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Wheat Industry News

Recent news and highlights from around the wheat industry.

Quote of the Week: “I want people to know that I’m producing a safe product. I think there is a lot of fear around where our food comes from. But hopefully coming straight to the source you can see that we take pride in what we do and we want to produce food that is safe to eat, because our family eats it, too.“ – Scott VanAllen, Kansas wheat farmer, speaking at his farm to food bloggers on a visit sponsored by Kansas Wheat and Red Star Yeast.

Congratulations. U.S. Wheat Associates (USW) Regional Program Coordinator Domenique Opperman, based in the Cape Town Office, recently welcomed a baby girl, Calia, who joins father Shaun and big brother Javier.

Best Wishes to Pamela Ann Leckie Wiese who is retiring after serving as an Administrative Assistant in the USW Cape Town office for more than 25 years. USW thanks Pam for her service to U.S. wheat farmers and their customers in Sub-Saharan Africa.

IGP Seeks Ag Economist. IGP International’s long time Senior Agricultural Economist Jay O’Neil retired in late June and IGP is currently seeking national or international candidates to replace him. Ideal candidates will serve as on-site expert on grain trading and risk management, and program manager for the Grain Procurement and Risk Management Curricula. Here is a link to more information about the position and to apply: https://careers.k-state.edu/cw/en-us/job/504320/senior-agricultural-economist.

Gene Editing Coalition. A multi-stakeholder steering committee of the Coalition for Responsible Gene Editing in Agriculture met recently to “develop a framework that can provide assurance to the food system and other stakeholders that those using gene editing … are doing so responsibly,” said Charlie Arnot, chief executive officer of The Center for Food Integrity (CFI), which facilitates the Coalition. “The framework will provide an opportunity for those engaged in gene editing to demonstrate their commitment to values that build trust.” For more information, visit https://geneediting.foodintegrity.org/.

Business World Notices Wheat Weather Market. An article in the “Wall Street Journal” Aug. 4 attributed rising wheat prices to heat-related short crops around the world. The article noted that “after years of over-supply, this year’s heat is hitting wheat yields in key growing areas like Russia, Ukraine, France and Britain, while also affecting the crop in Australia, China and other parts of Asia.” About price increases, AgResource analyst Ben Buckner said: “If everyone comes to the U.S. [wheat farmers] in November, it could be incredible, and that part hasn’t yet been fully digested.” Read more at: https://www.wsj.com/articles/global-heat-wave-toasts-wheat-and-prices-soar-1533391201.

New World-grain.com Website. The publication says the new world-grain.com will present users with a fresh layout to access content. With a new navigation system, topics are broken down into multiple categories allowing users to take a surface-level look at news or a deep dive into a topic. For users wanting to browse industry news, they can access the homepage where the newest stories are available. By clicking the “More News” icon, readers can find a feed of latest articles. Read more at https://bit.ly/2OUnfdE.

Grain Procurement Management for Importers. The Northern Crops Institute will host this eight-day course, Sep. 10 to 19, 2018, at its facilities in Fargo, N.D. The course will focus on the mechanics of grain merchandising and providing training for individuals responsible for purchasing grain. The registration deadline is Aug. 15, 2018. Learn more about the course here.

IAOM-KSU Basic and Advanced Milling Principles. The IGP Institute will host two short courses focused on milling principles in October at its conference center in Manhattan, Kan. The Basic Milling Principles short course, scheduled Oct. 8 to 12, 2018, will help participants develop a conceptual understanding of the milling process with a focus on mill balance, understanding critical control points in the milling system, and milling different wheat classes. The Advanced Milling Principles short course, scheduled Oct. 15 to 19, 2018 will educate participants on quantitative tools and practices to influence and impact, optimal machine adjustment, milling efficiency and flour quality in the mill. Learn more about the courses here.

