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Nick Jorgensen‘s approach to farming in the 21st Century is simple and direct. “First and foremost, we are stewards of this land so that we can pass it on to the next generation where it’s better than it was when we received it,” Jorgensen, whose family farms in Ideal, South Dakota, says in Episode 4 of U.S. Wheat Associates’ (USW) “Stories of Stewardship” series.

Watch Episode 4 here:

USW’s new video series focuses on the sustainable practices applied by five farm families growing different classes of wheat across the range of conditions in the United States. They share a commitment to farm in ways that sustain economic viability to produce safe, wholesome wheat for the world while ensuring the land is passed on in better condition for future generations.

USW wants to thank Jorgensen; Tom Cannon of Blackwell, Okla., Ben and Stephanice Bowsher of Harrod, Ohio.; Art Schultheis of Colton, Wash.; and Aaron Kjelland of Park River, N.D. for sharing their Stories of Stewardship.

Future episodes will be released March 6, and March 20.

To learn more about sustainable U.S. wheat production, visit the USW website at https://www.uswheat.org/stories-of-stewardship/. USW is also a member of the U.S. Sustainability Alliance where you can see a fact sheet on wheat sustainability.

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“If you take care of the land, the land will take care of you.”

For Ben and Stephanie Bowsher of Harrod, Ohio, field tiling is an integral part of “taking care of the land” because it removes excess water from the soil, reduces erosion, and helps ensure higher quality soft red winter wheat and other crops.

Episode 3 of the U.S. Wheat Associates (USW) “Stories of Stewardship” series features the Bowsher family and their efforts to improve their land.

Watch Episode 3 here: Stories of Stewardship – U.S. Wheat Associates (uswheat.org).

Wheat harvest in 2022 on BS Farms, Harrod, Ohio.

Soft red winter wheat harvest on Ben and Stephanie Bowsher’s farm in Harrod, Ohio, in 2022.

USW’s new video series focuses on the sustainable practices applied by five farm families growing different classes of wheat across the range of conditions in the United States. They share a commitment to farm in ways that sustain economic viability to produce safe, wholesome wheat for the world while ensuring the land is passed on in better condition for future generations.

USW wants to thank Tom Cannon of Blackwell, Okla., the Bowshers; Nick Jorgensen of Ideal, S.D.; Art Schultheis of Colton, Wash.; and Aaron Kjelland of Park River, N.D. for sharing their Stories of Stewardship.

Future episodes will be released Feb. 21, March 6, and March 20.

To learn more about sustainable U.S. wheat production, visit the USW website at https://www.uswheat.org/stories-of-stewardship/. USW is also a member of the U.S. Sustainability Alliance where you can see a fact sheet on wheat sustainability.

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Drought in major U.S. wheat-growing regions over the past few years is well-documented. The persistent dry conditions acutely impacted U.S. wheat yield and increased abandonment, with 2023/24 production coming in 6% below the pre-drought five-year average. Now, entering the second half of the marketing year, the focus has shifted to the 2024 harvest and its impact on both U.S. and global supply and demand. Although it is early, optimism has begun to bloom for the 2024 winter wheat harvest, and the following highlights the factors that have helped boost the U.S. wheat outlook.

Acreage Down, But Conditions Improved

The Winter Wheat and Canola Seedings Report, published on Jan. 12, put the preliminary winter wheat acreage at 34.4 million acres (m.a.) (34.3 million hectares), down 6% from 2023 but still 4% ahead of the five-year average. The hard red winter (HRW) wheat area is estimated at 24.0 m.a. (9.7 million hectares), down 5% on the year, while the soft red winter (SRW) area is approximately 6.89 m.a. (2.8 million hectares), a 7% decrease. The white winter wheat (including soft white and hard white winter) area came in at 3.5 m.a. (1.4 million hectares). Desert Durum® seedings in Arizona and California for the 2024 harvest are estimated at 65,000 acres (26,300 hectares) total, up 16% from 2023 and 48% below 2022.

This bar chart shows U.S. wheat planted area by class between 2013/14 to 2023/24.

