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Wheat Export Supply System Map a Practical Tool for Importers

The first of its kind interactive wheat export supply system map that U.S. Wheat Associates (USW) introduced in 2020 is a helpful planning tool for U.S. wheat customers, our staff, and others. USW produced the map with Heartland GIS using USDA Foreign Agricultural Service Agricultural Trade Promotion program funds. The “USW Wheat Export Supply System” map is posted here on the USW website.

“There are six distinct wheat classes grown across many states and delivered by many different routes. So the U.S. wheat supply chain truly is driven by geography,” said USW Vice President of Overseas Operations Mike Spier. “The wheat export supply system map provides a geographical information system. That helps USW representatives show the world’s wheat buyers where the wheat they want is grown and transported to the export elevator.”

“Assisting overseas customers is a critical service that helps add value to U.S. wheat,” said USW Vice President of Communications Steve Mercer. “This wheat export supply system map is unique, and a practical addition to the trade service our representatives conduct around the world.”

Interactive export supply system map to help when buying U.S. wheat

Click on the map to use this tool.

 

The map includes a selection tool that allows the viewer to identify, in any combination, U.S. wheat production by class, wheat shuttle loading terminals, Class 1 U.S. rail lines and spurs, wheat terminals on major rivers, and export elevator locations.

“Working with U.S. Wheat Associates and its state wheat commissions, we used data from a lot of sources, including satellite imagery, to identify wheat planted area data,” said Todd Tucky, Owner and Senior Consultant of Heartland GIS. “I believe this is the most accurate representation ever developed of where individual U.S. wheat classes are produced along with the parts of the export system.”

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Moving Wheat Efficiently Through the Columbia Snake River System

In the Pacific Northwest (PNW), wheat can move by barge to export elevators from as far away as Idaho. That is because of the series of eight locks and dams that make safe, efficient navigation possible on one of the leading trade gateways in the United States — the Columbia Snake River System.

The Pacific Northwest Waterways Association (PNWA) notes that over 8.6 million tons of cargo are moved by barge on the inland portion of the system, feeding the deep draft lower Columbia River. The Columbia Snake River System is the top wheat export gateway in the nation.

Serving Asia, Latin America

Idaho exports more than half of its wheat crop each year. The Port of Lewiston on the Snake River, the most inland U.S. port, is uniquely positioned to source that wheat for the six major PNW export elevators serving Asian and Latin American wheat markets. All aspects of the river system are essential for transporting wheat from farm to market. However, barging through the lower Snake River is the most efficient, affordable, and environmentally friendly way to get that wheat to export locations. For context, one 4-barge tow on this river system moves as much cargo as 144 rail cars or 538 semi-trucks.

An estimated 10% of all U.S. wheat exported every year moves through the four locks and dams on the lower Snake River. The Idaho Wheat Commission and its partners recently shared the short video below that tells the story of how the Columbia Snake River System works for the world’s wheat importers, for the U.S. farmers who grow that wheat, and for the people of the Pacific Northwest.

U.S. Wheat Associates (USW) will share more information about the crucial role of the Columbia Snake River System in future Wheat Letter posts.

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Things to Know When Buying U.S. Wheat

U.S. Wheat Associates (USW) works on behalf of U.S. wheat producers to help millers, bakers, wheat food processors and government officials understand the process of buying U.S. wheat at the best value possible.

The U.S. grain marketing system is reliable and transparent but can be complicated. So, USW keeps buyers and wheat food processors informed about the wide variety of U.S. wheat classes, how wheat moves to export markets as well as current crop quality and prices.

Interactive map to help when buying U.S. wheat

USW has developed an interactive map of regional U.S. wheat production by class and how it is transported to export terminals.

As part of a recent seminar for overseas buyers, USW Vice President and West Coast Office Director Steve Wirsching recorded a presentation titled “U.S. Wheat Market Overview.” From how regional climate affects wheat quality and USW’s process for sharing estimated export prices to how export basis regulates the flow of grain to market and the role of the Federal Grain Inspection Service (FGIS), Wirsching provides an important primer for buying U.S. wheat.

Many Resources for Buyers

Click on the image below to see the entire presentation that was used in the buyer’s seminar in July 2021. Additional information is always available online. And most importantly, USW representatives in 13 offices around the world, are always ready to help our customers, through trade service and technical support, making buying U.S. wheat a rewarding experience.

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Exporters Share U.S. Wheat with the World

The commitment of the people who participate in every step of the U.S. wheat export supply system helps build an unmatched reputation for both quality and reliability.

