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Recent news and highlights from around the U.S. wheat industry.

Speaking of Wheat

It is an interesting year for sure. Drought is the primary concern that HRW producers are dealing with right now as we are just beginning the wheat planting window in Kansas. We received some rain overnight, and this burst of weather has ranged from spotty to adequate in some areas. However, meaningful amounts haven’t been widespread, and has been light in the southwestern areas of Kansas.” – Justin Gilpin, CEO, Kansas Wheat, in his Sept. 23, 2022, weekly report.

South Asian Biscuit and Cake Customer Visit

This week, U.S. Wheat Associates (USW) Bakery Consultant Roy Chung accompanied a team of biscuit and cake bakers from South Asia on a visit to the Pacific Northwest to learn more about the U.S. soft white crop production and quality. The trip included a stop at Tri-Cities Grain’s barge loading facility in Richland, Wash. (photo above), time with the Washington Grain Commission in Spokane, Wash., and a tour of the Wheat Marketing Center, Portland, Ore., including a discussion of the Solvent Retention Capacity (SRC) analysis for use in various confectionary baked goods.

USDA: Spring Wheat Harvest 96% Complete

According to USDA, 96% of the spring wheat crop had been harvested as of Sept. 25, with Montana and South Dakota 100% complete and Minnesota 98 percent complete. The North Dakota spring wheat harvest stood at 93% complete as of Sept. 25, up slightly from 91% the previous week. Progress was anticipated to be stronger this week, with more favorable forecast of warmer temperatures and clearer days. Read more here.

Agriculture Trade Nominees Await Floor Action

The Senate Agriculture Committee on Tuesday cleared the way for a vote on the full Senate floor for Alexis Taylor for the position of USDA’s Undersecretary for Trade and Foreign Agricultural Affairs. Taylor and Doug McKalip, nominee for U.S. Trade Representative chief agricultural negotiator, await a vote by the full Senate. Read more from the U.S. Wheat Industry here.

Reuters Covers Bioceres’ HB4 Drought-Tolerant Wheat

While there is no genetically modified wheat available for commercial sale today, the Argentinian company Bioceres has developed a transgenic event for drought tolerance in wheat and is seeking approval for commercial use in many countries. The Reuters news service recently published an article that examines the challenging environment of public opinion facing introduction of a transgenic wheat like HB4. Read the Reuters article here, and public statements from USW and the National Association of Wheat Growers here.

Global Grain Stocks Could Drop to Decade-low Levels

A ratio that factors in U.S. wheat inventories compared to usage, along with wheat stockpile levels, is expected to drop to a nine-year low in 2022-23, according to Reuters’ calculations of government data. The same ratio is also predicted to hit a nine-year low for U.S. soybeans. The Reuters story, which can be read here, also explains how lagging shipments and smaller than expected harvests by major crop producing countries is fueling predictions of the tightest grain supply in years.

Open Wheat Industry Position in Idaho

The Idaho Wheat Commission is accepting applications for its Communications and Programs Manager position. With responsibilities to help develop and implement communications strategies that promote use of Idaho wheat, this position offers excellent benefits and a great place to live in the Boise, Idaho, area. Read more about the position and how to apply, here.

Subscribe to USW Reports

USW publishes various reports and content available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts and wheat industry news, the weekly Price Report, and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online

Visit our Facebook page for the latest updates, photos, and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter, video stories on Vimeo, and more on LinkedIn.

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Grain buyers have the unenviable task of sorting through today’s news and determining what it means for tomorrow’s prices. Experienced buyers have plenty of tools to help with their decisions, but the volatility experienced in 2022 may be embedded for the near future. Talk of a global recession may soften commodity prices initially, but just as quick, geopolitics can reverse any downward trend as we’ve seen the last two weeks.

U.S. wheat futures price chart for one year from October 2021 to late September 2022 showing volatility affecting the global wheat market

Volatility seems to be the new normal in global wheat markets. U.S. wheat futures prices over the past year clearly demonstrate that condition.

Global Supply

The global balance sheet for wheat is down 10.0 MMT in 2022/23 compared to 2021/22 at 1.06 billion metric tons (MT). Beginning stocks this season are the lowest since 2017/18 while ending stocks are expected to be the tightest since 2016/17. Despite Russia’s huge wheat crop and rebounds in production for both the U.S. and Canada, reductions in the European Union (E.U.), Argentina, and Ukraine are helping to keep prices firm.

