more and more people and that makes a difference across this industry.”

On the first day, participants drove west from Fargo to Bismarck, with two routes going farther into the western part of the state, and others covering western Minnesota and northern South Dakota. The Day 1 weighted average yield was 41.1 bu/a, up from 38.8 bu/a in 2017. For HRS specifically, the yield was 41.3 bu/a, down from 37.9 bu/a in 2017. The scouts surveyed 138 fields on Day 1, of which 135 were HRS and 3 were durum.

On Day 2, the tour surveyed 148 fields, 135 of which were HRS and 13 were durum. The group moved from Bismarck to Devils Lake. The overall average for Day 2 was 38.8 bu/a, up from 35.7 in 2017. For HRS, the yield was 38.3 bu/a, up slightly from 35.8.

The third day of the tour included a half day of crop surveying. The participants then all returned to North Dakota State University’s Northern Crops Institute in Fargo to compile the overall crop report. On Day 3, participants surveyed at total of 55 HRS fields and one durum field. The Day 3 weighted average yield for HRS was 45.6 bu/a, down slightly from 46.2 bu/a in 2017.

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

“I think what we saw was kind of encouraging in part because there had been concern about scab with this crop, but we saw a lot of spraying for it; and we never felt that more than a handful of fields had a serious scab problem,” said Green. “And we were scouting for it, so we were very positive about what we saw.”

Green added, “I’m also positive that we thought we were headed for a lower protein record relative to how good everything looked going in, but I wouldn’t say the same thing now that we’ve seen the crop. I think it is going to have a wide range of protein and a lot of choices for buyers. I would anticipate that with the heat that us on the crop, the quality is going to be better than normal.”

View highlights and photos from the tour by searching #wheattour18 on Facebook and Twitter. For more information and for results from previous tours, visit the Wheat Quality Council’s website at www.wheatqualitycouncil.org.

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USW Harvest Reports Now Posting Every Friday

Generally cool spring conditions delayed the start of the 2018/19 U.S. winter wheat harvest, but the combines are now in the fields and U.S. Wheat Associates (USW) published a preliminary Harvest Report on May 25. USW Harvest Reports are published every Friday afternoon, Eastern Daylight Time, throughout the season with updates and comments on harvest progress, crop conditions and current crop quality for hard red winter (HRW), soft red winter (SRW), hard red spring (HRS), soft white (SW) and durum wheat.

The weekly Harvest Report is a key component of USW’s international technical and marketing programs. It is a resource that helps customers understand how the crop situation may affect basis values and export prices.

USW’s 14 overseas offices share the report with their market contacts and use it as a key resource for answering inquiries and meeting with customers. USW also publishes the report in Spanish as  “Trigonoticias,” distributed to Latin American wheat buyers and millers and posted on www.uswheat.org.

Anyone may register to subscribe to an email version of the Harvest Report. For the first time this year, USW includes links in the email to additional wheat condition and grading information, including the U.S. Drought Monitor, USDA/NASS Crop Progress and National Wheat Statistics, the official FGIS wheat grade standards and USDA’s World Agricultural Supply and Demand Estimates report. Harvest Reports are also posted online at www.uswheat.org/harvest.

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Even with Lower HRW Outlook, U.S. Wheat Production Called Up for 2018/19

By Stephanie Bryant-Erdmann, USW Market Analyst

With the small, stressed hard red winter (HRW) wheat crop getting the lion’s share of attention, it was an initial surprise to read in USDA’s May World Agricultural Supply and Demand Estimates (WASDE) that U.S. wheat production is expected to increase to 49.6 million metric tons (MMT) in 2018/19. That would be up 5 percent year over year, if realized.

The forecast increase is a result of greater harvested area and slightly higher average yield in the other classes. USDA forecast 2018/19 all wheat average yield at 46.8 bushels per acre (3.15 metric tons [MT] per hectare), up from 46.3 bushels per acre (3.11 MT per hectare) last year. Harvested area is expected to increase 1.3 million acres (526,000 hectares) in 2018/19. Crop condition ratings also matter in this forecast, and as the following by-class reviews show, HRW is clearly the exception to the up-trend in production.