The 2021 crop is an unfortunate but telling example of how U.S. farmers overcome significant risks to meet domestic wheat demand and still provide sufficient supplies for export markets. Farmers and commercial elevators can store and efficiently transport U.S. wheat in top condition to meet overseas demand when needed and throughout the marketing year. Prices are discovered through futures exchanges and basis costs that are always available to customers.

High Standards

The rigorous crop inspection and management continues with private export companies where high standards create the consistency and trust overseas customers depend on.

These companies use risk management tools to honor sales contract prices often made months before vessel loading. The Federal Grain Inspection Service (FGIS) independently inspects wheat at vessel loading to certify that the quality matches the customer’s specifications.

FGIS inspector of U.S. wheat

The Federal Grain Inspection Service weighs and inspects every sub-lot of U.S. wheat to certify it meets each customer’s specifications. This inspector is dividing a wheat sample into two equal sub-samples for various inspection processes.

“It’s a critical function the Federal Grain Inspection Service provides to meet our contractual obligation overseas and create that global standardization,” said United Grain Corp. President and CEO Augusto Bassanini. “I think that separates the value of U.S. wheat and other grain products from the rest of the world.”

Those inspections also yield valuable data down to the sub-lot level of 1,000 to 2,000 metric tons that offer customers even more value from their purchases with help from U.S. Wheat Associates (USW).

Personal Integrity

“Creating that difference for U.S. wheat is all done through relationships,” Bassanini said. “We couldn’t do it without the people, whether in this organization, whether in U.S. Wheat Associates. Really, it is that quality of those individuals that really creates, again, the unrivaled value to our customers.”

Augusto Bassanini

Augusto Bassanini, President and CEO, United Grain, Vancouver, Wash.

United Grain and Bassanini generously offered their story in USW’s video presentation “Wholesome: The Journey of U.S. Wheat” as a representative of all private export companies that share the U.S. wheat crop with the world. Now “Wheat Letter” shares that story below.

Learn more about how USW works with buyers and the U.S. wheat export supply system here.

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Sharing a Way of Life: U.S. Wheat Farmers Invest Hard Work and Purpose in their Crops

Over the past few months, Wheat Letter has shared the story of the U.S. wheat supply chain. We started with the public and private wheat breeders who help protect wheat crops from extreme conditions while improving performance qualities. We discussed how U.S. wheat farmers carefully select the best wheat varieties to plant on their land, then care for the crop in more sustainable ways. And we demonstrated how grain handlers and exporters maintain wheat quality for their customers.

Behind this impressive industry, there are people who bring passion and purpose – intangible investments that go into every step of the field to export journey. As U.S. Wheat Associates (USW) says in its film, “Wholesome: The Journey of U.S. Wheat,” while the process makes U.S. wheat the world’s most reliable supply, the people make the wheat whole.

“I cannot imagine not doing this work,” said USW Chairman and Grass Valley, Ore., farmer Darren Padget. “We were born and bred to do it.”

Darren’s son and farming partner Logan agreed.

“I feel like what we do out here is very good. We raise some of the best quality wheat in the world and I am proud to be a part of it,” he said.

Jeremy Goyings, a fifth-generation farmer from Paulding, Ohio, sees intangible value in his work that U.S. wheat buyers around the world will appreciate.

“The reward is knowing that the things we have changed, the things that we do differently day-in and day-out means someone gets better quality food in the end,” said Goyings.

Wheat Letter invites you to learn more about how the ordinary people who grow U.S. wheat see great responsibility and reward in their work.

In October, November and December, Wheat Letter will continue focus on the unique end-product qualities and value of the six wheat classes these U.S. wheat farmers produce.

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Transporting the Crop: U.S. Grain Handlers Ask, “What Can We Do for You?”

As U.S. grain handlers transport wheat from the farm to grain companies by truck, river or rail, it is tested and sorted to meet customer specifications at every step of its journey to export elevators on the Gulf, Great Lakes or Pacific Northwest.

Logistics are a critical part of the work grain handlers do to make sure U.S. wheat arrives at export houses in peak condition and they take their jobs seriously. General Manager Paul Katovich and his colleagues at Highline Grain in Washington state think about the farm families they have served for generations. At the same time, like grain handlers across the United States, his organization is upgrading processes, storage and facilities to ensure those farmers and, ultimately, customers overseas are well served.