According to the Winter Wheat and Canola Seedings Report, published on Jan. 12, the winter wheat acreage is estimated at 34.4 m.a., down 6% from 2023 but still 4% ahead of the five-year average. The HRW area is estimated at 24.0 m.a., SRW at 6.89 ma, and the white winter wheat area came in at 3.5 m.a. Desert Durum® seedings in Arizona and California are estimated at a combined 65,000 acres. Source: USDA Winter Wheat and Canola Seedings Report.

Moving toward fall of 2023, moisture helped replenish dry soil in the U.S. Southern Plains, aided planting, and supported early-season growth and emergence, while making visible improvements in the U.S. Drought Monitor. According to USDA, as of Jan. 30, 2024, winter wheat area in drought registered at 17%, down from 22% the week prior and 58% last year. Meanwhile, the last aggregate USDA Crop Progress Report, published on Nov. 27, 2023, put 50% of winter wheat in the good to excellent category, the highest since 2020.

This line chart shows the percentages of U.S. winter wheat rated "good to excellent" from 2015 to 2024.

The last national USDA Crop Progress Report put 50% of the U.S. winter wheat crop in good to excellent condition, the highest since 2020. Source: USDA NASS Data.

Despite the decreased acreage, the cautious optimism about wheat conditions suggests the potential for improved yield and reduced abandonment for the 2024 harvest. Improved yields will provide a welcome boost to U.S. wheat production, helping improve supply and relieving pressure on the U.S. balance sheet and wheat prices.

An Early State-by-State Snapshot

Comments from producers at a recent meeting of the U.S. Wheat Associates (USW) Wheat Quality Committee echoed the optimistic sentiment. However, despite the objectively improved crop outlook from the year prior, winter conditions have started to vary as the season progresses, serving as a reminder that much can change before harvest time.

Following are condition recaps in major winter wheat-producing states from committee members and National Agricultural Statistics Service (NASS) data as of Jan. 28:

Kansas. Data from NASS rates 54% of Kansas winter wheat good to excellent, and optimism has bloomed regarding the 2024 harvest. Kansas wheat farmer and USW Secretary-Treasurer elect Gary Millershaski highlighted visible improvements to wheat stands compared to the previous year.

Texas. NASS data put Texas wheat conditions at 42% good to excellent, while Texas farmers remain optimistic about current conditions.

Oklahoma. An Oklahoma farmer commented that soil moisture remains adequate, and the wheat entered dormancy in good condition. Oklahoma crop conditions rated 63% of the crop in the good to excellent category.

Colorado. About 61% of the crop sits in the good to excellent category, though winds and dry weather this winter may cause some condition deterioration.

Nebraska. According to a Nebraska farmer, rain during planting helped boost conditions, and the stands continue to benefit from the soil moisture. Current conditions put Nebraska winter wheat at 69% good to excellent.

South Dakota. South Dakota Wheat Commission CEO Jon Kleinjan commented that the state’s HRW wheat was seeded with adequate moisture. As good snow cover remains, he is optimistic about the 2024 crop. Likewise, NASS put 53% of winter wheat in good to excellent.

Montana. Approximately 41% of the HRW crop sits in the good category; however, cold and a lack of snow coverage have negatively impacted crop conditions this winter.

USDA/NOAA Map of Winter Wheat in Drought from Jan. 30, 2024.

According to the weekly USDA Agriculture in Drought Report, as of Jan. 30, 2024, 17% of U.S. winter wheat resides in areas experiencing drought, down from 22% last week and much improved from 58% last year. Source: U.S. Agriculture in Drought.

More Data to Come

The upcoming USDA Prospective Plantings Report will provide preliminary estimates for spring wheat, durum, and the white spring wheat area and update the winter wheat estimates. It is important to remember that the 2024 harvest is still months away, and conditions can and will change as the crop year progresses. Nonetheless, even after an extended drought, U.S. wheat farmers remain resilient and committed to growing a reliable supply of high-quality wheat for their customers around the world.

By USW Market Analyst Tyllor Ledford

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

Already in the Market

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

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

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

A Trusted Source

Portrait of USW Regional Vice President Jeff Coey.

Jeff Coey

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

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

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

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

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

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

On the Ground Input

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

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

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

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

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

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

By USW Vice President of Communications Steve Mercer

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A month-long effort that had U.S. wheat farmers and industry experts presenting the 2023 Crop Quality Report to customers in more than two dozen countries is winding down with a collective sense of accomplishment.