U.S. wheat production is up this year, increasing almost 4 MMT to 48.5 MMT according to USDA. Exports are expected to increase slightly to 22.5 MMT. According to the latest world agricultural supply and demand estimates (WASDE), production for all classes of U.S. wheat is expected to increase this year except for hard red winter (HRW) wheat which is estimated down 21%. Kansas, the primary HRW growing state, remains dry even as winter wheat planting is underway.

Black Sea Grain Corridor

Russia’s invasion of Ukraine has had the biggest effect on upending the global wheat market. The United Nations brokered an agreement to establish a grain corridor in the Black Sea. As a result, Ukraine has shipped more than 7 MMT of grain since July, when the agreement was signed according to APK. However, Putin’s criticism of the grain deal and escalation of the war on his neighbor have once again roiled markets and sent futures higher.

The multilateral agreement establishing the grain corridor will expire in November. Given the Russian president’s unpredictable actions so far, there is no guarantee that the agreement will be renewed.

Russian Potential

Russia has produced its largest wheat crops ever. The USDA forecasts Russian wheat production at 91 MMT this month while the European Union’s crop monitoring service, MARS, projects the Russian wheat crop will total 95 MMT. The USDA predicts exports could reach 42 MMT. But Russian exports so far this season have been slow to move. According to IKAR, a Russian analyst, Russian wheat exports are expected to reach 4 MMT in September, well behind the 4.7 MMT exported a year ago. Russian wheat exports are not under any western backed trade sanctions, but shipping companies, insurers, and banks are still cautious to do business with Russia.

Additionally, heavy rain in the central and southern areas of the country is delaying plantings. SovEcon reported that 8.6 million hectares (21.2 million acres) of grain had been sown so far, 1.5 million hectares (3.7 million acres) behind their pace a year ago. The consultancy added that it’s the lowest area planted since 2013.

Dependability of Supply

India also played its hand in driving global wheat futures higher. After initial pronouncements of feeding the world’s hungry, India quickly reversed course and blocked wheat exports. The country is expected to instead import 25,000 MT of wheat this year.

Input Costs

High gas prices could affect access to nitrogen-based fertilizers. Yara International, a Norwegian-based fertilizer producer warned that the gas situation in Europe could create shortages and add to risk. Gas prices on the continent have risen 45% since June when Russia curtailed shipments following E.U. sanctions. Yara said it expects to pay $1.1 billion more for natural gas in the third quarter than a year ago. Natural gas is a key ingredient for making nitrogen-based fertilizers.

U.S. dollar value indexed to a basket of currencies showing the general rise over the past year.

U.S. Dollar Value continues to rise against many different currencies, affecting the cost of dollar denominated wheat trade. In such an uncertain global wheat market, even minor changes in the dollar index are adding volatility.

The Rising U.S. Dollar

Overall, the U.S. Dollar (USD) continues to strengthen. Yet in this environment even subtle changes up or down in USD value can move U.S. and global wheat prices.

There is no shortage of headlines that directly affect the global wheat market. It is tough to say how much the road will curve in the near term. Grain buyers will remain busy absorbing the headlines as fast as they come.

By Michael Anderson, USW Market Analyst

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It is planting season for U.S. winter wheat growers. Conditions and timing vary by region, but a lot of the 2023 hard red winter (HRW), soft red winter (SRW) and even fall-seeded soft white (SW) area has already been seeded.

Long before farmers select and clean seed from their last crop or purchase certified seed wheat, researchers and breeders have developed new wheat varieties that meet the highest standards of yield and quality across a wide range of end uses at home and across the world.

Chart showing seasonal U.S. winter wheat and spring wheat planting and harvesting schedule.

U.S. Winter Wheat Planting starts in September and can last into early November depending on conditions. Winter wheat must experience a period of significant cold days to signal reproductive growth, a process called vernalization.

In a greenhouse at the Kansas Wheat Innovation Center in Manhattan, Kansas State University wheat breeder Dr. Allen Fritz talked about starting the process of creating wheat varieties.

Looking Back to the Future

“There are facilities like this around the country where people are working to improve varieties for those different regions,” he said. “They are working on specific market classes have different functionalities to be able to make almost any kind of wheat food product.”

Dr. Fritz added that to do that work, breeders are finding new ways to use historic wheat genetics to improve wheat quality and production.

“In some projects, we are reaching back into wild relatives and bringing some of those characteristics to bring healthy, nutritious food to the table and I think [breeders] have a passion to bring that forward.”