Subscribe to USW Reports. USW publishes a variety of reports and content that are available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts, the weekly Price Report and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online. Visit our page at https://www.facebook.com/uswheat for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter at www.twitter.com/uswheatassoc and video stories at https://www.youtube.com/uswheatassociates.

Photo credit: Kansas Wheat

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Ahead of USDA Report, Wheat Futures on a Powder Keg

By Stephanie Bryant-Erdmann, USW Market Analyst

Wheat prices are in for a wild ride. Just last week, all it took to trigger a limit up move in futures prices was a rumor that Ukraine might restrict milling wheat exports. Although the market took back most of those gains after the rumor was retracted, Chicago soft red winter (SRW) futures ended the week up 5 percent while Kansas City hard red winter (HRW) climbed 6 percent and Minneapolis hard red spring (HRS) increased 3 percent.

That short-term volatility is indicative of how tightly wound global wheat markets are, and the next big price move could be triggered on Aug. 10 when USDA updates its monthly World Agricultural Supply and Demand Estimate (WASDE). We will look for factors that could trigger additional price moves including changes to production, export demand and world feed grain supply estimates.

Shrinking Global Wheat Production. A saying among wheat people suggests that at harvest, “big crops get bigger and small crops get smaller.” This seems to be a “small crop” year with analysts and traders alike expecting USDA to reduce world production estimates based on new harvest numbers from France, Germany, Poland and Russia. Current estimates from Stratégie Grains put EU common wheat production (excluding durum) below 130 MMT, down 8 percent year over year if realized.

The Russian Ministry of Agriculture expects 2018/19 Russian wheat production to total 64.4 MMT, down 25 percent from the year prior. According to analysts at IKAR, sprouting and disease pressure from late season rains further decreased Russian exportable supply. Australian wheat production may also be reduced as the region that produces Australian Prime Hard and Australian Hard wheat is experiencing “the worst drought in living memory.”

Bullish supply news has pushed both U.S. and global wheat prices higher in recent weeks. Since July 13, U.S. HRW futures are up 75 cents per bushel ($28 per metric ton [MT]), SRW futures grew 59 cents per bushel ($22 per MT) and HRS climbed 81 cents per bushel ($30 per MT). At the same time, free-on-board (FOB) prices paid by Algeria and Egypt for wheat in public tenders have increased an average 90 cents per bushel ($33 per MT).

Changes to Wheat Exports. United States. Despite global FOB wheat prices climbing at a faster rate than U.S. wheat futures, U.S. wheat exports remain slow. Through July 27, U.S. wheat export sales totaled 7.20 MMT, down 28 percent from 2017/18. That pace must quicken soon to meet USDA’s current U.S. wheat export forecast of 26.5 MMT.

Ukraine. Each year, the Ukraine Agricultural Ministry signs a memorandum with grain exporters outlining an agreed volume of milling wheat trade not subject to government restriction. This year, the proposed volume is 8.0 MMT, down from 10.0 MMT exported in 2017/18. Milling wheat exports generally make up a little more than half of the country’s wheat exports. In July, USDA forecast Ukraine total wheat exports (milling and feed wheat) at 16.5 MMT, down 1.0 MT from 2017/18.

Decreases to the Global Feed Grain Supply. While higher wheat prices would normally ration feed wheat demand, tightening global feed grain supply and demand is creating a price floor for global wheat prices. USDA expects global feed grain consumption — barley, corn, mixed grains, oats, rye and sorghum — to outpace global feed grain production by 34.1 MMT in 2018/19. With global consumption outpacing global production for the second year in a row, USDA anticipates global feed grain ending stocks falling to 179 MMT, the lowest level since 2012/13.

As we have suggested (Lower U.S. Wheat Prices Are an Anomaly and An Excellent Opportunity), U.S. and global wheat prices are sitting on a powder keg with an anticipated global stocks-to-use ratio (excluding China) of 19 percent, a level that has not been seen since 2007/08. Both U.S. and global wheat prices have rallied in recent weeks. Continued reports of quality damage and lower yields in the EU and Russia and drought conditions in Australia indicate the 2018/19 crop is shrinking. If last week’s limit up movement is any indication, wheat prices could go much higher very quickly if additional bullish news comes out.

