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USW Analyst Shares Global Wheat Market Summary with Farmer Directors

U.S. Wheat Associates (USW) Market Analyst Tyllor Ledford compiles a comprehensive “World Wheat Supply and Demand” summary for three USW Board of Directors meetings each year. Using the USDA World Agricultural Supply and Demand Estimates (WASDE) report as her primary source, Ledford prepared the attached market summary for the USW Winter Board Meeting in Washington, D.C., Jan. 23 to 26, 2024.

Following is the start of Ledford’s report. Continue reading the entire report here.

World Wheat Supply and Demand

Released on January 12, the World Agricultural Supply and Demand Estimates (WASDE) had a bearish impact on the market, as the estimates quantified the sustained record export flows from the Black Sea and increased ending stock levels. The 2023/24 global wheat production is forecast at 784.9 MMT, up 1.9 MMT from December’s estimates. Meanwhile, world wheat demand remains at a record high of 796.4 MMT, outpacing world wheat production by 11.5 MMT

Page 2 USW World Wheat Supply and Demand Summary

USW Market Analyst Tyllor Ledford’s report to the USW Board of Directors includes highlights of world wheat supply and demand. Read more at https://www.uswheat.org/wp-content/uploads/USW-Market-Summary-Winter-2024.pdf.

Although demand surpassed supplies, the January WASDE increased world ending stocks by 1.8 MMT. The current estimate of 260.0 MMT is a 4% decrease from the year prior and the lowest level since 2015/16. In major exporting countries, wheat stocks sit at 58.7 MMT, an improvement from previous estimates but still below 60.4 MMT the year prior. Increased ending stocks in the EU and Ukraine helped support the recent increases. World wheat trade is expected to reach 209.5 MMT, down from 220.2 MMT in 2022/23.

Domestically, the January WASDE made few significant changes, while the Winter Wheat Seedings Report overshadowed the WASDE’s impacts. U.S. ending stocks came in 300,000 MT lower, though USDA foresees ending stocks at 17.6 MMT, a 14% increase year over year and the first increase since 2015/16. That estimate helps loosen the U.S. wheat balance sheet and relieve underlying price pressure, though ending stocks still sit 13.9 MMT below the recent highs hit in 2016/17.

 

 

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Inspired by Bread Made with U.S. Wheat, Ambassador to Chile Tours Major Flour Mill

Breads made with U.S. wheat caught the attention of the U.S. Ambassador to Chile during September’s Espacio Food and Service trade show in Santiago. It set in motion a series of discussions that led to Amb. Bernadette Meehan touring a top Chilean flour mill arranged by the U.S. Wheat Associates (USW) South American regional team.

The bread Meehan raved about at the show was baked in the USW wheat flour and baking laboratory on the campus of Universidad Mayor.

“Ambassador Meehan opened the Food and Service Show this past fall and noted an interest in the bread at our display. She wanted to know more about U.S. wheat’s work in Chile, the flour milling process and the products produced using U.S. wheat,” explained Miguel Galdos, USW Regional Director in South America.  “I contacted a USDA Foreign Agricultural Service (FAS) specialist and set up a visit to a mill. We met and toured a mill on Jan. 10 at Molinos Cunaco, a customer of U.S. wheat and one of Chile’s largest milling companies.”

Molinos Cunaco processes approximately 300,000 metric tons of wheat each year, of which 30% to 35% is U.S. wheat.

USW arranged a tour of a Molinos Cunaco flour mill for U.S. Ambassador to Chile Bernadette Meehan. In this photo, USW Regional DIrector Miguel Galdos (far left) and Meehan (second from right) pose with Molinos Cunaco executives in the mill's packaging room.

USW arranged a tour of a Molinos Cunaco flour mill for U.S. Ambassador to Chile Bernadette Meehan. Posing for a photo in the mill’s packaging department are (left to right) USW Regional Director Miguel Galdos, U.S. Agricultural Attaché Bret Tate, Ambassador Meehan, and Molinos Cunaco General Manager Cristian Diaz.

A Close Look at U.S. Wheat in the Market

Meehan became Ambassador to Chile in July 2022.   She was joined on the mill tour by U.S. Agricultural Attaché Bret Tate and FAS Marketing Specialist Maria Jose Herrera. Molinos Cunaco’s General Manager Cristian Díaz, Director Juan Enrique Ojeda and Finance Manager José Ignacio Vargas hosted the American group.

“The meeting between the Ambassador and the executives covered a lot of topics,” Galdos reported. “One topic was the current situation of the milling industry in Chile. They also discussed the commercial relationship between the company and its wheat suppliers. Cooperation of the U.S. government on issues involving Chilean agriculture and trade was also part of the chat.”