Naturally Stronger Gluten

At Oklahoma State University, Wheat Genetics Chair Brett Carver and his colleagues are developing new hard red winter wheat varieties that have better gluten strength to produce higher quality bread products while keeping yields and disease resistance high. With naturally developed dough strength, such new varieties may not need additional gluten, adding value to the U.S. wheat and flour produced from it.

“Simply stated, a truly unique combination of wheat quality in a high-performance wheat variety provides value-capturing opportunities to farmers, millers and bakers,” Dr. Carver recently told the High Plains Journal. “It is important that the genetics are maintained and delivered throughout the supply chain in its purest form. Then consumers will see value through a cleaner label on various wheat food products.”

Planting Stories

Image from inside a tractor of a dry Montana field in which Denise Conover is seeding winter wheat

This is Denise Conover’s “office” as she seeded hard red winter wheat on her family farm near Broadview, Montana, late in September 2022.

After years of testing and perfecting U.S. winter wheat seeds, planting looks different for every family farm depending on the region, the soil, the wheat class. In the arid conditions in north-central Oregon, for example, each field lies fallow for a year to improve moisture and add organic matter to the soil.

“Then in the fall, at the end of September to the first part of October, we start seeding,” said Logan Padget, a SW wheat grower in Grass Valley, Ore. “We put down our seed and fertilizer together in one pass, one right underneath the other so as soon as that seed starts to grow, it puts roots down, finds the fertilizer and just takes off.”

Near Okarche, Okla., HRW grower and U.S. Wheat Associates (USW) Secretary-Treasurer Michael Peters is seeing very dry conditions for planting. When the time is right, Peters said everything will be done to start the new crop.

Doing What It Takes

“We will start as early as we can in the morning, go late into night,” he said. “Then we may go home at night, and we are loading seed wheat for the next day or adjusting the planter, just to get it into the ground.”

Kyler Millershaski, a young farmer from Lakin, Kan., is fully committed to the work and challenge of growing another hard white and hard red winter wheat crop.

“I would say there is certainly a responsibility and a weight that you feel to not only provide a high-quality product, but enough of it to feed the world. That is why we are really selective in our varieties and make sure the crop has the right fertilizer and nutrients to grow and perform well. That way,” he said with a smile, “we can say we have the best wheat in the world – so buy from us.”

 

 

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

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

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

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

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

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

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

Many Options, Limited Acres

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

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

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

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

But at what cost?

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

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

Can Double-cropping Help?

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

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

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

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

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

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

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

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

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

Wheat Demand to Grow

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

Krueger expects the demand will continue to expand.

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

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

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

 

 

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Citing economic challenges and lingering effects of the COVID-19 pandemic, World Grain magazine recently suggested to the world’s flour millers that adapting to these challenges requires closer collaboration and more frequent communication with suppliers and partners. In these uncertain times, the people and resources of U.S. Wheat Associates (USW) stand ready to be that supportive partner.

USW works on behalf of dependable U.S. wheat producers to help millers and other wheat buyers, bakers, wheat food processors and government officials understand the quality, value and reliability of all six classes of U.S. wheat. This is so important because the U.S. grain marketing system is reliable and transparent but can be complicated. So, USW keeps customers informed about crop quality and prices — an effort that includes risk management and technical education, market analysis, and in-country demand creation.

Contact Your Local USW Office

Flour millers and other wheat buyers will be well served by making their local USW office their first point of contact. Our experienced staff and consultants are prepared to help buyers before, during and after the sale, with service that enhances U.S. wheat value. Find the nearest USW office here.

A team of Colombian flour millers on a trade team visit to High Line Grain

Supply Chain Lessons. In 2022, a team of flour millers from Colombia visited High Line Grain in Washington state to gain a better understanding of what it takes to move U.S. wheat to export locations. Photo by Lori Maricle, Washington Grain Commission.

Working directly with overseas buyers to answer questions and resolve issues in purchasing, shipping or using U.S. wheat, USW also sponsors trade delegations to the United States, regular crop and market condition updates, quality surveys and other activities.

Regular Market Reports

USW regularly gathers and analyzes relevant market data. USW shares information with flour millers and other buyers on trade policy, wheat grade standards or specifications that may affect price and future wheat production, trade and consumption projections. This information is available from local USW representatives and regular published reports covering:

Export Technical Support

2022 Taiwan bakery trade show exhibit by USW to educate flour millers and bakers

Quality Update. USW Country Director Bo Yuan Chen describes the source of U.S. wheat quality to visitors to a USW exhibit at a 2022 Taipei baking industry trade show.