It is believed at least one attendance record was set this year.

The annual series of U.S. Wheat Associates (USW) Crop Quality Seminars, which provide crucial information to customers and provide an opportunity for wheat buyers to interact and create a dialogue about the quality of the wheat crop, began in Sub-Saharan Africa on Nov. 1. Seminars in Central America/Caribbean and South Asia beginning soon after. Seminars in South America, the European Union and North Asia wrapped up on Nov. 20.

Only two dates remain: Seminars will take place in Dubai on Dec. 5 and Casablanca on Dec. 7.

Large Attendance

“The large attendance we saw this year highlights how much our customers value U.S. wheat’s timely and transparent information,” said USW Marketing Analyst Tyllor Ledford, who participated in her first Crop Quality Seminar. Ledford presented at the South Asia seminars (see photo above), which took place in the Philippines, Indonesia and Thailand. “Throughout the three seminars, we were able to reach customers from Thailand, Malaysia, Myanmar, Singapore, Vietnam, the Philippines, and Indonesia. The seminar in Bangkok was the largest on record, with nearly 140 participants.”

Attendance was strong throughout the 2023 Crop Quality Seminar series including here in Seoul, South Korea.

Attendance was strong throughout the 2023 Crop Quality Seminar series including here in Seoul, South Korea.

Producers Cory Kress (Idaho) and Aaron Kjelland (North Dakota) presented on New Technologies in Agriculture and Planting Decisions for Farmers. Likewise, U.S. country elevator managers Jason Middleton and Tyler Krause provided a presentation about grain origination and how it is handled at the first point of sale, in addition to by-class perspectives from exporters.

“The farmers and wheat buyers were happy to reconnect with familiar faces they had seen on trade team visits to the U.S. and other events,” said Ledford.

Positive Feedback

Erica Oakley, USW Vice President of Programs, said there has been a lot of positive feedback from each of the seven regions where Crop Quality Seminars were held.

“Our customers around the world have complimented U.S. wheat staff and presenters from our partner organizations,” said Oakley. “We had a lot of good information to share, so credit goes to the U.S. farmers who produced a high-quality wheat crop.”

Mexico

USW’s Mexico City Office hosted more than 225 participants representing flour millers and wheat buyers from Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Panama, St. Vincent and the Grenadines, Trinidad and Tobago, and Venezuela.

China

The North Asia Crop Quality Seminar team traveled to Suzhou, China, and presented to about 160 flour millers, wheat buyers, and baking industry representatives. Guest of note included Ms. LaShonda McLeod Harper, Director of the USDA Foreign Agricultural Service Agricultural Trade Office in Shanghai, and the senior COFCO Wheat Department Manager Mr. Sun Wei who had just participated in a USW-sponsored trade team visit for COFCO managers to the United States.

Group of about 160 U.S. and Chinese wheat industry officials and managers at the 2023 USW Crop Quality Seminar in Shanghai, China, Nov. 2023.

About 160 wheat buyers, flour millers, and baking industry executives participated in the 2023 USW Crop Quality Seminar in Suzhou, China.

Japan

Montana wheat farmer Denise Conover greets Japanese wheat industry executives at a USW Crop Quality Seminar in Tokyo, Japan.

Montana wheat farmer Denise Conover greets Japanese wheat industry executives at the 2023 USW Crop Quality Seminar in Tokyo, Japan.

In Tokyo, Japan, 130 customers attended a Crop Quality seminar. Attendees included flour milling companies from across the region, Japanese traders, grain inspectors and members of the media.

“The participants were very satisfied with the presentations and engaged them in active discussions and questions to gain a deeper understanding of the quality of this year’s U.S. wheat crop,” said Rick Nakano, USW Country Director in Japan.

South Korea

A total of 90 participants, including customers from the flour milling and food processing industries, attended the seminar held in Seoul, South Korea. It was the first in-person seminar held in South Korea in three years.

“Customers expressed great satisfaction with the on-site Crop Quality Seminar,” said USW Country Director Dong-Chan “Channy” Bae. “Notably, despite the typically reserved nature of Korean attendees, there was an engaging discussion on the market, wheat quality, and logistics during a question-and-answer session.”