To track U.S. wheat export basis levels and prices, subscribe to the USW Weekly Price Report.

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A Mid-Season Look at the U.S. Winter Wheat Harvest for Buyers

U.S. farmers are making good progress now on the second half of their 2018 winter wheat harvests and U.S. Wheat Associates (USW) wants to provide a mid-season look at winter wheat harvest and quality in this “Wheat Letter” entry. USW publishes a new Harvest Report every Friday on this website.

 

Soft Red Winter (SRW) harvest of a crop that was quite affected by rain throughout the growing season is now complete. Planted area was up somewhat compared to last year’s record low level. With abundant rain, yields were above average for the year but test weights from crops in both the East Coast and Gulf port tributaries are less than last year and the 5-year average. That knocks down the U.S. Grade for this crop to #3 SRW. DON levels are slightly higher in 2018 but are below the 5-year average. Processers should find good qualities for crackers overall and for cookies from segments of the crop. With higher protein and good extensibility, the crop should also be valuable for blending for baking applications. USW will post the final SRW quality report within the next few weeks.

John Hoffman SRW Wheat

Past USW Director John Hoffman of Circleville, Ohio, just beat the rain to complete his 2018 SRW harvest.

 

Hard Red Winter (HRW) harvest is more than 80 percent complete and buyers should want to take a very good look at the 2018 crop. Starting with another record low planted area, USDA believes farmers will harvest 17.9 million metric tons (MMT) of HRW this year or 12 percent less than in 2017. That amount is likely to change as USDA measures the effects of abandoned area in drought stressed areas of the Southern Plains. For buyers, however, this is a very good supply of HRW with composite protein holding at 12.6% (12% moisture) and test weights at 79.7 kg/hl (60.6 lb/bu). Quality reports from Montana’s harvest are even better. While flour and dough properties are just being measured for this crop, domestic millers and processors are saying they like what they see in this HRW crop.

HRW Harvest Peter Miller

HRW farmer Peter Miller of Lodgepole, Nebraska, posted this photo on his Twitter account @pmiller1320 on July 23.

 

Soft White (SW) winter wheat growing conditions across the Pacific Northwest (PNW) were nearly ideal for the 2018 crop. As of Aug. 3, the PNW SW harvest was 55% complete in Oregon (sadly aided by destructive fires in the north-central part of the state), 28% in Washington and 12% in Idaho. Industry sources say continued dry weather has pushed progress beyond those levels since early this week. Dryland yields are well above normal and early quality analysis indicate good test weight at 61.8 lb/bu (81.3 kg/hl), very low moisture content at 8.4%, low protein at 9.4% (12% moisture basis), and sound falling number value at 305 seconds.

Harvest Time Logan Padget

Logan Padget, son of USW Secretary-Treasurer Darren Padget, of Grass Valley, Oregon, posted this beautiful image of SW “Harvest Time” on their farm July 23.

 

We hope you will subscribe to USW’s Harvest Report and if you want to ask questions about this year’s crops or about other topics related to U.S. wheat and U.S. wheat exports, visit our new “Ask the Expert” section of this website at https://www.uswheat.org/market-and-crop-information/ask-the-expert/.

 

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Promoting Wheat Around the World

As U.S. Wheat Associates (USW) President Vince Peterson often says, at any given hour of the day there is someone, somewhere, talking about the quality, reliability and value of U.S. wheat. Wheat Letter wants to share some of the ways USW was working in June and July to promote all six classes of U.S. wheat in an ever more complex world grain market.