To help strengthen the technical efficiency of flour milling, storage, handling and end-product industries, USW sponsors participation in webinars, technical courses, workshops and in-person seminars. Other activities include personalized consulting in milling, baking, snack food and pasta production as well as grain storage and handling.

USW also works with customers and other U.S. grain industry partners to expand consumer awareness and appreciation for wheat foods, including nutritional information through webinars, in-person seminars, consumer demonstrations, trade shows and promotional campaign support.

USW’s work is supported by 17 state wheat commissions and the USDA Foreign Agricultural Service (FAS). Private U.S. wheat exporters also have representatives worldwide, so flour millers will also want to contact them for additional information.

Other important resources include:

  • Agricultural Attaché and Counselors: The U.S. agricultural attaché and/or agricultural counselors are in the American Embassy or in the Agricultural Trade Office (ATO). Find the nearest U.S. Embassy or ATO.
  • NAEGA Trade Lead Form:  Many companies and cooperatives that supply U.S. wheat belong to the North American Export Grain Association (NAEGA).
  • Registered Grain Exporter Directory: The USDA’s Federal Grain Inspection Service maintains a list of registered exporters on its website.

Please visit www.uswheat.org for more information. Photo above of a Japanese flour miller trade team at the Washington Grain Commission office in Spokane, Wash., by Lori Maricle.

 

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USW Vice Chair Michael Peter( left) with Sen. Frank Lucas, R-Oklahoman (center) and Yi-Cheun "Tony" Shu, chair of the TFMA, after the Letter of Intent signing at the U.S. Capitol.

USW Vice Chair Michael Peters ( left) with Sen. Frank Lucas, R-Oklahoma (center) and Yi-Cheun “Tony” Shu, chair of the TFMA, after the Letter of Intent signing at the U.S. Capitol.

Representatives from the Taiwan Flour Millers Association (TFMA) signed a Letter of Intent September 14, 2022,  with U.S. Wheat Associates (USW) to purchase 1.9 million metric tons – about 69.8 million bushels – of wheat from the U.S. over the next two years, a commitment with an estimated value of $576 million.

The signing, held at the U.S. Capitol in Washington, D.C., was a much-anticipated stop for the 2022 Taiwan Agricultural Trade Goodwill Mission, a team made up of Taiwanese government officials and representatives of some of the largest importers of U.S. grains. The group is led by Yi-Cheun “Tony” Shu, chair of the TFMA and of Formosa Oilseed Processing Co. Also participating is Dr. Ching-Cheng Huang, deputy minister of Taiwan’s Council of Agriculture.

Taiwan is the 6th largest U.S. wheat export market and the 7th largest overseas market for U.S. agricultural products. Along with its intent to purchase U.S. wheat in 2023 and 2024, the team also signed Letters of Intent with the U.S. Soybean Export Council (USSEC) and the U.S. Grains Council (USG) to purchase soybeans and corn. The total estimated commitment in the three letters total $3.2 billion.

Michael Peters, USW Vice Chairman, signed the TFMA Letter of Intent on behalf of the U.S. wheat industry.

“American farmers place great value on the relationship between U.S. agriculture and Taiwan,” Peters, a wheat producer and cattle rancher from Okarche, Oklahoma, said during the signing ceremony. “We pride ourselves as being dependable partners who grow the highest quality agriculture products in the world. The TFMA and its members have been great trading partners who fully recognize the value of purchasing U.S. wheat.”

Among U.S. officials on hand were Senators Kevin Cramer, R-North Dakota, John Hoeven, R-North Dakota, Frank Lucas, R-Oklahoma, Jim Risch, R-Idaho, and Chuck Grassley, R-Iowa. Representative Steven Chabot, R-Ohio, co-chair of the Congressional Taiwan Caucus, was also present to witness the signing.

Following the visit to Washington, D.C., flour millers on the Mission headed west to get a first-hand look at U.S. wheat production and meet the people responsible for supplying high-quality wheat to Taiwan. The team is scheduled to visit wheat farmers in Kansas, Idaho and Oregon. Other scheduled stops also include the Kansas Wheat Innovation Center and the Port of Portland in Oregon.

USW also joined USSEC, USGC, the National Association of Wheat Growers (NAWG) and the North American Export Grain Association (NAEGA) in hosting a reception for the Mission team on September 13. The event provided leaders of the U.S. wheat and grain industry an opportunity to catch up with members of the Taiwan Goodwill Mission, which last visited the United States in 2019.