HRW production is expected to be the smallest since 2006/07 at 17.6 MMT. If realized, that would be down 14 percent year over year and 22 percent below the 5-year average. Low farm-gate prices and poor planting weather last fall reduced 2018/19 U.S. HRW planted area to 23.2 million acres (9.4 million hectares), the second lowest planted area on record. That poor start coupled with widespread drought throughout the U.S. Southern Plains set up the current situation where harvested HRW acres are expected to fall 5 percent from 2017/18 to 16.5 million acres (6.68 million hectares).

The large decrease in harvested acres is centralized in the U.S. Southern Plains where HRW crop condition ratings remain poor. In top HRW-producing states of Kansas, Oklahoma and Texas, 51 percent, 65 percent, and 59 percent of HRW is rated poor or very poor, respectively. As a consequence of the drought and resulting poor crop conditions, USDA expects harvested area in Oklahoma to fall 31 percent year over year to 2.0 million acres (810,000 hectares). On May 10, USDA rated 25 percent of HRW in the states surveyed in good to excellent condition, while 45 percent is rated poor or very poor. Read more about the all too evident challenge of wheat farming on the High Plains.

Soft red winter (SRW) production is expected to increase to 8.57 MMT in 2018/19. If realized, that would be up 8 percent year over year, but still 22 percent below the 5-year average. 2018/19 U.S. SRW harvested area is expected to increase 8 percent from the year prior to 4.0 million acres (1.62 million hectares). USDA also expects record high yields in Indiana, Kentucky, Maryland and Michigan due to favorable growing conditions this spring.

On May 14, USDA noted week over week crop condition rating improvements in nearly all SRW-growing states, with 67 percent of the SRW acres surveyed rated good to excellent. Week over week improvements were noted in Illinois and Arkansas where 63 percent of SRW was rated good to excellent, up 10 percentage points and 5 percentage points, respectively, from the week prior.

White wheat.* 2018/19 white winter wheat production is forecast at 6.24 MMT, including 5.66 MMT of soft white (SW) winter wheat and 577,000 MT of hard white (HW) winter wheat. If realized, SW winter wheat production would be up 2 percent year over year, due to increased planted area, while HW winter wheat production would be down 11 percent from 2017/18 due to forecast reduction in average yield. SW winter wheat production is centralized in the Pacific Northwest (PNW) states of Idaho, Oregon and Washington. As of May 14, 71 percent of Idaho SW, 80 percent of Oregon SW and 85 percent of Washington SW was rated in good to excellent condition.

Desert Durum®. USDA expects Desert Durum® production — centralized in Arizona and California and planted in the winter — to total 332,000 MT, up 6 percent from 2017/18 due to significantly better yields in California. In Arizona, the Desert Durum® crop was 90 percent headed by April 29, significantly ahead of the year prior’s pace.

Spring wheat and Northern durum. Snow covered, frozen fields delayed spring wheat and Northern durum planting this year, but U.S. farmers are beginning to catch up. As of May 14, spring wheat and durum planting is 58 percent complete, up from just 30 percent complete the week prior, but still behind the 5-year average pace of 67 percent.

With spring planting still underway, USDA did not provide a by-class breakdown of production for hard red spring (HRS) and durum on May 10. However, USDA did note that combined spring wheat and Northern durum production is projected to increase 34 percent year over year due to “both increased area and yield.” With total U.S. wheat production projected at 49.6 MMT and U.S. winter wheat production projected at 32.4 MMT, that puts 2018/19 spring wheat — including soft white spring, HRS, and hard white spring — and durum production at 17.2 MMT.