Sub-Saharan Africa. Flour milling executives from Nigeria, South Africa, Tanzania and Liberia traveled to Texas, Oklahoma and Kansas in June to get the latest information about hard red winter (HRW) wheat quality and value. The delegation experienced each part of the supply chain by visiting the Port of Corpus Christi and local grain elevators, participating in wheat harvest, meeting with USDA officials and discussing wheat quality at the Kansas Wheat Innovation Center. Also in June, another delegation from Nigeria and South Africa attended a two-week milling short course at the IGP Institute in Manhattan, Kan. Read more about these activities here and here.

South Asia. In June, the USW Singapore and Manila Offices led a week of Procurement and Mill Profitability Workshops in Thailand, Indonesia and the Philippines. Funded by the Washington Grain Commission (WGC), the activities included three full-day workshops focused on commodity price analysis to guide purchasing strategies and increase mill profitability.

Philippines. A delegation of four leaders from the Philippine flour milling industry traveled to Oregon, Washington D.C. and Washington state in June to meet with state wheat commissions, producers and grain traders, and visit a port loading facility and an FGIS dockside laboratory. In the U.S. capital, the team discussed various trade policy topics, including issues related to Turkish flour imports. Read more about this delegation here.

Ecuador and Chile. In June, a delegation of four millers from Ecuador and Chile traveled to Nebraska, North Dakota and Oregon to gain a better understanding of the wheat marketing and the supply chain. The delegation’s travel included visits to HRW and soft white (SW) producing area, an export elevator, FGIS laboratory and meetings with wheat producers and grain exporters.

Haiti. USW staff traveled to Haiti in June to meet with Haitian millers, wheat importers, the U.S. Embassy and the Haitian Ministry of Commerce and Industry (MCI) to discuss and review the status of possible dumping of Turkish wheat flour exports to Haiti and how it negatively affects the local wheat milling industry. Industry sources estimate Haitian Turkish flour imports have reached nearly 40,000 tons annually, and are entering the country at an understated price on the invoice value presented to Haitian customs. Read more about this activity here.

Taiwan. USW collaborated with the Lien Hwa Flour Mill and Chia Nan University in June to host a noodle making contest using flour from U.S. wheat classes. The contest was divided into two groups for machine-made noodle and hand-made noodles. After making their noodles, participants had to include them in a creative dish for the judges. 64 participants entered the contest.

Korea. In June, USW sponsored a Baking Product Development Course for Korean millers at the Wheat Marketing Center (WMC), Portland, Ore., that focused on U.S. wheat flour blending research.

Japan. A delegation of Japanese mid-level mill managers traveled to Oregon, Washington and North Dakota in July to learn more about this year’s crop and better understand the U.S. wheat supply chain.

Honduras. USW conducted baking seminars and in plant consultations with leading Honduran bakeries in July which focused on using new technological advancements. USW Baking Consultant Didier Rosada was interviewed on a live television program for 40 minutes that was disseminated through Facebook to consumers across the country.

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The Art of the (US-EU) Deal

By Ben Conner, USW Vice President of Policy

 

On July 25, we received excellent news after a meeting between U.S. President Donald Trump and EU Commission President Jean-Claude Juncker: the United States and European Union had agreed to work towards a trade deal and hold off on any additional tariffs.

 

Excellent news because the apparent direction prior to the meeting was toward opening another massive trade dispute across the Atlantic on a similar scale to the one happening across the Pacific with China. The ongoing Section 232 investigation on automobile imports threatened punitive tariffs on tens of billions in EU exports to the United States. Retaliation likely would have been similarly massive (putting aside for now the also massive amount of trade that may still be hit by the 232 tariffs on autos and auto parts from Mexico, Canada, Japan, Korea and others).

 

There have been conflicting reports from both sides about the scope of the deal with regard to agriculture. Some European officials claimed agriculture is not on the table, while American officials said the negotiations will cover agriculture. To the Europeans’ point, the text of the joint statement specifies that the work towards zero tariffs will cover “non-auto industrial goods,” and subsequent clarification mentions one agricultural product for increased trade: soybeans.