USW President Vince Peterson addresses those gathered for a reception welcoming the 2022 Taiwan Agricultural Trade Goodwill Mission

USW President Vince Peterson addresses those gathered for a reception welcoming the 2022 Taiwan Agricultural Trade Goodwill Mission

USW President Vince Peterson addressed the gathering by pointing out the long and beneficial history of cooperation between Taiwan’s flour milling industry and the U.S. wheat industry that first opened a promotional office in Taipei 56 years ago.

“Our legacy organization Western Wheat Associates established a presence in Taiwan in 1966, so we are going on six decades of working with the country’s flour millers and food industry,” Peterson said. “In that time, Taiwan has purchased more than 45 million metric tons of U.S. wheat. This partnership between TFMA, U.S. Wheat Associates and U.S. wheat producers has been on a great path, and we plan to continue on that path in the future. We truly thank the Taiwan Goodwill Mission for coming to the United States and for its ongoing preference for U.S. wheat and other agricultural products.”

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Recent news and highlights from around the U.S. wheat industry.

Speaking of Wheat

Our country’s reputation as the world’s most reliable wheat supplier depends heavily on functioning rail transportation and that won’t change in the future. So we welcome this tentative agreement and hope both sides continue to work together to serve shippers like the U.S. wheat industry.” — U.S. Wheat Associates (USW) President Vince Peterson in a Joint Statement with the National Association of Wheat Growers applauding a tentative labor agreement between railroads and rail union that averts a strike.

Welcome News

The Biden Administration on September 14, 2022, announced a tentative labor agreement between U.S. railroad workers and railroad companies that will avert a strike. U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) applaud the agreement. The organizations issued a Joint Statement thanking the Administration and the two sides for negotiating an agreement. Read more here.

U.S. Ag Trade Negotiator Nominee Awaits Senate Approval

On September 7, 2022, the U.S. Senate Finance Committee unanimously approved USDA adviser Doug McKalip to be the chief agricultural negotiator for the Office of the U.S. Trade Representative, sending the nomination to the full Senate for final approval. Following the Committee’s vote, a broad group of elected officials, producers, and stakeholders voiced strong belief that the United States Senate should confirm McKalip as quickly as possible. Read more here.

Open Wheat Industry Position in Montana

The Montana Department of Agriculture is accepting applications for our Wheat and Barley Committee Executive Director position  based in Great Falls, MT. The Montana Wheat & Barley Committee (MWBC) promotes research locally and market development around the world through its USW membership and in-king contributions. More information about the open position is posted here.

Watching Wheat Weather

“World-Grain” reporter Drew Lerner recently wrote an interesting article about the impact of weather on the winter wheat crop now being sown in the Northern Hemisphere. “… After much speculation over drought in North America in 2022, the winner of the most adverse weather award in the Northern Hemisphere goes to Europe due to its summer drought and heat problems” Lerner wrote. “Nearly three years of La Niña contributed to Europe’s dry weather this year and it also contributed to dryness in the U.S. Plains and Russia’s dry finish to its warm season. September marks the beginning of meteorological autumn for the Northern Hemisphere and winter wheat and other small grain production areas may head the list of areas to watch until greater rain occurs.”

Subscribe to USW Reports

USW publishes various reports and content available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts and wheat industry news, the weekly Price Report, and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online

Visit our Facebook page for the latest updates, photos, and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter, video stories on Vimeo, and more on LinkedIn.

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In 2022, U.S. wheat farmers continued a now three-year run producing excellent quality soft red winter (SRW) wheat for the world’s weak gluten wheat buyers and food processors.

U.S. SRW is grown over a wide area mainly east of the Mississippi River. The production region experienced generally good growing conditions in the 2022 crop year. A total of 230 samples from elevators in 18 reporting areas across 11 states accounting for an estimated 68% of total U.S. SRW production, were collected and analyzed by Great Plains Analytical Laboratory, Kansas City, Mo. The results were weighted by the estimated production for each reporting area and combined into “Composite Average,” “East Coast” and “Gulf Port” values.

Illustration shows states in which soft red winter wheat samples were drawn and the percentage of total SRW the samples represent

Hitting Quality Targets

The 2022 SRW crop is very sound with high test weight and falling number values, lower moisture, 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.

Buyers are encouraged to review their quality specifications to ensure that purchases meet their expectations.