Back on March 29, USDA projected U.S. HRS planted area at 12.1 million acres (4.9 million hectares). If farmers are able to realize their planting intentions despite the late start, that would be up 17 percent year over year. Northern durum planted area was forecast at 1.88 million acres (760,000 hectares), down 14 percent, if realized. Still, weather will play a role in farmers’ decisions, and a late spring in Montana and western North Dakota tends to favor increased wheat area. Conversely, it tends to favor increased corn and soybean acres in Minnesota.

To stay in touch with U.S. wheat harvest progress, subscribe to the U.S. Wheat Associates Weekly Harvest Reports, which will start later this month.

*In the May 10 report, USDA combined data for soft white winter wheat and hard white winter wheat. Both soft white (SW) and hard white (HW) can be grown in either the spring or fall. USDA will provide a wheat by-class outlook in July. Similarly, data for HRS, SW spring, HW spring and spring-planted durum were combined into a general “spring-planted wheat” category.

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As Always, Weather Is the Wildcard for U.S. Wheat Planting and Production

By Stephanie Bryant-Erdmann, USW Market Analyst

According to the March 29 USDA Prospective Plantings report, U.S. total spring-planted area will jump to an estimated 14.1 million acres (5.71 million hectares), 12 percent above 2017/18, if realized. The estimate includes 12.1 million acres (4.90 million hectares) of hard red spring (HRS), up 17 percent from 2017, if realized. It is important to note that this is an estimate, as farmers in the top four HRS producing states of Minnesota, Montana, North Dakota and South Dakota have not started planting due to extremely cold, snowy weather across the region.

USDA expects a 1.05 million acre (425,000 hectare) increase in North Dakota spring wheat area, which is forecast at 6.40 million acres (2.59 million hectares). If realized, that would be up 20 percent year over year. Spring wheat acres in Minnesota are also expected to increase 38 percent from 2017/18 levels to 1.6 million acres (648,000 hectares). South Dakota 2018/19 HRS planted area is forecast at 1.05 million acres (425,000 hectares), up 80,000 acres (32,000 hectares). However, the planting window for spring wheat in North Dakota and Minnesota is no more than three weeks; after that the yield potential starts to decrease and farmers choose to plant alternative crops.

“This cold, wet spring could work against spring wheat planting in eastern North Dakota and western Minnesota,” said Mike Krueger, an independent market analyst based in North Dakota. “Farmers in these areas are reluctant to plant spring wheat after late April and right now the forecast is calling for another two weeks of cold weather and snow. If planting is delayed until May, we will probably see a switch to soybeans or other crops.”

USDA forecast Montana HRS planted area at 2.50 million acres (1.00 million hectares), in line with 2017/18 planted area. But, in contrast to eastern North Dakota and western Minnesota, the late spring may increase HRS planted acres in parts of Montana according to Cassidy Marn, marketing program manager with the Montana Wheat & Barley Committee.

“Farmers in Montana have fewer alternatives and, since we can only grow limited quantities of corn and soybeans here, wheat tends to be the last alternative,” said Marn. “Planting peas and lentils is possible, but given the amount of snow we still have on frozen ground, some farmers could miss the window for those crops. Planting spring wheat in June is not ideal, but it is preferable to planting nothing.”

USDA expects U.S. durum planted area to total 2.00 million acres (809,000 hectares), down 13 percent from 2017/18, if realized. The predicted decline is driven in large part by USDA’s expectation that North Dakota farmers will switch from durum to HRS or oilseed crops due to lower returns on durum in recent years. In addition, growers near the border are frustrated by a large volume of durum freely crossing the border from Canada that increases pressure on durum prices. Weather conditions will also affect durum planting decisions.

USDA also updated the winter wheat planted area from its January 2018 estimate, increasing winter wheat planted area by 50,000 acres (20,000 hectares) to 32.7 million acres (13.2 million hectares). The new estimate is still 2 percent below the 2017/18 planted area. The increase came from hard red winter (HRW) area, estimated at 23.2 million acres (9.39 million hectares), up slightly from the previous projection, but still 2 percent below the year prior and 17 percent below the 5-year average.