South America

Seminars in South America attracted a good number of customers, reports USW Regional Director Miguel Galdos.

“In the seminar held in Cali, Colombia, participants represented 30% of total wheat imports in Colombia,” he said. “Meanwhile, in Bogota, more than 35% of total wheat imports were represented.”

USW Regional Director Osvaldo Seco welcomes participants to a 2023 Crop Quality Seminar in South America.

USW Assistant Regional Director Osvaldo Seco welcomes participants to a 2023 Crop Quality Seminar in South America.

A seminar In Quito, Ecuador, drew companies accounting for at least 90% of U.S. wheat imports. The same can be said for seminars in Lima, Peru, and Santiago, Chile – both saw more than 90% of U.S. wheat purchases represented.

Sub-Saharan Africa

USW’s Cape Town Office conducted Crop Quality seminars in Nairobi, Kenya; Lagos, Nigeria; and Cape Town, South Africa. Presenting quality data from the 2023 harvest were Dr. Senay Simsek, Department Head for Food Science at Purdue University; Charlie Vogel, Executive Director of the Minnesota Wheat Research and Promotion Council; and Royce Schaneman Executive Director of the Nebraska Wheat Board.

Simsek presented on Solvent Retention Capacity (SRC) and industry analyst Mike Krueger presented via video on the world supply and demand situation for grains.

In Nairobi, USW also conducted a demonstration at the African Milling School using soft red winter (SRW) and hard red winter (HRW) for local products, such as chapati and mandazi.

By Ralph Loos, USW Director of Communications

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During the week of Sept. 25-29, U.S. Department of Agriculture Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor is leading an agribusiness trade mission to Chile. U.S. agribusinesses, including U.S. Wheat Associates (USW), are participating in business-to-business meetings with importers from both Chile and Peru.

The trade mission coincides with the USDA-endorsed Espacio Food and Service trade show, a major food show held in Santiago, Chile. USW joined several other U.S agricultural export promotional organizations in a USDA-SaborUSA Chile exhibit at the show. Under Secretary Taylor visited and offered remarks at the USW exhibit on Sept. 26. USW staff from the Santiago office shared these photos.

In the photo at the top of this page, USW Santiago Assistant Regional Director Osvaldo Seco and Program Coordinator Maria Fernanda Martinez show their pride in the USW exhibit with USW Baking Consultant Miguel Seguel.

Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor (right) is welcomed to the USW section of the SaborUSA Chile exhibit by USW Santiago Regional Director Miguel Galdos.

Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor (right) is welcomed to the USW section of the SaborUSA Chile exhibit by USW Santiago Regional Director Miguel Galdos.

Greetings from USDA

Under Secretary Taylor making remarks at the SaborUSA Chile exhibit on Sept. 26.

Under Secretary Taylor making remarks at the SaborUSA Chile exhibit on Sept. 26. Of her visit and the trade delegation she is leading, Taylor said, “As we celebrate the 200th anniversary of U.S.-Chile relations, I am honored to lead such an incredible group as we work with Chilean importers on expanding our bilateral trade even further.”

Quality Wheat, Exquisite Bread

Artisan bread baked by USW consultant Miguel Seguel to demonstrate the quality and versatility of flour milled from U.S. wheat classes

Artisan bread baked by USW consultant Miguel Seguel to demonstrate the quality and versatility of flour milled from U.S. wheat classes had a prominent place in the SaborUSA Chile exhibit at the Espacio Food and Service trade show.

Chile is a well-developed wheat food market with a variety of products available. In 2022, U.S. wheat imports were valued at more than $100 million. Chile is currently ranked among the top 10 U.S. wheat importing countries in marketing year 2023/24 (June to May). Chilean flour millers import U.S. hard red winter (HRW) and hard red spring (HRS) wheat classes to produce flour for bread consumption. The bread is produced mainly by small artisan bakeries, as well as commercial and supermarket bakeries. To serve a growing cookie and cracker demand, U.S. soft red winter (SRW) and soft white (SW) wheat is imported.

Read more about the Chilean market for U.S. agricultural products here.