 

Before considering the U.S. perspective, it is worth noting that our soybean exports to the EU are already increasing due to substantial discounts on newly homeless U.S. soybeans that, like U.S. wheat, are missing the boats to China. Soybean tariffs are already zero and the EU has no power to compel companies to purchase U.S. origin, so if the agricultural negotiations are limited to soybeans, the additional gains for U.S. farmers will be extremely small.

 

From the U.S. perspective – the one we expect to prevail ultimately if this deal will have any chance of ratification in the U.S. Congress – of course agriculture will be covered, in spite of what the initial statement may have implied. How could they negotiate an agreement covering “substantially all trade” (the WTO requirement for such deals) if the negotiations left out one of the most competitive export sectors?

 

Moreover, U.S. Trade Promotion Authority (TPA), which gives the President delegated authority to negotiate trade agreements, specifically includes “trade in agriculture” as a principle negotiating objective distinct from trade in other goods. If the U.S. Administration completely ignored that negotiating objective, it is highly unlikely that Congress would provide necessary procedural protections for the agreement under TPA.

 

These questions may complicate the discussions going forward. Agricultural negotiations are always difficult between the U.S. and the EU, as they were during the last attempt at a deal under the Transatlantic Trade and Investment Partnership negotiations. But for now, we can all be grateful that discussions are occurring and a deepening trade war with the EU seems to be on hold.

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World Wheat Trade Dynamics Dominate 2018 Latin American & Caribbean Buyers Conference

Almost 100 people from 16 countries participated in the 2018 edition of the biennial U.S. Wheat Associates (USW) Latin American & Caribbean Buyers Conference July 18 to 20 in Rio de Janeiro, Brazil.  Apprehension about a growing number of trade policy issues as the conference started was quickly replaced by enthusiasm for the abundance of opportunities available from the 2018 U.S. wheat harvest and USW’s tradition of service.

 

Change was the overall theme of this year’s conference and was apparent from the start with the introduction of the newest USW South American Region colleagues: Miguel Galdos as the next Regional Director and Andres Saturno in a new regional position as Technical Specialist. Regional Vice President Alvaro de la Fuente has announced plans to retire in October and USW recognized his 41 years of service at the conference.

 

USW President Vince Peterson added perspective to the theme with a presentation illustrating the changing dynamics of the global wheat trade and increased competitiveness from Russia and other non-traditional importers into the region. Mark Fowler, Vice President of Overseas Operations, then highlighted how expansion of technical service will increase value for our U.S. wheat customers in the Mexican, Central American and Caribbean region and in the South American region.

 

“The service we provide combines with the variety and quality of the six classes of U.S. wheat available to remain the best choice for our customers in Latin America,” said Fowler.  “As the market becomes more competitive and our customers strive to differentiate their products to their customers, our ability to provide the technical service and product development assistance becomes even more vital for them and the farmers we represent.”

USW Vice President of Overseas Operations Mark Fowler.

 

Galdos provided an overview of the Latin American and Caribbean baking industry while Marcelo Mitre, Technical Specialist, USW/ Mexico City, and Casey Chumrau, Marketing Manager, USW/Santiago, shared several examples of how technical support has benefitted USW buyers and wheat food processors. U.S. participants also provided a wide-ranging look at the supplies and quality of U.S. hard red winter (HRW), soft red winter (SRW), hard red spring (HRS), soft white (SW) and durum during the conference.

 

Ambassador Rubens Barbosa (second from right), President of Abitrigo, the Brazilian Millers Association, was a guest speaker at the Latin American and Caribbean Buyers Conference.

Additional guest speakers included: Alejandro Daly, Executive President of ALIM, the Latin American Millers Association covering how labeling laws affect consumption; Ambassador Rubens Barbosa, President of Abitrigo, the Brazilian Millers Association, focusing on Brazil’s wheat production and national policies; Irineu J. Pedrollo, Owner of I&MP Consulting Associates, presenting on the experiences of a U.S. wheat buyer; Dr. Glenn Gaesser, Arizona State University, presenting on the nutritional challenges of a gluten-free diet; and Mara Isabel Perdomo, Broker Manager Director with Marita Freight and Trade, speaking on freight market dynamics.