U.S. Wheat Associates (USW) has posted more information on the Soft Red Winter Wheat 2022 Quality Survey on its website here.

The Season in Review

Planting started at a normal pace in mid-September 2021 and progress was similar to the 5-year average. USDA estimates SRW seeded area for the 2022 harvest at 2.78 million hectares, up from 2.67 million hectares seeded for the 2021 harvest and above the 5-year average.

As the crop developed, there was plentiful moisture through winter and spring with only Maryland seeing lower soil moisture. Overall, timely mild temperatures and rainfall benefited critical kernel development.

Harvest began slowly in late-May but picked up pace in mid-June with hotter temperatures and dry conditions. By July, much of the growing region experienced heat, humidity and above average rainfall with pockets of favorable harvest weather.

2022 SRW production is estimated to be 10.4 million metric tons (MMT), up from 9.8 MMT in 2021 and above the 5-year average of 8.3 MMT.

Close up image of soft red winter wheat ready for harvest on an Ohio farm

Excellent Crop. Soft red winter wheat was ready for harvest in June 2022 on the Bowsher family farm near Waynesville, Ohio. Across the production region, protein, test weight, kernel characteristics and other functional factors were very good in 2022.

2022 Crop Highlights

  • The overall grade sample average for the 2022 SRW 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 a Composite average of 60.1 lb/bu (79.1 kg/hl), a Gulf average of 60.3 lb/bu (79.3 kg/hl) and East Coast average at 59.7 lb/bu (78.5 kg/hl).
  • 1000 Kernel Weight, Kernel Diameter and Wheat Protein values reflect a relatively consistent crop.
  • Single Kernel values also reflect a consistent crop. For the East Coast, kernels are softer, heavier and larger than last year but harder and smaller than the 5-year average. For the Gulf, kernels are slightly softer, lighter and smaller than last year, but harder than the 5-year average.
  • Wheat Protein content demonstrates a consistent crop. The Composite average of 9.6% (12% mb) and East Coast average of 10.1% are higher than 2021 and 5-year averages. The Gulf average of 9.4% is slightly higher than 2021 but below the 5-year average.
  • Falling Number trended well above average, indicating this is a sound crop with very little sprout damage. Composite (327 sec), East Coast (336 sec) and Gulf (325 sec) are all above 2021 and 5-year averages.
  • Vomitoxin (DON) averages are well below the USDA threshold of 2.0 ppm and indicate that the sampled crop is relatively free of DON: Composite (0.7 ppm), Gulf (0.8 ppm) and East Coast (0.4 ppm).
  • Laboratory Mill Flour Extraction for Composite (66.4%), East Coast (66.6%) and Gulf (66.4%) are all higher than 2021 but below the 5-year averages. The extraction rate from a laboratory mill is not optimized and will always be significantly lower than the rate obtained from a commercial mill.
  • Amylograph data indicates enhanced starch characteristics that are well suited for batter-based products. The 2022 averages for Composite (666 BU), East Coast (574 BU) and Gulf (687 BU) reinforce the high falling numbers and indicate very low levels of amylase activity.
  • Solvent Retention Capacity (SRC) values generally indicate excellent quality for cookies and crackers. Sucrose values indicate cookies and crackers will benefit from reduced baking time.
  • Dough Properties suggest that this crop is weaker than the 5-year average and is typical for SRW.
  • Alveograph data indicate a crop that is more extensible, less resistant than last year and is suitable for blending bread-type products. P values: Composite (36 mm), East Coast (41 mm) and Gulf (35 mm); L values: Composite (82 mm), East Coast (91 mm) and Gulf (80 mm).
  • Average Loaf Volumes are higher than last year and indicate this crop is excellent for blending: Composite (624 cc), East Coast (610 cc) and Gulf (627 cc).
  • The Cookie Spread Ratios for Composite (10.7), East Coast (10.6) and Gulf Ports (10.7) are all similar to last year and higher than the 5-year averages, indicating good spreadability.

The latest 2022 USW Harvest Report on all U.S. wheat classes is posted here. Wheat Letter will share final crop quality reports as they are available, and reports will be posted here.

 

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This was supposed to be the year dry bulk freight vessel owners turned a profit, Jay O’Neil, a commodities consultant and author of a weekly transportation report recently commented. And U.S. Wheat Associates (USW) shared similar thoughts early in 2021. Instead, S&P Global Market Intelligence noted recently that freight rates for dry bulkers have fallen over the past three months after rates peaked earlier than expected in the second quarter of 2022.