After the meeting, the group moved to the mill. Meehan walked all five floors of the facility to see the entire milling process – from U.S. wheat being brought into the mill to the department where flour made with the wheat is packaged.

Galdos shares a U.S. wheat sample card with ambassador Meehan during discussions about the many uses for U.S. wheat and the preferences of end users in Chile.

Galdos shares a U.S. wheat sample card with ambassador Meehan during discussions about the many uses for U.S. wheat and the preferences of end users in Chile.

Chile Typically Imports Four Classes of Wheat

Galdos shared with her the fact that U.S. wheat currently has about a 30% market share in Chile. He explained that Chile typically imports four classes of U.S. wheat: hard red winter, soft red winter, soft white and hard red spring wheat. In 2023, due to the pricing situation, only three classes were purchased by Chilean millers – soft white, soft red winter and hard red winter.

“The ambassador asked a lot of questions about wheat, the milling process and the end products. We answered all of her questions,” said Galdos. “She had the opportunity to meet the people who work in different areas of the company.”

Ambassador Shares Appreciation for USW

Later that day, Meehan posted an account of the tour on her X, formerly Twitter, account, which can be seen here.

“Incredible experience today at #molinocunaco with representatives from U.S. Wheat Associates,” Meehan noted in her post. “I discovered that Chile imports American wheat varieties for bread and other high-quality delicacies – continued collaboration to deliver exceptional products to consumers.”

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Wheat Industry News

News and information from around the wheat industry.

 

Speaking of Wheat

“Farmers have a unique perspective of longevity and sustainability because our livelihoods depend on it. And it breeds a level of commitment to these practices over the generations. Wheat is an integral part of our system and has been for generations, but it’s important to see it in a context of the whole system that is anchored in this crop that just naturally fits.” – Park River, North Dakota, farmer Aaron Kjelland, in Episode 1 of the new “Stories of Stewardship” video series.

Thank You and Best Wishes to Ann Murchison!

Our colleague Ann Murchison (shown in the photo at the top of this page) has retired from her position as Office Manager, West Coast Office in Portland, Ore., after almost 29 years with U.S. Wheat Associates (USW). Over those years, Ann has welcomed hundreds if not thousands of overseas customers and other office visitors, shipped tons of wheat samples around the world, and cheerfully taken care of the people and busy office in the Albers Mill Building on the Willamette River. We all wish Ann a long and healthy retirement and sincerely thank her for such dedicated service!

Congratulations to Cathy Marais

USW is happy to recognize the service of Cape Town Regional Finance and Administration Manager Cathy Marais who marks 30 years of service on Jan. 17, 2024. Dankie, Cathy, for your hard work and dedication from all your colleagues!

Photo of Cathy Marais

Cathy Marais, USW Cape Town

K-State Seeks Nominations for New Grain Science Department Leader

The College of Agriculture at Kansas State University (KSU) is now accepting nominations and applications for the Head of the Department of Grain Science and Industry. This is a critical position for the milling industry. Click here for more information. Screening of applications will continue until the position is filled.

Wheat Breeding Innovation News

Researchers at the United Kingdom’s John Innes Centre have announced use of gene-editing techniques to help identify a temperature tolerance factor that may protect wheat from the increasingly unpredictable challenges of climate change. A team headed by Prof. Graham Moore made the discovery during experiments looking at wheat fertility in plants exposed to either high or low temperatures. Read more about this wheat breeding innovation here. In other news, U.S. based company Cibus, Inc., said it has successfully regenerated wheat plants from single cells in a wheat cultivar, a breakthrough the agricultural technology company said may be used to develop traits like disease resistance and nitrogen use efficiency that support increased yields. Read more about this innovation here.

Durum Prices are More Competitive

“World Grain” recently reported that pasta manufacturers looking for 2024 semolina coverage will find durum values lower than a year ago and down sharply from mid-December 2021. And yet U.S. Northern Plains durum growers deciding when to sell stored supplied will encounter bids hovering about a $1 a bushel higher than the five-year average for the date. Four months before the typical seeding time for the U.S. northern durum crop, soil moisture conditions were in much better shape than a year earlier. Read more here.

Durum

El Niño Winter Outlook

“Farm Progress” publications in the United States recently looked at the potential impact of the El Niño weather patterns on global wheat production. A wetter summer and fall in 2023 helped reduce the amount of wheat produced in areas experiencing drought conditions. The article notes that early in 2024, top hard red winter wheat-growing regions in the Southern Plains enjoyed higher rainfall volumes than at the same point over the past two years. Ratings improved for winter wheat crops in top producer Kansas, as well as Texas, Oklahoma, and South Dakota. But dry soil continues to plague the entire Heartland. Through early February, 32% of U.S. winter wheat acres were rated in drought condition (below). And perhaps more notably, 25% of spring wheat acres were located within a drought area at that time (see additional maps here). Read more here.