 

In addition to the wheat buyers from milling companies at the conference, U.S. wheat producers from seven states either attended or provided financial support for the conference. USW thanks the Idaho Wheat Commission, the Oregon Wheat Commission and the Washington Grain Commission for their sponsorship and participants from the California Wheat Commission, Kansas Wheat Commission, Montana Wheat & Barley Committee, North Dakota Wheat Commission and Oklahoma Wheat Commission for their support to make the conference a continued success. Additional funding was provided by USDA’s Foreign Agricultural Service.

 

“It’s significant that the conference was held in Brazil this year because Brazil is one the world’s leading wheat importers,” said Kansas Wheat CEO Justin Gilpin in a report on the conference by Kansas Wheat.

 

Dr. Romulo Lollato, Extension Wheat Specialist at Kansas State University, spoke on “The Role of Agricultural Extension on Wheat Quality: A Case Study for Hard Red Winter.”

 

According to Gilpin, Lollato was able to communicate to buyers about what Kansas wheat farmers are putting into their crops for both management and quality.

 

“Buyers have a better understanding of what goes into wheat production and management for quality,” Gilpin said. “This will help differentiate U.S. hard red winter in a competitive marketplace.”

 

Kansas Wheat Vice President of Research and Operations Aaron Harries saw the conference as an opportunity for customers to meet U.S. growers and discuss wheat productio

USW Chairman and wheat grower Chris Kolstad.

n and the business of farming, and for growers to show their appreciation to buyers and millers who buy their crops. In fact, USW Chairman Chris Kolstad, a wheat farmer from Ledger, Mont., covered “The Economics of Growing Wheat” at the conference.

“I hope that the buyers and attendees appreciate the transparency we show,” Harries said. “We fully disclose information about the crop, even in years when our wheat crop isn’t that good. I hope they come away from the conference knowing that if they seek any information or expertise, as sellers we have that readily available for them.”

 

USW has posted presentations from the 2018 Latin American, Caribbean and South American Buyers Conference on its website here: https://www.uswheat.org/marketing/2018-latin-american-and-caribbean-buyers-conference/.

 

 

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The EU Fails to Support Scientific Progress Yet Again

By Elizabeth Westendorf, USW Assistant Director of Policy

 

This week, the European Court of Justice (ECJ) ruled on the regulatory status of plants developed through mutagenesis (which includes many modern plant breeding innovations). They determined that these technologies do fall under the jurisdiction of EU laws regarding GMOs. And with that, they landed a serious blow to the future of agricultural innovation.

 

Earlier this year, an advocate general of the ECJ wrote an opinion stating that gene-editing techniques that did not result in foreign DNA in the final product should not be considered GMOs under EU GM legislation. This ruling created hope that regulations on promising new technology like CRISPR-Cas9 would not be overly burdensome. Those hopes were dashed by this new ruling though.

 

This ruling, based solely on the process used to develop a plant and ignoring the safety and effectiveness of the plant itself, is shortsighted and irresponsible. A ruling like this will have a chilling effect on European plant breeding efforts, and by extension will have negative economic and environmental consequences for the continent. Those effects will likely trickle to other plant breeding programs around the world because if a plant cannot get into Europe easily, then all countries that export to the EU will be hesitant to adopt new technology.  Additionally, the EU is often used as a benchmark for other countries considering their own regulations on biotechnology and plant breeding, so this interpretation may be adopted more widely.

 

The EU, as a group of developed countries, can weather those negative effects of restrictive regulation. But this is one more stumbling block to food security that other parts of the world cannot afford. The privilege to limit food options based on non-scientific consumer fear is one that the EU and other developed countries take for granted. But these technologies can have a massive impact on production and nutrition in Sub-Saharan Africa or Southeast Asia. With that in mind, rather than constraining new research, we should be supporting these efforts as much as possible. And one crucial avenue of support is providing science-based regulations that do not impede trade flows. As global economic leaders, this is not an option; it is a responsibility.