The decreased HRW planted area makes crop conditions even more crucial. The April 2 USDA Crop Progress report rated 10 percent of Kansas HRW, 9 percent of Oklahoma HRW and 17 percent of South Dakota winter wheat as good, with virtually none of the crop rated as excellent in those states.

Soft red winter (SRW) planted area decreased from the previous estimate to 5.85 million acres (2.37 million hectares), but is still 4 percent above 2017/18 planted area. Overall, conditions for SRW are similar to what growers faced at the same time last year with a majority of the crop rated in good to excellent condition.

USDA expects white wheat acres — planted in both winter and spring — to reach 4.15 million acres (1.68 million hectares) for 2018/19, up 3 percent from 2017/18, but in line with the 5-year average. The U.S. Drought Monitor shows adequate moisture for Washington, but southern Idaho and Oregon are experiencing abnormally dry to moderate drought conditions. Still, USDA reported that the majority of the white wheat crop in those states are in good to excellent condition.

The expected increase in spring wheat area would increase total U.S. wheat planted area to 47.3 million acres (19.1 million hectares) in 2018/19, up 3 percent year over year. The increase was unexpected, but if realized it would still be the second lowest planted wheat area since 1919 when USDA records began.

As always, spring brings the waiting game — all we can do is watch how the crops respond to conditions going forward.

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2018/19 U.S. Wheat Planted Area Expected to Increase Despite Dry Conditions

By Stephanie Bryant-Erdmann, USW Market Analyst

Total U.S. planted wheat area will rise 500,000 acres (202,000 hectares) in 2018/19 due to an expected increase in spring wheat area (including durum) according to Joanna Hitchner of the USDA World Agricultural Outlook Board. The USDA held its annual Agricultural Outlook Forum on Feb. 22 to 23, where Hitchner presented the 2018/19 Grain and Oilseeds Outlook.

USDA forecasts 2018/19 combined spring wheat and durum planted area at 13.9 million acres (5.63 million hectares). If realized, that would be up 2 percent from 2017/18 and the largest spring and durum planted area since 2015/16. Increased spring wheat and durum planted area is expected to more than offset the lowest U.S. winter wheat planted area since 1909. USDA currently estimates 2018/19 (June to May) wheat acreage at 46.5 million acres (18.8 million hectares), a one percent increase from last year, if realized.

Wheat buyers should note that factors affecting planting decisions can change before seed is sown. Long-term dry conditions in top hard red spring (HRS) and durum producing states of Montana, North Dakota and South Dakota may significantly alter farmers’ plans.

In January, USDA reported U.S. farmers planted 32.6 million acres (13.2 million hectares) of winter wheat last fall, down slightly from 2017/18, but 15 percent below the 5-year average. Increases for soft red winter (SRW) and white wheat offset a decrease in hard red winter (HRW). USDA assessed 2018/19 HRW planted area at 23.1 million acres (9.35 million hectares), down 2 percent from 2017/18 with planted acreage down year over year in nearly every HRW-producing state. However, 2018/19 total SRW planted area of 5.98 million acres (2.42 million hectares) increased 4 percent from last year, and white winter wheat planted area increased to an estimated 3.56 million acres (1.44 million hectares), up 1 percent from the prior year. Winter durum planting in the Southwestern United States was estimated at 74,000 acres (30,000 hectares), down 41 percent from 2017/18 and 51 percent below 2016/17.

Based on trend yields, USDA expects the national average yield to grow to 47.4 bushels per acre, up from 46.3 in 2017/18 due to expected increases in spring and durum wheat yields which were hard hit by last year’s drought. USDA projects the wheat harvested-to-planted ratio will increase to 0.83, up slightly from last year’s 0.82 due to a small decrease in expected abandonment rates. Total U.S. 2018/19 wheat production is forecast to rise by 6 percent year over year to 50.0 million metric tons (MMT).