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

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

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

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

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

Mexico: U.S. Wheat’s Top Customer

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

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

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

Ecuador and Colombia: Markets With Great Potential

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

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

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

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

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

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

Developing Customers

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

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

 

 

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Attractive cash prices, a good agronomic fit, and excellent breeding and crop management have once again combined to help produce a large and high-quality U.S. soft red winter wheat crop in 2023.

Soft red winter (SRW) is grown over a wide area of the eastern United States that experienced generally good growing conditions in the 2023 crop year. This crop is very sound with high test weight and falling number values, large kernel size, good milling characteristics, and is relatively free of DON. Processors will find a versatile crop with good qualities for cookies, cakes, and crackers. With higher protein and good extensibility, the crop should also be valuable in blending for baking applications.

This image shows a map of the United States with soft red winter wheat production and regions from which samples were analyzed for quality.

Great Plains Analytical Laboratory, Kansas City, Mo., collected, tested, and analyzed 232 samples from elevators in 18 reporting areas across 11 states: 46 samples were from East Coast states and 186 from Gulf states.

The full SRW Quality Survey will be available soon online here. Buyers are encouraged to review their quality specifications and work with their local U.S. Wheat Associates (USW) representatives to ensure that purchases meet their expectations.

The Season in Review

USDA estimates the total SRW seeded area for 2023 harvest at 3.10 million hectares, up 12% seeded for the 2022 harvest and up 26% over the 5-year average, making this the most planted area since 2014.

Early development was good and much of the soft red winter growing area received plentiful moisture through the winter and spring with only Maryland seeing a decrease in soil moisture. Later in the season, mild temperatures and rainfall benefited critical kernel development.

Harvest began in mid-May and picked up pace in early-June with unusually dry conditions and below-average temperatures. Weather patterns changed by mid-June with widespread rain causing harvest delays in North Carolina, Maryland, and Ohio.

However, USDA estimates the 2023 SRW crop to be 12.0 MMT, up from both 9.2 MMT in 2022 and the 5-year average of 8.1 MMT, making this the largest SRW production in 9 years and highest yield on record.

 

2023 Crop Highlights

  • The overall average sample grade for the 2023 soft red winter harvest survey is U.S. No. 1 SRW; the Gulf average is U.S. No. 1 SRW, and East Coast is U.S. No. 2.
  • Test weight averages trended higher and indicate a sound crop with Composite average 60.3 lb/bu (79.3 kg/hl), Gulf average 60.4 lb/bu (79.5 kg/hl) and East Coast 59.6 lb/bu (78.4 kg/hl).
  • The wheat falling number overall average of 320 seconds is below 2022 but above the 5-year average and indicates there is very little sprout damage in the crop; lower East Coast average is due to rainfall at harvest.
  • Single kernel values reflect a consistent crop. Kernels are harder, heavier, and larger than last year’s and 5-year averages.
  • Vomitoxin (DON) averages are well below the USDA threshold of 2.0 ppm and indicate the sampled crop is relatively free of DON.
  • Amylograph data indicate suitable starch characteristics for batter-based products. The 2023 averages for Composite (655 BU) and Gulf (709 BU) are very sound, reinforce the high falling numbers, and indicate very low levels of amylase activity. The East Coast value of 401 BU reflects this year’s slightly lower falling number values.
  • Solvent Retention Capacity (SRC) values indicate excellent quality for all typical applications. Sucrose values indicate cookies and crackers will benefit from reduced bake time and should not experience any excess water-holding issues.
  • Dough properties suggest this crop is typical for SRW although weaker than the 5-year average
  • Alveograph data indicate a crop that is less extensible, more resistant/tenacious than last year and is suitable for blending applications: P values: Composite (51 mm), East Coast (50 mm) and Gulf (52 mm); L values: Composite (57 mm), East Coast (56 mm) and Gulf (57 mm).
  • Cookie diameter values are consistent across the soft red winter crop (9.0 cm) and are higher than last year but similar to the 5-year average, indicating this crop has adequate to good spreadability.
  • Loaf volume averages are lower than last year and 5-year averages, which is consistent with alveograph data, and indicate this crop is suitable for blending: Composite (602 cc), East Coast (587 cc) and Gulf (606 cc).