“We are all stewards of this platform,” Katovich said. “It is why we do what we do … with a greater purpose. What we talk about internally, in a group setting or when we go overseas, or when we have customers come here is, ‘What is it that we can do for you.’”

As a part of its film, “Wholesome: The Journey of U.S. Wheat,”  USW is sharing individual chapters of the video throughout the year. “Grain Handlers: Transporting the Crop” provides more information about the essential work of U.S. grain handlers.

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A Visit to an Export Elevator with United Grain Corporation

The United Grain Corporation (UGC) wheat, corn, and soybean export elevator in Vancouver, Wash., on the Columbia River, is the largest of its kind on the U.S. West Coast with storage of more than 220,000 metric tons. It was originally built in the 1920s and purchased by United Grain in 1970.

Like other U.S. facilities serving U.S. wheat buyers, the United Grain export elevator is part of the world’s most efficient supply system and is constantly improving.

“Every year we do upgrades and maintenance that make the facility the cutting edge operation it is today,” said Brian Liedl, UGC Director of Merchandising.

Video Tour

Earlier this year, U.S. Wheat Associates (USW) worked with United Grain to record a video tour of this amazing export elevator facility. USW Vice President and West Coast Office Director Steve Wirsching joined Liedl on a walk around the entire elevator and a detailed discussion of its systems. The program covers shuttle trains arriving from interior elevators and rapidly unloading wheat, explains how the facility separates and stores wheat by class and quality, discusses its investment in high-speed cleaning systems, and the essential work of federal grain inspectors.

Federal Control

Inside the inspection office, Liedl explained to Wirsching that under U.S. law, grain weight is measured and quality is tested by the Federal Grain Inspection Service before it is loaded onto a vessel for delivery.

“After our shipping bins are filled, those independent inspectors have control of the grain and only release it to be loaded after they determine it meets that customer’s specifications,” he said.

This program was created originally as part of a three-day USW seminar called “Contracting for Wheat Value” for Chinese customers. We are sharing it here to demonstrate how U.S. grain companies and the federal government are working to ensure all importers get the wheat they want as efficiently as possible.

Thank you to United Grain Corporation for their collaboration on this video.

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How the U.S. Wheat Export System Delivers Quality and Value

Private grain companies in the U.S. wheat export system in the Pacific Northwest (PNW) overcome challenging logistics to deliver wheat that consistently meets contract specifications to buyers around the world. Grain sellers based in Gulf, Lakes and Atlantic ports operate very similar logistical systems to export wheat and other grains.

We are sharing a video and written look at how these successful companies do their work serving U.S. wheat farmers and overseas wheat buyers.

Sourcing Wheat From the Interior

An overseas buyer contracts with an exporter for wheat of specific class, grade, quality and price. It is then up to the exporter to source that wheat and get it loaded at the contracted price.

They do this reliably through a very efficient, system that moves the wheat to market using trucks, barges and rail to the vessel, often within a two-week shipping window.

U.S. wheat export system starts at country elevators.

U.S. wheat export system starts at interior elevators where wheat purchased from farmers is loaded onto train cars for delivery to export elevators.

In the U.S. wheat export system, grain sellers source U.S. wheat supplies from local elevators close to the farms.

Hard red spring (HRS) wheat comes mainly from the Dakotas and Montana. Hard red winter (HRW) wheat originates mostly in Montana, Wyoming, Nebraska and some from PNW states.

Those classes are loaded onto dedicated 110 car unit trains that haul the wheat over the Rocky Mountains and down the Columbia River Gorge to the export elevators.

Farmers deliver much of the soft white (SW) and white club wheat grown in Washington, Oregon and Idaho to grain facilities on the Snake, Columbia or Willamette Rivers where it is loaded onto barges or trains for the ports.

In the U.S. wheat export system, barge transportation is efficient and safe.

In the U.S. wheat export system, barges are the most cost-efficient transportation method. In the Pacific Northwest, wheat can move by barge to export elevators from as far away as Idaho because of the series of locks and dams that make safe, efficient navigation possible on the Columbia-Snake River System.

Because U.S. wheat is graded and segregated by class and quality at every step of the supply system, the export elevator knows they will receive the wheat they need to fill their customer’s contract.

Highly Automated Process

The receiving process at elevators in the U.S. wheat export system is highly automated. Numerous sensors and cameras allow only a few people to unload the wheat very quickly into temporary holding bins segregated by class, grade and quality.