As rates recently climbed, however, O’Neil said the freight market may have finally found its bottom.

Bearish Factors

Since early 2020, shipping has faced uncertainties: labor shortages, various COVID restrictions made worse by each country applying different restrictions, port congestion, and supply chain breakdowns have all competed to make shipping tough. The challenges to shipping logistics have abated. As a result, the number of available vessels floating in the dry bulk freight market has increased.

As China Goes…

China plays such a dominating role in the dry bulk shipping market that analyzing economic activity there can predict the dry bulk fleet’s prospects. China’s economic growth slowed under the government’s zero-COVID policy. The global iron ore trade, one aspect that drives the dry bulk fleet, was down 6% last month compared to a year ago. An analyst with S&P Global Market Intelligence said “slower than expected economic growth” could exist through the second half of 2023. O’Neil covered bearish factors for the dry bulk freight market for USW’s 2021 Crop Quality report.

Russian Coal

Putin’s war in Ukraine has also rerouted some cargo flows and driven up demand for coal, another commodity that absorbs dry bulk shipping capacity. Sanctions on Russian gas supplies have quickly reversed European Union plans to close many coal-fired plants. While the E.U. looks to the United States for coal imports, India and China are taking advantage of cheap Russian coal and changing demand for different bulker size categories.

Another key component that helped bring down dry bulk shipping rates is the easing of port congestion.

“Inefficiencies of last year do not apply to the current market anymore and the supply-demand equation is more straightforward,” said one ship owner. AXS said a primary driver behind the lower rates is the drop in ton-miles.

Overall, Breakwave Advisors, a shipping publication, agreed saying, “Following a period of high uncertainty and significant disruptions across the commodity spectrum, the gradual normalization of trade is shifting the market’s attention back to the traditional demand and supply dynamics that have shaped dry bulk profitability for decades.”

This was all good news for dry bulk freight customers, including the world’s wheat buyers.

Line chart shows the Baltic Dry Index change from April 2022 to September 2022

Stormy Seas for Dry Bulk Freight. After peaking in the second quarter of 2022, the Baltic Exchange Dry Index retreated before bouncing up in September. Some suggest the market found a bottom, yet bearish economic factors continue.

Turning Tides

Yet signs of rate recovery are evident. The Baltic Index on September 9 notched its largest weekly increase in 8 years, according to Reuters data. The index was up 12% to 1,213. On September 12, the Baltic Index marked its fourth consecutive session of gain. AgriCensus, in a story published on August 31, noted that the purchasing managers’ index (PMI) rose to 49.4 in August, up 0.4 compared to July. But still, the index remained below the 50-point mark which separates contraction from growth.

Despite the current strengthening in the shipping index, generally bearish factors affecting dry bulk freight rates such as China’s economic situation remain. Those that follow the market closely say that rebound may simply be a market correction. For now, it seems like vessel owners may have to wait longer before turning that profit that many predicted not long ago.

By Michael Anderson, USW Market Analyst

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An online training series developed by U.S. Wheat Associates (USW) in the early days of the COVID pandemic continues to have success in its effort to educate South American bakers and millers about the value and quality of U.S. wheat.

Specifically, the Online Baking Certification program promotes baking methods and processes that highlight all six U.S. wheat classes. What is significant about the program is that it’s able to reach a large number of bakery and milling staff who otherwise would not be able to take part in educational workshops. The virtual format allows participants to study at their own pace before testing through a handful of modules to earn certification.

Funded by the Agricultural Trade Promotion Program (ATP) – a USDA Foreign Agricultural Service (FAS) program created in 2018 to help U.S. agricultural exporters enhance their work in international markets and mitigate other obstacles to trade – USW’s online trainings have made great strides toward reaching the goal of boosting awareness of U.S. wheat.

Bakers and millers in Colombia, Peru, Chile, Ecuador, Bolivia and Brazil have been getting a thorough introduction to U.S. wheat and are learning how they can utilize it to improve the quality of breads and other baked goods.

The goal for U.S. wheat is ambitious yet simple: Sharing ways to improve baked products made with U.S. wheat could result in increased consumption in South America, which could lead to more customers for South America’s bakeries.

It could also potentially lead to a greater demand for U.S. wheat.

Putting U.S. Wheat ‘Top of Mind’

USW's Online Baking Certification program build's upon an effort to create awareness of U.S. wheat in South America. Pictured here is an in-person workshop conducted in USW's Santiago office in 2019, prior to the COVID pandemic.