By USW Vice President of Programs Erica Oakley

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Mexico, Central America, the Caribbean, and South America represent a substantial portion of U.S. wheat sales, accounting for around 33% of all U.S. wheat exports. Due to proximity and sophisticated, quality-focused markets, Latin America and the Caribbean see competitive advantages in U.S. wheat supplies. In fact, while total demand for U.S. wheat slowed the last two years, sales to Latin American countries increased.

This trend signifies the value of U.S. wheat to customers throughout the region. This article will analyze the recent trends in Latin American markets and highlight current opportunities for U.S. wheat importers based on their patterns.

Looking Back

In the marketing year (MY) 2022/23, South American wheat imports were 1.6 MMT, up 29% from MY 2021/22, while U.S. wheat exports decreased by 2% from the prior year and were 17% below the five-year average. On a country level, significant sales increases were observed in Chile, Ecuador, and Brazil, among others.

Despite high prices, customers in Latin America and the Caribbean continued seeing the value in U.S. wheat classes, particularly soft red winter wheat (SRW). SRW sales were up 28% from the year prior and 31% above the five-year average regionwide.

This is a bar chart showing sales of U.S. SRW wheat to Latin American countries for 2022 and 2023 showing increased demand.

SRW exports increased in several Latin American countries in MY 2022/23. Sales were up 361% in Ecuador, 128% in the Dominican Republic, 99% in Honduras, 50% in Nicaragua, and 130% in Venezuela. Source: USDA FGIS Export Data.

Emphasis On Value

Moving into MY 2023/24, SRW remains an excellent value. The latest U.S. Wheat Associates (USW) Price Report put U.S. SRW at $249/MT FOB, competitively priced with other origins. Despite the recent volatility in wheat markets, SRW prices remain at their lowest level since the summer of 2021, and wheat futures have just breached the $6.00/bu threshold.

This line chart shows how U.S. SRW and soft white wheat export prices have declined of the past year.

SRW prices have hovered at their lowest level since July 2021. Harvest pressure and the above-average production weighs on the export basis and CBOT futures. Source: U.S. Wheat Associates Price Report.

Sales of SRW are tracking above last year’s pace. The most recent commercial sales put SRW commitments at 1.6 MMT, and the majority of this increase can be attributed to purchases from Latin American and Caribbean customers. In South America, SRW purchases are up 37%, while total U.S. wheat sales are down 34% in the region.

The August World Agricultural Supply and Demand Estimates put SRW exports at 3.7 MMT, up 26% from the year prior and up 37% from the five-year average.

This line chart compares the export price of U.S. soft red winter (SRW) wheat to competing supplies from Russia, Australis, Canada and France.

SRW has become competitive with other world suppliers. As of August 15, SRW was near parity with 12.5% (dry matter basis) Russian wheat. Source: AgriCensus Price Data and the U.S. Wheat Associates Price Report.

Risk Management is Vital

As mentioned in previous articles, the war in the Black Sea is a continued risk in the world wheat market. Though risk premiums have been eroded and the market appears to have reached some level of “comfort” with the war, prices can spike in an instant, especially as fighting has intensified in the weeks since the dissolution of the Black Sea Grain Agreement.

As seen in commercial sales to many Latin American customers, SRW demonstrates an excellent value as a high-quality and competitively priced soft wheat. Nevertheless, with the potential for more upside risk than a downward opportunity for SRW and all U.S. wheat classes, importers must watch market conditions closely to maximize SRW’s value in their blends. Your local USW office will be an important partner in this effort.

By Tyllor Ledford, USW Market Analyst

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Just one year ago, U.S. wheat prices hovered near record highs. The geopolitical ramifications of Russia’s invasion of Ukraine stoked supply concerns and fears of spiraling food price inflation, and India had just banned wheat exports, further fueling wheat supply fears.

Flash forward to the week of May 2, 2023, Chicago Board of Trade soft red winter wheat (SRW) futures traded at their lowest level since March of 2021 at $5.95/bushel, earning that class the elusive honor of being the cheapest wheat on the world market.

After months of high prices, SRW and soft white (SW) classes have finally become more price competitive, providing a buying opportunity for importers. In this article, we will look in-depth at the market conditions for U.S. soft wheat classes and the factors influencing the entire market.