Barges in this tributary can discharge 600 metric tons of wheat per hour. Unit train cars are opened and unloaded in less than 18 hours.

The export elevator’s shipping system is also automated. One person from a control room can select wheat from different storage bins and blend them together to be loaded onto the bulk vessel the buyer has chartered.

But, under U.S. law, that cannot happen until the wheat is inspected to certify that the quality loaded matches the customer’s specifications.

This highly regulated, standardized process is conducted by the USDA’s Federal Grain Inspection Service, or a state inspection agency supervised by and subject to the same standards as FGIS.

FGIS inspection and certification is required by law in the U.S. wheat export system.

FGIS inspection makes  the U.S. wheat export system uniquely valuable. A random sample of every sub lot of wheat is broken down into specified quantities by FGIS officials and weighing, inspection and certification is standardized and objective. FGIS inspection data also yields information that buyers can use to get the most value from their tenders. 

In this process, a specific amount of wheat is sampled every 15 to 20 seconds as it flows from the elevator into designated shipping bins holding from 1,000 to 2,000 metric tons.

The sample is collected in the FGIS lab at the elevator and the shipping bins remain closed while FGIS inspects each sample.

When the inspectors certify that the sample meets the customer’s contract specifications, FGIS opens the shipping bins, allowing the elevator to load that wheat onto the vessel. If not, the wheat in the shipping bin is returned to the elevator to be re-blended.

Quality Assurance

FGIS saves sub-lot samples from each shipping bin for 90 days in case an issue comes up when the wheat arrives at its destination.

To give the buyer additional quality assurance, about 10 percent of all samples are sent to a national FGIS Board of Appeals and Review to be re-inspected for quality control monitoring.

Those inspections generate valuable data that customers can use to get even more value from their purchases of high-quality U.S. wheat. Your U.S. Wheat Associates (USW) representative can help you make good use of this information as you write your tenders.

In the U.S. wheat export system, grain companies move wheat from inland farms and elevators to deep water ports more efficiently and economically than any wheat supply system in the world.

In the U.S. wheat export system, grain companies move wheat from inland farms and elevators to deep water ports more efficiently and economically than any wheat supply system in the world.

It is very reassuring to wheat importers that U.S. grain handlers segregate wheat by class and quality, and maintain its wholesome character, while moving wheat from inland farms and elevators to deep water ports more efficiently and economically than any wheat supply system in the world.

Learn More

More information about the U.S. wheat export supply system is available from USW online or from your local representative, including an interactive map of the system, a section on “How to Buy U.S. Wheat” and other resources.

 

 

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Rail Rates Directly Affect Basis Values for Wheat Importers

Grain companies serving Pacific Northwest (PNW), Gulf, Lakes and Atlantic ports overcome challenging logistics to efficiently deliver wheat that consistently meets contract specifications to buyers around the world. Rail rates, for example, make up a significant percentage of U.S. wheat export basis and, ultimately, the FOB price paid by importers.

Exporting grain companies draw from inland country elevators that play a vital role in the U.S. wheat export system. And, according to the National Grain and Feed Association (NGFA), which represents and provides services for country elevators and other related commercial businesses, having access to efficient, competitive rail transportation is crucial. In fact, NGFA notes that 72% of U.S. wheat moves to domestic and export markets by rail.

Base and Secondary Rail Markets

Dr. Frayne Olson, Crop Economist/Marketing Specialist with the North Dakota State University Extension, says the United States has a very strong network of reliable freight rail systems that move wheat and other grains from where it is produced to domestic and export locations. He suggests that most deliveries to export elevators in the Pacific Northwest (PNW) or the Western Gulf rely on 110-car shuttle trains dedicated to wheat or other grain deliveries. The total cost of shuttle train delivery includes a base tariff rate and, if needed, a secondary market.

Shuttle loading system to present rail rates background

A shuttle train is loaded with grain at an inland elevator in this image from a video lecture by Dr. Frayne Olson, North Dakota State University, produced for USW. Arrows indicate the rail engines and covered grain cars.

“The base rate does not change rapidly,” Dr. Olson said in a recently produced video lecture on grain transportation for U.S. Wheat Associates (USW). “With shuttle systems, the base rate reflects the use or leasing of a train for about a 12-month period by the exporting company.”

U.S. railroads are also allowed to apply a fuel surcharge per car.

The secondary market allows exporters to contract for unanticipated rail requirements by purchasing unused space in a rail car and move the grain to the export terminal. Because the secondary rail market correlates directly with the principles of supply and demand, it can be considerably more volatile than the base rate tariff.