In addition to lower planted area for winter wheat, crop conditions for many HRW-producing states are deteriorating due to sustained drought conditions. On Feb. 26, USDA rated 12 percent of Kansas winter wheat in good to excellent condition, down from 14 percent at the end of December. Winter wheat condition remained unchanged in Oklahoma with just 4 percent rated good to excellent, but declined in Colorado, Montana, Nebraska, North Dakota and South Dakota. SRW conditions improved in Illinois, where 45 percent of the winter wheat crop was rated in good to excellent condition compared to 38 percent last month. USDA will resume weekly U.S. crop progress reports in April.

A decrease in carryover stocks is expected to offset increased production, and the total U.S. wheat supply is expected to fall in 2018/19. USDA forecasts 2018/19 U.S. supplies at 77.5 MMT, down 2 percent from 2017/18, if realized, in part because USDA anticipates a slight increase in domestic use, from 30.4 to 30.7 MMT.

Price competition and large supplies in other wheat exporting countries will continue to pressure demand for U.S. wheat. USDA expects U.S. exports to fall to 25.2 MMT, down 3 percent from the forecasted 2017/18 U.S. wheat export level of 25.9 MMT.

To read more from the USDA Outlook Forum or to download presentations, please visit https://www.usda.gov/oce/forum/.

To see the latest Drought Monitor, please visit https://droughtmonitor.unl.edu/

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Sustained Demand for U.S. Wheat in a New Price Environment

By Stephanie Bryant-Erdmann, USW Market Analyst

Six months into marketing year 2017/18 (June to May), total U.S. export sales of 19.5 million metric tons (MMT) are 8 percent behind last year’s pace according to USDA Export Sales data through Jan. 4. However, the estimated total value of U.S. wheat export sales is 4 percent greater than last year on the same date at $4.72 billion, due to slightly higher export prices according to USDA Export Sales data and USW Price Report data.

A deeper analysis of USDA data shows total sales to six of the top 10 U.S. export markets in 2016/17 are ahead of last year’s pace, demonstrating strong demand for U.S. wheat. Sales of soft red winter (SRW) and soft white (SW) are both ahead of last year’s pace. USDA projects total 2017/18 exports will fall slightly to 26.5 MMT, which, if realized, would be 8 percent below 2016/17 but 1 percent above the 5-year average pace.

USDA reported hard red winter (HRW) year-to-date exports at 7.79 MMT, down 10 percent from the prior year. Still, 2017/18 export sales are 10 percent ahead of the 5-year average due to competitive prices for medium protein HRW and the good, overall quality of this year’s crop. The estimated value of year-to-date HRW export sales is 6 percent above 2016/17 due to a 14 percent increase in the average U.S. HRW free-on-board (FOB) price that is supported by the increased premiums for HRW with higher protein. Mexico is currently the number one HRW purchaser. As of Jan. 4, HRW sales to Mexico totaled 1.58 MMT, up 28 percent from last year’s pace. Sales to Indonesia are also up 28 percent year over year at 430,000 metric tons (MT). HRW purchases by Algeria total 456,000 MT, more than double last year’s sales on this date. To date, HRW sales to Venezuela totaling 120,000 MT are nearly four times great than the 2016/17 pace.

Both export sales volume and value of SRW for 2017/18 are up due to the excellent quality of this year’s crop and relatively competitive pricing. Export sales are up 7 percent year over year at 2.02 MMT, boosting estimated export sales value to $400 million, or 12 percent more so far this year. As of Jan. 4, total sales to 11 of the top 20 U.S. SRW export markets from 2016/17 are higher than last year. Sales to Colombia are 12 percent ahead of 2016/17 at 198,000 MT. Nigerian SRW purchases total 234,000 MT, up 12 percent from last year. Sales to other Central and South American countries, including Brazil, Peru, Panama, Venezuela and El Salvador, are also ahead of the 2016/17 pace.