 

For more information, visit:

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Annual Spring Wheat Tour Sees Improvement from 2017 Drought Impact

By Amanda J. Spoo, USW Assistant Director of Communications

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

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

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

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

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

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

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

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

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

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

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Wheat Industry News

Recent news and highlights from around the wheat industry.

 

 

Quote of the Week. “Going back to the days of President Carter’s grain embargo, we learned that trade, more especially agricultural trade, should not be used as a weapon. Rather it is a tool – a tool for peace, for national security through open markets, and for economic growth.” — Sen. Pat Roberts, addressing the Washington International Trade Association on July 19, 2018.

Congratulations. We are fortunate to have devoted, loyal colleagues at USW. This month Senior Advisor Jim Frahm is celebrating 40 years and Office Director and Marketing Specialist Valentina Shustova, based in the USW Moscow Office, is celebrating 25 years. Thank you Jim and Valentina for your service to our organization, to U.S. wheat farmers and to our customers around the world.

FGIS Advisory Committee. USDA Secretary Sonny Perdue has appointed 12 members to serve on the Federal Grain Inspection Service’s (FGIS) Grain Inspection Advisory Committee beginning July 1, 2018. Their recommendations ensure that FGIS services meet the needs of all stakeholders, he said. Read more.

Korea, Japan to Accept Canadian Wheat Again. Following the discovery of a small number of wheat plants with a regulated glyphosate resistance trait in Alberta, Korea and Japan have established testing programs and re-opened their markets to Canadian wheat imports, confirming that no wheat with transgenic events are in commercial supplies. Korea and Japan have also tested U.S. wheat for similar traits for several years with no detection.

USDA’S $12 Billion Farm Assistance Programs. The Trump administration on July 24 said it would provide up to $12 billion in aid for U.S. farmers from early September to shield them from the repercussions of trade disputes between the United States and China, the European Union and others. See a U.S. wheat organization statement on the program here. More details here.

SW Losses in Oregon Fire. A recent wildfire in north central Oregon destroyed as much as 1 million bushels (more than 27,200 metric tons) of soft white (SW) in the field — a devastating loss to many individual farmers, but unlikely to influence SW export supply or prices. One farmer said he watched the fire “torch a 900 acre wheat field in 12 minutes.” USDA expects increased SW production this year. Read more here.

“Quick” Harvest in Oklahoma. Dry conditions in Oklahoma limited yield potential buy helped keep HRW quality higher this year. National Association of Wheat Growers President Jimmy Musick talks about his harvest in a video here.

Grain Procurement Management for Importers. The Northern Crops Institute will host this eight-day course, Sep. 10 to 19, 2018, at its facilities in Fargo, N.D. The course will focus on the mechanics of grain merchandising and providing training for individuals responsible for purchasing grain. The registration deadline is Aug. 15, 2018. Learn more about the course here.

IAOM-KSU Basic and Advanced Milling Principles. The IGP Institute will host two short courses focused on milling principles in October at its conference center in Manhattan, Kan. The Basic Milling Principles short course, scheduled Oct. 8 to 12, 2018, will help participants develop a conceptual understanding of the milling process with a focus on mill balance, understanding critical control points in the milling system, and milling different wheat classes. The Advanced Milling Principles short course, scheduled Oct. 15 to 19, 2018 will educate participants on quantitative tools and practices to influence and impact, optimal machine adjustment, milling efficiency and flour quality in the mill. Learn more about the courses here.

Subscribe to USW Reports. USW publishes a variety of reports and content that are available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts, the weekly Price Report and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online. Visit our page www.facebook.com/uswheat for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter at www.twitter.com/uswheatassoc and video stories at www.youtube.com/uswheatassociates.