USW’s Online Baking Certification program builds upon an ongoing effort to create awareness of U.S. wheat’s value and quality in South America. Pictured here is an in-person workshop conducted in USW’s Santiago office in 2019, prior to the COVID pandemic.

Miguel Galdos, USW’s regional director in South America, says the goal of the Online Baking Certification program is to create better awareness of U.S. wheat.

“We want U.S. wheat to be top of mind for more bakers in the region, as well as for the technical staff at the milling companies,” he said. “We want to place a higher emphasis on reaching bakers

and technical people to perhaps give them a voice when it comes to wheat purchasing decisions.”

The fact that both bakers and milling staff are registering for the online course, too, is a sign that many in the industry want to take advantage of the opportunity to get experience working with U.S. wheat.

USW, the wheat industry’s export market development organization, works with wheat buyers, millers, bakers, food processors and government officials in more than 100 countries to promote the reliability and value of the six U.S. wheat classes. The new emphasis on creating awareness in South America and educate the people who work directly with wheat and wheat flour inside of bakeries is strategic.

Creating awareness – putting U.S. wheat top of mind of bakers – opens all kinds of opportunities.

“The key is that once they learn one aspect of U.S. wheat’s quality, they want to see what else there is to learn,” explained Galdos. “In this program, they must test out of one module to be able to move on to the next. Before earning the certification, they must complete a two-day practical course in person. Soon, after moving through the program, they are an expert on our product. At that point, U.S. wheat has developed a customer.”

Virtual Training has Become Commonplace

The virtual baking training includes six different modules that allow bakers and milling staff to progress at their own pace. Participants must pass a module to move on to the next, assuring they are exposed to all of U.S. wheat's positive attributes.

The Online Baking Certification program includes six different modules that allow bakers and milling staff to progress at their own pace. Participants must pass one module to move on to the next, assuring they are exposed to all of U.S. wheat’s many positive attributes.

Launched in October 2020 as an alternative to in-person training workshops during the height of the COVID pandemic, the Online Baking Certification program has grown rapidly. USW recently added a Portuguese version to the original Spanish version to attract more Brazilian participation. USW also has plans to add a master-level course in the near-future.

The current program has registered nearly 5,500 students in two years. Thanks to a partnership between U.S, Wheat Associates, the Brazilian Wheat Industry Association and the Brazilian Bakery and Confectionery Industry Association, further growth is expected.

The six South American countries targeted by USW are the six that purchase U.S. wheat.

“The biggest wheat buyer in Colombia has had 15 staff members go through the whole program and earn certification,” said Galdos. “Chile has been another active participant, so we are seeing interest from a good portion of the region. Brazil is promising. We have met with the millers and bakers’ associations and U.S. Wheat Associates is going to be recognized by those associations at an upcoming event.”

The birth of the program came by necessity after in-person trainings and workshops were eliminated because of COVID. By March 2020, USW’s staff in Santiago, Chile, were putting together educational materials to complete the online bakery course – courses featuring baking theory, video instruction and assessment platforms were assembled. USW Baking Consultant Didier Rosada played a key role in the production of baking videos for the modules, which were finished in May 2020 and then sent to selected baking staff around the region for testing.

Opportunity for a Competitive Edge

Those who have completed USW’s Online Baking Certification are reporting they gained greater knowledge of traditional baking methods that work well with U.S. wheat.

Miguel Galdos, USW regional director in South America

Miguel Galdos, USW regional director in South America

Galdos emphasized that the online courses provide U.S. wheat with an advantage over competing wheat growing and exporting countries.

One example is the value of U.S. hard red winter wheat compared to Canadian wheat.

“One thing we stress to the bakers in South America is that many of the products they are baking do not require Canadian wheat that is higher in protein but more expensive,” Galdos said. “U.S. hard red winter wheat is a better option, and the content in the online baking courses teach them why. We show them how to bake with it. The problem is that the bakers are not trained. We want more bakers in the region exposed to the value and quality of U.S. wheat and how using it can benefit their products and their businesses.”

Along with putting U.S. wheat top of mind for South American bakers, Galdos pointed out a valuable additional benefit to USW’s online baking program.

“Through this certification process we are working with bakeries, collaborating with millers, collaborating with the people who either are or could be buying and using U.S. wheat,” he said. “We are educating them and creating awareness for U.S. wheat. At the same time, we are building relationships.”