The Agricultural Marketing Service (AMS) of USDA notes that secondary rates are most often a small fraction of the full cost or rail shipments relative to the base tariff rate.

Total rail rates make up a significant percentage of U.S. wheat export basis. Each week, USW Market Analyst Michael Anderson polls export grain traders about changes in export basis. In their reports, the traders consider factors that directly affect basis including rail capacity’s effect on rates. Nearby futures prices and average basis are included in the USW Price Report to provide an estimate of weekly FOB prices for several classes and protein levels from PNW, Western Gulf and Lakes ports.

Current Rail Rates

Overall, current rail rates for shipping U.S. wheat are about equal to or slightly less than they were one year ago. In its July 15, 2021, “Grain Transportation Report,” AMS reported the following base rail tariffs, plus a fuel surcharge, per metric ton (MT) for shuttle trains:

Great Falls, Mont., to PNW Ports:                  $39.90

Wichita, Kan., to Western Gulf Ports:            $42.07

Grand Forks, N.D., to PNW:                            $56.37

Grand Forks to Western Gulf:                         $59.54

Colby, Kan., to PNW:                                        $63.35

NGFA points out that agricultural producers and shippers now are dependent upon only four U.S. Class 1 carriers to haul most grains and oilseeds by rail. Those four railroads typically originate more than 80 percent of such traffic, compared to only 53 percent in 1980.

USW map of Class 1 U.S. railroads to help demonstrate rail rates.

U.S. Class 1 railroad routes are shown in this image from USW’s interactive map of the U.S. Wheat Export Supply System.

Monitoring Rail Rates and Policies

Like NGFA, the U.S. wheat industry is closely watching the current proposal for control of Kansas City Southern Railroad by Canadian National Railway and a potential competitive offer by Canadian Pacific Railways. USW’s Wheat Transportation Working Group will weigh in on these proposals to the U.S. Surface Transportation Board (STB) with public comments.

In addition, USW has joined several other organizations, including NGFA, urging the STB to adjust rail regulations to ensure sufficient competition and, ultimately, the most efficiency and value for farmers, the grain trade and overseas wheat buyers. Anderson will report on that effort in the next Wheat Letter post July 22, 2021.

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U.S. Farm and Industry Organizations Respond to Dam Breaching Proposal

A coalition of Pacific Northwest (PNW) agricultural and commercial organizations recently responded with serious concerns to a controversial dam breaching proposal that would tear out four dams on the Snake River.

The dam breaching proposal, presented by U.S. Representative Mike Simpson of Idaho, aims to restore fish populations on the river while compensating groups affected by removing the dams. However, in a letter to government officials, the coalition said the plan would decimate U.S. producers’ ability to move wheat and other products to overseas customers and be of questionable environmental benefit.

The National Association of Wheat Growers joined state wheat organizations in Idaho, Washington, Oregon and Montana in signing the letter.

No Dams, No Barges

U.S. Wheat Associates (USW) has shared stories about the sustainability and reliability of wheat transportation by barge. The Columbia and Snake Rivers are essential parts of a logistical system that moves more than half of all U.S. wheat exports every year to more than 20 Pacific Rim countries. Wheat loaded on the Snake River makes up 10% of all U.S. wheat exports.

Barge traffic on the Columbia-Snake River System is the most cost-efficient and sustainable connection between U.S. wheat farmers and their customers overseas. And more easily navigable, safe and efficient barge transportation depends on river locks at each of the targeted dams.

Uncertain Results

USW shares the opinion stated in the coalition letter that improving fish populations are important and admirable goals. Still, there is little certainty removing the dams will restore fish populations to a level that would satisfy environmental advocacy groups involved in litigation over the river’s management.

The river system’s current management strikes a balance between all river uses—providing renewable electricity, transportation, irrigation flood control, and recreation. The dam breaching proposal would eliminate nearly all these benefits of the river. It would also subject interior PNW communities to a wide range of environmental and economic impacts.

Barge Traffic Safe for Now

Fortunately, U.S. wheat importers should not worry that the dams are in imminent danger. Members of Congress have not yet written legislation on the dam breaching proposal and it has not attracted much political support.

Hopefully, the proactive and vocal nature of river stakeholders early in this process will highlight the shortcomings of the proposal’s fish recovery portion and the enormous costs for trade, the region and the U.S. Treasury.

By Dalton Henry, USW Vice President of Policy

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