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Lower U.S. Wheat Futures: An Anomaly and Excellent Opportunity

By Stephanie Bryant-Erdmann, USW Market Analyst

 

There is an old saying: “When there’s blood on the streets, buy property.” Given recent price movements, that could easily be changed to: “When trade policies are in the news, buy wheat.”

 

Since the steel and aluminum tariffs went into full effect for major U.S. wheat customers, September Kansas City hard red winter (HRW) wheat futures have fallen 51 cents per bushel ($19 per metric ton [MT]), September Chicago soft red winter (SRW) wheat futures dropped 25 cents per bushel ($9 per MT) and Minneapolis hard red spring (HRS) plunged 58 cents per bushel ($21 per MT).

 

Seasonal harvest pressure always impacts U.S. wheat prices during the summer months; however, this year the unique trade environment is also pressuring export demand and driving U.S. wheat prices lower. As of July 19, U.S. export sales for marketing year 2018/19 (June 1 to May 31) totaled 6.43 MMT, down 32 percent year over year. Exporters note that customers are choosing to purchase smaller than normal volumes of U.S. wheat, just what they need for the short-term or are waiting to make purchases, noting uncertainty about U.S. trade policies and their own countries’ retaliatory measures. Sales to the top five U.S. wheat customers — Mexico, Japan, the Philippines, Korea and Nigeria — are 27 percent behind last year’s pace.

 

Futures v Global S&D

U.S. wheat futures prices are not reflecting global supply and demand realities. Buyers are uncertain about the effects of unforeseen tariff wars and have altered their typical wheat import cadences.

With trade policy issues dominating the headlines, U.S. wheat futures markets are mostly ignoring global wheat supply and demand fundamentals, which can be seen in competitors’ wheat prices. The average global wheat price is up 41 cents per bushel ($15 per MT) with larger increases noted in Australia and Argentina, which compete with the United States in key quality-driven markets. According to International Grains Council (IGC) data, the average price of Australian wheat is up $19 per MT and the average price of Argentine wheat is up $75 per MT. These price increases are driven by increased global wheat demand, shrinking global wheat supplies and their location.

 

USDA noted in last week’s World Agricultural Supply and Demand estimates that global wheat production will fall to 737 MMT in 2018/19, the first drop in 5 years and down 3 percent from 2017/18. Decreased production is expected in the European Union (EU), Russia, Ukraine, Kazakhstan, and Australia. While the United States, Canada and Argentina are expected to have increased production, exporter supplies are expected to fall 20.2 MMT year over year.

 

Simultaneously, many importers are engaging in “just in time” purchases since wheat price movement has rewarded their patience the last few years. USDA expects importer ending stocks to fall to 49.8 MMT in 2018/19, the lowest amount in a decade.

 

While importer stocks are shrinking, USDA expects global wheat demand to surge to a new record high of 749 MMT, 4 percent above the 5-year average. That means that global wheat consumption will outpace global wheat production by 12.6 MMT this year and drop the global wheat stocks-to-use ratio (excluding China) to less than 20 percent. A level that has not been seen since 2007/08.

 

For perspective, in July 2007 all three wheat futures were above $6.00 per bushel ($220 per MT) and would continue climbing until March 2008 when prices peaked at $11.60 per bushel ($426 per MT) for SRW, $12.17 per bushel ($447 per MT) for HRW and $17.30 per bushel ($636 per MT) for HRS. On Friday, July 20, those three futures were at $5.16 per bushel ($190 per MT), $5.08 per bushel ($187 per MT) and $5.55 per bushel ($204 per MT), respectively, indicating there is a lot of room for upward mobility.

 

With exporter supplies shrinking and importers continuing a “just in time” purchasing pattern, global wheat prices are sitting on a powder keg that trade policy issues are currently disguising. Customers should take advantage of current U.S. futures price levels and lock in the competitive prices.

 

To track U.S. wheat export prices, subscribe to the USW Weekly Price Report.

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