 

 

 

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Watch Episode 1 of New “Stories of Stewardship” Video Series

U.S. Wheat Associates (USW) is happy to share a new video series featuring farmers explaining how they responsibly manage the land and natural resources entrusted to their care.

“Stories of Stewardship” premiered Jan. 10, 2024, on Facebook with Episode 1 focusing 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.

Watch Now

Watch Episode 1 here and stay tuned as five new episodes are released Jan. 24, Feb. 7, Feb. 21, March 6, and March 20.

USW wants to thank Tom Cannon of Blackwell, Okla., Ben and Stephanie Bowsher of Waynesfield, Ohio, Nick Jorgensen of Ideal, S.D., Art Schultheis of Colton, Wash. (photo above), and Aaron Kjelland of Park River, N.D., for sharing their Stories of Stewardship.

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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‘Spotlight on the Philippines’ Allows USW to Share its Experiences in the Important Market

Flour millers and bakers in the Philippines have a strong preference for U.S. wheat, and U.S. Wheat Associates (USW) has spent many years building relationships in the important market.

‘Spotlight on the Philippines’ Provided Opportunity

Because of USW’s work there, USDA invited USW to participate in “Spotlight on the Philippines,” a webinar held in December that was organized by the Foreign Agricultural Service (FAS) office in Manila. USW Assistant Regional Director Joe Bippert presented during the event. He shared USW’s experiences in the market and some of its plans for the coming year.

In this short video – the first of two videos on USW’s work in the market – Bippert explains why USW was chosen to participate in the FAS event. He also provides some background on U.S. wheat’s successes in the Philippines.

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U.S. Wheat Export Basis Levels Support On-Going Competitiveness

During the summer of 2023, U.S. wheat export basis levels hovered near record lows as slow demand met seasonal weakness. Across almost all the U.S. wheat classes and export points, export basis levels hovered below average, signaling a unique pricing opportunity for U.S. wheat. Historical trends indicate that basis levels generally hit their lowest point during wheat harvest and increase in October, November, and December as export capacity tightens in response to an influx of corn and soybeans.

Following the seasonal pattern, U.S. export basis levels have since risen for all U.S. wheat classes. Despite the increase, the average HRS basis for the Gulf and Pacific Northwest sits 15% below the five-year average, while HRW and SRW sit 31% and 27% below the five-year average, respectively. The following examines the underlying factors driving this trend and its impact as we dive into the second half of marketing year 2023/24.

Line chart showing export basis levels from December 2022 to December 2023.

U.S. export basis levels generally follow a seasonal pattern, hitting lows during the wheat harvest and highs during October, November, and December as elevation capacity tightens in response to the corn and soybean harvest. In July 2023, basis levels hovered near record lows as seasonal weakness was coupled with an overall lack of demand. Source: U.S. Wheat Associates Price Report.

Excess Capacity Meets Slow Demand

The most significant factor influencing the below-average basis values is the overall decrease in export volume for grains and oilseeds, particularly for soybeans. According to USDA, for the week ending December 28, 2023, inspections for all grains (wheat, corn, and soybeans) were down 19% from the same period last year and 39% below the three-year average.

U.S. soybean exports are down due primarily to South American competition in the Chinese market. Reflected in the December 2023 World Agricultural Supply and Demand Estimates, forecast for U.S. soybean exports to all destinations came in at 47.6 MMT, down from 54.2 MMT in 2022/23 and 58.6 MMT in 2021/22. Meanwhile, total Brazilian exports are forecast at a record 99.5 MMT, up from 95.5 MMT the year prior and 18% above the five-year average as record quantities of soybeans are exported to China.

U.S. wheat exports face similar competitive headwinds. USDA export data shows that the export pace sits 14% behind last year and 26% below the five-year average.

Line chart shows price changes since 2019 for secondary grain railcar auction market bids to illustrate effect on wheat export basis.

Secondary Railcar Auction Market Bids (a real-time reflection of the supply and demand for rail freight) for October, November, and December sit at $65.12/car on average, down from $836.11/car last year and the five-year average of $262.96/car. The combined impact of excess capacity within the grain handling and logistics system has removed pressure on wheat basis levels and allowed them to drift lower. Source: USDA Rail Transportation Dashboard.