Hard red spring (HRS) sales of 5.15 MMT are down 25 percent year over year and 7 percent below the 5-year average. Higher prices due to smaller 2017/18 production have slowed HRS exports thus far in 2017/18, but global demand for HRS is strong. Year-to-date in 2017/18, the average FOB price of HRS is $293 per metric ton ($7.97 per bushel), compared to $241 per metric ton ($6.55/bu) in 2016/17, according to USW Price Report data. As of Jan. 4, buyers in Japan purchased 878,000 MT, up 20 percent from 2016/17. Sales to Taiwan of 518,000 MT are up 17 percent from last year’s sales on the same date. The Philippines continues to import the largest volume of HRS, though at a 6 percent slower pace so far.

As of Jan. 4, exports of soft white (SW) wheat are up 22 percent year over year at 4.30 MMT. That is 28 percent greater than the 5-year average. Sales to the top 10 SW customers are ahead of last year’s pace, supporting an estimated export value of $896 million, up 25 percent from the prior year. Philippine millers purchased 946,000 MT, up 16 percent compared to last year’s sales on the same date. South Korean sales are up 43 percent at 674,000 MT. U.S. SW sales to China, Thailand and Indonesia are also up. Year-to-date, Indonesia has purchased 515,000 MT, compared to total 2016/17 purchases of 270,000 MT. Thailand sales are up 18 percent year over year at 217,000 MT. Chinese purchases of 306,000 MT are already greater than 2016/17 total SW sales.

Year to date durum exports total 272,000 MT, down 32 percent from the same time last year, and below the 5-year average, with tighter supplies and resulting higher prices. The average export price for U.S. durum is up 5 percent over last year at this time according to USW Price Report data. To date, Nigeria, the European Union (EU), Algeria and Guatemala are the top durum buyers. A significant portion of the first quarter 2017/18 sales is designated as “sales to unknown designations.

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USW Reviews Crop Quality for the 2017/18 Hard Red Spring, Soft White and Durum Crops

USW and its partner organizations have completed the crop quality analysis of the 2017/18 U.S. hard red spring (HRS), soft white (SW) and durum crops. The final data is summarized below. The complete analyses will appear in class-specific reports and USW’s 2017 Crop Quality Booklet, and shared with hundreds of customers around the world as part of USW’s annual Crop Quality Seminars.

Full regional quality reports for the 2017 HRS, SW, northern durum and Desert Durum® crops are posted at www.uswheat.org/cropQuality.

Hard Red Spring. USDA estimates that the total 2017/18 HRS supply (excluding imports) is down 19 percent from 2016/17 due to smaller production and beginning stocks.

Overall, 97 percent of Eastern Region and 83 percent of Western Region samples graded U.S. No. 1. The overall average test weight is 61.6 lb/bu (81 kg/hl), similar to the 5-year average, though the Western Region average is lower due to drought. The average protein is 14.6 percent (12 percent mb), higher than both 2016 and the 5-year average. More than one-half of all samples have greater than 14.5 percent protein in 2017 compared to just 36 percent in 2016.

The smaller 2017 HRS crop has many positive attributes, including high grades, plentiful protein, little to no DON and very good functional performance. Protein levels, shrunken and broken kernels and thousand kernel weights are more variable than recent years due to the vast differences in growing conditions across the region. Diligent contract specifications are still encouraged on this high-quality crop to ensure buyers get the quality expected.

Soft White. USDA estimates total 2017 SW production at 6.14 MMT, down slightly from 2016. Of that, the Washington Grain Commission estimates white club (WC) accounts for 359,000 MT.

The 2017 SW and WC overall average grade is U.S. No. 1. The average SW test weight of 60.9 lb/bu (80.1 kg/hl) is close to last year’s 60.8 lb/bu (80.0 kg/hl), while WC test weight of 60.2 lb/bu (79.2 kg/hl) is slightly less than 2016’s 60.8 lb/bu (80.0 kg/hl). The overall SW and WC wheat protein contents (12 percent mb) of 9.6 percent and 9.4 percent, respectively, are each 0.5 percentage point below the respective 2016 values and well below the wheat protein 5-year averages.