U.S. soft white wheat futures prices.

U.S. wheat prices retreated significantly the week of May 5 to touch near two year lows before ending slightly higher, demonstrating how quickly price sentiment can shift, though soft red winter wheat prices have trended lower. Source: U.S. Wheat Associates Price Charting Tool.

Competitive U.S. Soft Wheat Classes

Looking back, the U.S. soft wheat classes were poised to be more competitive thanks to several positive supply-side factors. Last year, both SW and SRW registered above-average production. The SW harvest came in at 4% above the five-year average and 35% above the drought-afflicted 2021/22 crop, while SRW was 16% above the five-year average, even boasting two large crops at 9.8 MMT in 2021/22 and 9.1 MMT in 2022/23.

Moreover, heading into marketing year 2023/24, the production outlook for SRW and SW remains positive. According to the USDA Prospective Plantings Report, SRW planted area increased 18% to 7.8 million acres (3.1 hectares), while white wheat plantings are estimated up 2% at 4.33 million acres (1.75 million hectares). The combination of good production last year and a positive outlook for the 2023 crop helped position SW and SRW to capture demand and remain competitive on the world market.

With the production bump and increased global competition, U.S. soft wheat prices have steadily decreased in the last few weeks. For a brief moment on May 2, U.S. SRW was the cheapest wheat in the world, coming in on average $10.00/MT FOB less than French wheat, $14.00/MT less than Russian wheat, and $13.00/MT less than Ukrainian. As a result, the U.S. Wheat commercial sales recorded 145,000 MT of SRW last week, the entire quantity likely bound for China. Meanwhile, SW wheat FOB prices hovered at $275.00/MT compared to $288.00/MT for Australian Standard White.

U.S. soft white wheat FOB export prices.

U.S. soft wheat prices have trended lower in search of demand. Soft white wheat prices have decreased by 39% since April 2022, while SRW has dropped by 45%. Even since the start of 2023, prices have come down 12% and 18%, respectively. Source: U.S. Wheat Associates Price Report

Underlying Bearish Market Factors

In addition to the positive supply outlook for soft wheat classes, recent bearish market factors have also been at play, influencing all U.S. wheat class prices. Last week hard red spring (HRS hit a nearly two-year low of $7.58/bu while hard red winter wheat (HRW) breached the $8.00/bu barrier to close at $7.71/bu. Seasonal influences also contribute to a fall in prices, especially for the soft wheat classes with a looser balance sheet and optimistic production outlook. Farmers and exporters will need to clear out their bins as new crop approaches to make room for the upcoming harvest.

Additionally, In the last two weeks, rain has fallen on some of the most drought-afflicted areas of the U.S. Southern Plains. Before these showers, it had been over 270 days since 0.25 inches of moisture (6.35 mm) had been recorded in some areas. The rains helped relieve some price pressure as the market assessed the moisture’s impact on drought conditions in the HRW growing region.

Beware The Bull

Demonstrated by this week’s jump in futures prices from the previous week’s lows, bullish influences are always lurking, especially as the Black Sea conflict continues to be an unpredictable bullish influence. As the Black Sea Grain Initiative approaches its May 18 expiration date, the longevity of the corridor hinges on Russia’s continued cooperation.

Furthermore, though the major HRW growing region in the Southern Plains received needed rains, there is concern about its impact. Some say the showers were “too little too late” for the crop as many fields already face abandonment.

Map of NOAA's prediction of long-term drought showing how U.S. soft white wheat is outside of the drought area.

Despite the rains in the U.S. Southern Plains, drought persists throughout the central HRW growing region. The recent showers helped improve soil moisture but not enough to reverse the drought impacts. Source: U.S. Department of Agriculture Drought Monitor.

Key Takeaways

This week’s price movements are just the latest example of how quickly market sentiment can shift, especially with influences as unpredictable as the weather and the war in Ukraine. Amidst the persistent market volatility, buyers must be wary of the market trends and be positioned to take advantage of every buying opportunity. As always, U.S. Wheat Associates (USW) representatives are committed to helping customers capitalize on market opportunities and navigate the ever-changing wheat market.