The decrease in overall grain volume has created surplus capacity in the U.S. logistics systems, particularly for the railroads. As a result, Secondary Railcar Auction Market Bids (a real-time reflection of the supply and demand for rail freight) for October, November, and December sit at $65.12/car on average, down from $836.11/car last year, and the five-year average of $262.96/car. The combined impact of excess capacity within the grain handling and logistics system has removed pressure on wheat basis levels and allowed them to drift lower.

Basis Levels Support Competitiveness

As overall grain export volume remains below average, we can expect the depressing impact on the basis to continue. South American competition for soybean exports will continue to influence grain markets, forcing participants to readjust to the changing dynamic.

The combined impact of below-average basis levels and the downward trend in wheat futures prices, driven by competition from the Black Sea, Canada, and other origins, has helped improve U.S. wheat competitiveness throughout 2023/24. Therefore, basis movements will continue to play a key role in maximizing value and capitalizing on opportunities as they arise in the market.

By USW Market Analyst Tyllor Ledford.

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Season’s Greetings and 2023/24 Holiday Office Schedule

On behalf of the dedicated U.S. Wheat Associates (USW) colleagues around the world and the wheat farmers we represent, we wish you all a joyous, healthy holiday season and a peaceful and prosperous 2024!

U.S. Office Schedule

In recognition of Christmas and New Year’s holidays, the USW Headquarters and West Coast Offices will be closed: Friday, Dec. 22; Monday, Dec. 25; Friday, Dec. 29; and Jan. 1, 2024. The USW Wheat Letter email update will resume its bi-weekly schedule on Jan. 11, 2024. The next USW Price Report will be published Thursday, Dec. 22 and resume its weekly schedule on Jan. 5, 2024.

 

2023-24 USW Holiday Schedule

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Wheat Industry News

News and Information from Around the Wheat Industry

Speaking of Wheat

“Regenified, what does that mean? Raw materials … grown in a very sustainable effort. It’s saying that we are making things better tomorrow than they were yesterday, from a farming perspective. So, we are building the soil, we are preserving the soil, we are protecting the environment, we are doing all those things that are very important for generations to come.” – Bernard Peterson, Chairman, National Wheat Foundation and Kentucky wheat farmer who is the sole supplier of red winter wheat for Makers Mark® Bourbon. Read more here.

KSU Awarded $16M Grant to Study Crop Yields and Sustainability

The Foundation for Food & Agriculture Research (FFAR) awarded a $7,657,633 grant to Kansas State University (KSU) to support an expansive study across the U.S. Corn Belt and Great Plains exploring how crop, soil, and water management affect the soil microbial communities that drive agroecosystem functions. Partners including KSU, Bayer, Iowa State University, LandScan, LI-COR Environmental, Mississippi State University, The Ohio State University and The University of Kansas also provided funds for a total investment of $16,362,948.

Argentine Wheat Policies, Production in Spotlight

With Javier Milei’s election as Argentina’s president, farmers there are hoping new policies will help rapidly expand wheat production, Bloomberg wrote this week. The news service cites a farmer and board member of the Bahia Bianca Grain Exchange who believes that Milei’s promise to undo currency controls cut agricultural export tariffs will entice increased production. The last time Argentina deregulated its wheat market eight years ago production soared by 52% and kept climbing to fresh records. Read more.

Christopherson Tells U.S. Wheat Quality Story

Regional farm publication Tri-State Neighbor has published an interview with South Dakota Wheat Commission Executive Director Reid Christopherson about his participation in U.S. Wheat Associates (USW) Crop Quality Seminars in North Asia. He said the seminars put U.S. industry experts “in front of several of the best international customers, telling that story of why U.S. wheat should be a part of their formulation” adding that there is a special story to tell about the functional quality of U.S. wheat. Read more here.

Reid Christopherson, executive director of South Dakota Wheat Growers Association, recently traveled with a group of six others to China, Japan, South Korea and Taiwan to tell the story of U.S. Wheat.

Reid Christopherson, Executive Director of South Dakota Wheat Growers Association, recently traveled with a group of six others to China, Japan, South Korea and Taiwan to tell the story of U.S. Wheat.

K-State Research: Lower Gluten with Same Dough Quality      

Kansas State University researchers have reported a breakthrough in developing wheat-based foods that contain lower amounts of gluten, a discovery that may lessen the adverse effects for those with celiac or other autoimmune diseases. Scientists from K-State’s Wheat Genetics Resource Center and the USDA’s Agricultural Research Service — in partnership with USW member Kansas Wheat — successfully used a gene editing technique to reduce the presence of two types of gluten-coding genes called gliadins. “We were very surprised that [editing] reduced the immunotoxicity caused by gliadin genes in wheat by 47-fold,” said Dr. Eduard Akhunov, University Distinguished Professor in K-State’s Department of Plant Pathology, and director of the Wheat Genetics Resource Center. Read more.