The 2017 PNW soft white wheat crop is generally characterized by having similar kernel characteristics to last year with good test weight, lower moisture content, lower protein content, higher falling number values and acceptable finished product characteristics. This year’s WC quality characteristics follow the same trend as SW. The high protein segment of the SW crop provides opportunities in blends for Asian noodles, steamed breads, flat breads and pan breads.

Durum. Production in the U.S. Northern Plains is down by more than 50 percent from 2016 due to a small decline in acreage and sharply lower yields caused by severe drought. Scattered rain delays toward the end of harvest affected the color of a portion of the crop.

The 2017 Northern durum crop average grade is U.S. No. 1 Hard Amber Durum (HAD). However, a larger portion of the samples than in 2016 graded U.S. No. 1 or 2 Amber Durum due to color loss in some areas. Average test weight of 60.9 lb/bu (79.4 kg/hl) is slightly below last year. Hot, dry conditions pushed protein levels higher, with the 2017 average at 14.5 percent (12 percent moisture basis).

Buyers will be pleased with this year’s excellent grading Northern durum crop boasting strong protein levels, overall high vitreous kernel levels, higher semolina extraction and improved mixing and pasta quality characteristics. With reduced supply and isolated areas with lower vitreous kernel levels, lighter thousand kernel weights and some DON detections, buyers should always remain diligent in their contract specifications.

2017 Desert Durum® production acreage was less than in 2016, largely due to lower prices available at planting time. Yields were average, and quality was uniformly good. The crop exhibits consistently large kernels and low moisture, traits that contribute to efficient transportation costs and high extraction rates. The 2017 crop will deliver the valuable milling, semolina and pasta quality traits that customers have learned to expect and appreciate.

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USDA Reports Smallest U.S. Harvested Area in 127 Years

By Stephanie Bryant-Erdmann, USW Market Analyst

USDA’s Sept. 30 Small Grains Summary reported that U.S. farmers harvested 37.6 million acres (15.2 million hectares) of wheat for the 2017/18 crop, a 14 percent reduction from 2016/17 and the smallest harvested area since 1890. USDA estimated U.S. 2017/18 wheat production at 47.4 million metric tons (MMT) (1.74 billion bushels), down 25 percent year over year and 15 percent below the 5-year average. The smallest planted area since USDA record began in 1919, adverse weather conditions and wheat streak mosaic virus all contributed to reduced harvested area.

The largest beginning stocks since 1988/89 will partially offset lower production. USDA expects 2017/18 U.S. beginning stocks to total 32.2 MMT (1.18 billion bushels), up 21 percent year over year and 57 percent greater than the 5-year average. Total 2017/18 U.S. wheat supply is forecast at 79.6 MMT (2.92 billion bushels), down 11 percent from 2016/17 but in line with the 5-year average. Despite the sharp year over year reduction in yields, USDA expects the final average yield to reach 46.3 bu/acre (3.11 MT/ha), similar to the 5-year average of 46.6 bu/acre (3.13 MT/ha).

Last fall, low farm gate prices and large carry-in stocks prompted U.S. farmers to plant 32.7 million acres (13.2 million hectares) of winter wheat, down 9 percent from 2016/17. The winter wheat crop went into winter dormancy in good or above average condition. A mild winter and early spring was beneficial for both winter wheat and, unfortunately, the mites that carry wheat streak mosaic virus. The disease was widespread in Kansas, Oklahoma and parts of Nebraska, cutting yields and causing higher rates of abandonment in affected hard red winter (HRW) areas. A late spring blizzard in western Kansas cut yields and increased abandonment. Soft red winter (SRW) generally came out of dormancy in better than normal conditions, but growing conditions also varied widely across the Southeast. In some areas, excessive moisture helped boost yields, in others it delayed or prevented emergence.

As with winter wheat, low spring wheat and durum farm gate prices and large carry-in stocks reduced planted areas. After planting (which is generally early), drought conditions spread across Montana, North Dakota and South Dakota with devastating effects on yield. As a result, the rate of abandonment in South Dakota, which was particularly hard hit, is estimated at 37 percent — nearly triple the state’s 5-year average.

Here is a by-class breakdown of the Sept. 30 report.

Hard Red Winter (HRW). USDA estimates total 2017/18 HRW production fell to 20.4 MMT (750 million bushels), down 31 percent from 2016/17 and 15 percent below the 5-year average. USDA forecast 2017/18 HRW beginning stocks at 16.1 MMT (593 million bushels), up 33 percent year over year and 81 percent above the 5-year average. Even with large beginning stocks, total HRW supply will fall 12 percent year over year to 36.5 MMT (1.34 billion bushels). Total HRW planted area fell to 23.8 million acres (9.63 million hectares), down 10 percent from 2016/17. Yields also fell an average 13 percent from 2016/17 in the top HRW-producing states of Texas, Oklahoma and Kansas.

Hard Red Spring (HRS). USDA estimates total 2017/18 HRS production fell to 10.5 MMT (385 million bushels), down 22 percent from 2016/17 and 26 percent below the 5-year average. USDA forecast 2017/18 HRS beginning stocks at 6.40 MMT (235 million bushels), down 14 percent year over year but still 21 percent above the 5-year average. Total HRS supply will fall 12 percent year over year to 16.9 MMT (620 million bushels). USDA estimates farmers planted 10.3 million acres (4.17 million hectares) to HRS, 10 percent below 2016/17 levels. The drought cut yields an average of 11 bu/acre (0.74 MT/ha) in Montana, North Dakota and South Dakota. Abandonment in Montana and North Dakota was double the respective 5-year averages at 9 and 6 percent, and South Dakota farmers abandoned 37 percent of wheat fields due to the drought. The single bright spot for HRS production was Minnesota, with a record high average yield of 67.0 bu/acre (4.50 MT/ha) offsetting lower harvested area.

Soft Red Winter (SRW). USDA estimates total 2017/18 SRW production fell to 7.95 MMT (292 million bushels), down 15 percent from 2016/17 and 32 percent below the 5-year average. USDA reported 24 percent of SRW acres were abandoned compared to 17 percent last year. Record high yields in six SRW producing states partially offset the lower harvested area. USDA forecast 2017/18 SRW beginning stocks at 5.85 MMT (215 million bushels), up 37 percent year over year and 47 percent greater than the 5-year average. So, total SRW supply will rise slightly year over year to 13.8 MMT (507 million bushels). USDA estimates total 2017/18 SRW planted area at 5.61 million acres (2.27 million hectares), 15 percent lower than 2016/17 and 30 percent below the 5-year average.

Soft White (SW). USDA estimates total 2017/18 SW production declined to 6.14 MMT (226 million bushels), down 11 percent from 2016/17 due to small declines in harvested area and average yields in Washington and Idaho that were down 7 and 10 percent, respectively. USDA reports white wheat planted area decreased 3 percent year over year. White wheat planted area fell to 4.02 million acres (1.63 million hectares), 2 percent below the 5-year average. USDA projected white wheat beginning stocks will increase 42 percent year over year to 3.02 MMT (105 million bushels). If realized, that would be 65 percent above the 5-year average.

Durum. U.S. durum production fell 51 percent in 2017/18 to 1.49 MMT (54.9 million bushels) from lower planted area and yields in Montana, North Dakota and South Dakota. USDA estimates 1.91 million acres (773,000 hectares) were planted to durum, down 11 percent from 2016/17 but still 6 percent above the 5-year average of 1.80 million acres (729,000 hectares). Abandonment also increased this year from 2 percent in 2016/17 to 8 percent in 2017/18, due to the drought. USDA projected 2017/18 durum beginning stocks to climb to 980,000 metric tons (MT) (36 million bushels), nearly double the 5-year average and 29 percent above 2016/17 levels. USDA forecast total U.S. durum supply at 2.48 MMT (91 million bushels), down 31 percent year over year.

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