 

 

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A Busy Year for USW Export Market Development Programs

U.S. Wheat Associates (USW) staff across the world have had quite a busy year in 2023. Blessed in 2019 with additional funding from the Agricultural Trade Promotion (ATP) program but handicapped by pandemic restrictions, our teams have been playing “catch-up” with positive results.

The extra push helped USW conduct a record number of activities from trade teams and short courses to buyers’ conferences and board teams in 2023.

USW led a trade team of Nigerian and Kenyan wheat buyers on visits to farms and facilities in Kansas, North Dakota and Minnesota. The team was interested in learning about U.S. hard red winter (HRW), hard red spring (HRS) and hard white (HW) wheat.

USW led a trade team of Nigerian and Kenyan wheat buyers on visits to farms and facilities in Kansas, North Dakota and Minnesota. The team was interested in learning about U.S. hard red winter (HRW), hard red spring (HRS) and hard white (HW) wheat.

Fundamental Support

Along with technical support, market development activities are a fundamental part of USW’s work promoting U.S. wheat in overseas markets with funding from USDA’s Foreign Agricultural Service (FAS) and its state wheat commission members. Some of the most popular activities conducted annually in the United States include trade teams and short courses. The year 2023 saw a continued uptick in these activities and an increase in the number of customers participating. USW’s reach remains global with over 42 countries represented in trade teams and short courses this year alone

In 2023, USW sponsored 16 trade teams to the United States – a record number of teams in the last 13 years. Prior to this year, USW hosted an average of 11 trade team visits per year. Not only did we break records in 2023, we also welcomed the first team of high-level Chinese buyers to the United States since 2014, and the first EU team since 2015.

USW's North Asia Board Team was made up of U.S. wheat farmers who traveled to the Philippines, Japan and South Korea to meet customers.

USW’s North Asia Board Team was made up of U.S. wheat farmers who traveled to the Philippines, Japan and South Korea in March to meet customers and learn how U.S. wheat is used by flour millers and bakeries in different markets.

Partner Short Courses

Trade and technical short courses hosted by USW partner organizations including Wheat Marketing Center, Northern Crops Institute, and IGP International are also popular activities with overseas customers. While the number of courses USW offered remained steady, 2023 saw the most customer course participants in the last 5 years. From sponsoring 75 participants in 2018 to 100 participants in 2023, USW offices continue to make in-person customer training a priority.

Miguel Galdos, USW Regional Director, South America, noted “this was most activities we have conducted in 40 years!”

Three buyers’ conferences also landed spots on the USW market activities calendar in 2023. The South and Southeast Asia Wheat Marketing Conference, Latin American Buyers Conference and North Asia Marketing Conference brought together customers from 7 different regions.

October and November 2023 kept the overseas offices busy with Crop Quality seminars. USW sent staff and U.S. industry experts across the world including Africa, Central America, Asia, Europe, South America, and the Middle East to share crucial information about the quality of 2023 U.S. wheat crops. Consultants, state administrators, farmers, and USW technical staff presented almost 30 seminars in 26 countries. All these seminars took place in-person with full teams of speakers. That has not happened since before 2018.

Looking Ahead

As the long-term funding from ATP ends, USW continues to promote U.S. wheat with funding from the Market Access Program, Foreign Market Development, and other FAS export market development programs with essential support from U.S. farmers. Looking ahead, USW is now applying for additional export promotion funding under a new FAS Regional Agricultural Promotion Program (RAPP) that, if awarded, will allow USW to maintain a higher level of trade and technical service for customers that add exceptional value to U.S. wheat imports.

By USW Director of Programs Catherine Miller

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Video: USW Chairman Michael Peters Says ‘Active 2023 for U.S. Wheat Industry Sets Table for Productive 2024’

Meeting Customers Important to U.S. Wheat Industry

U.S. Wheat Associates (USW) Chairman Michael Peters traveled to eight countries this year, meeting with customers and potential customers of U.S. wheat in an increasingly competitive global market. “What I learned is that our customers really value the chance to talk to American farmers, the chance to learn about where the wheat they purchase comes from,” said Peters, who grows wheat and raises cattle in Okarche, Oklahoma. “At the same time, the discussions I had this year in places around the world helped me learn about where our wheat ends up and how it is used.”

In this short video, Peters, who is six months into his tenure as Chairman, reviews 2023 and looks ahead to 2024 . . .

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