thumbnail

By Neal Fisher, Administrator, North Dakota Wheat Commission; Reprinted from “Dakota Gold

[Editor’s Note: While Mr. Fisher’s article focuses on North Dakota’s agricultural products, the key points are relevant to every state that produces wheat for export.]

International trade and those affected by it have become a prominent main street topic in recent weeks as the United States and U.S. trading partners wrestle with an increasingly contentious global trade atmosphere. There have been some positive outcomes in recent negotiations, with revisions and updates to KORUS, the U.S.-Korean trade agreement, cited by U.S. trade officials as an example. South Korea is a very important export market for U.S. wheat (fifth largest), beef (largest) and other agricultural products.

U.S. agricultural exports were valued at $140.5 billion in 2017, and with a $30 billion trade surplus, agriculture is the only sector of the U.S. economy to consistently register a trade surplus, exporting more than we import. Agricultural exports also account for one third of U.S. gross farm income and generate 8,000 jobs for every $1.0 billion in exports, or 1.1 million jobs last year. But U.S. agricultural interests have become increasingly concerned, ever since the U.S. withdrew from the Trans Pacific Partnership (TPP), a very important trade agreement and missed opportunity.

U.S. wheat industry representatives and most in U.S. agriculture agree U.S. trade negotiators should be strongly encouraged to seek re-engagement in the TPP process and help President Trump get his better deal. TPP in its current form, without the U.S., has 11 country members and was signed in early March 2018. The reasons for U.S. re-entry are arguably many, but without re-engagement it appears certain that U.S. producers stand to lose very serious market share in many of their best customer destinations, while our competitors will enjoy much lower tariffs and gain market share. Comparatively higher tariffs could disadvantage U.S. wheat producers in a key market like Japan by as much as $2 per bushel and eventually impact other important markets. The TPP-11 tariff structure with Japan, a long time top U.S. spring wheat user, will be gradually reduced over five years for our chief competitors, Canada and Australia, both TPP-11 signatories, as implementation progresses. For wheat producers, other top end Asian customers are also members of the new TPP-11, further strengthening the case for U.S. re-engagement in the process.

The ability to trade, build long term market relationships, and protect hard won market shares in key customer destinations is extremely critical for North Dakota agriculture, our state’s primary industry, economic engine, and revenue generator. This has been the case for a very long time and remains so today. Trade in an environment that is as free flowing as possible, as fair and as rule-based as possible, or as fair and free as can be negotiated, is mostly a desirable situation. In contrast, several memorable historic events that were in part attributed to diplomatic and trade frictions include: commodity embargoes four decades ago that precipitated devastating economic downturns in U.S. agriculture and the North Dakota economy, earlier (national) isolationist trends that have long been linked as catalysts to epic world wars, and other historic conflicts over trade routes, and the goods that have for centuries traveled over them.

Most of what is produced in North Dakota with a lot of determination, effort and efficiency, must find its value and therefore a market beyond our state’s borders, whether our product is agricultural, or not, processed, packaged or refined, or not, or involves the latest technology and accompanying intellectual property rights, or not. These goods have always generated much more value if those who want or need to access them and are willing to pay premium prices, can readily do so. Producers benefit from stronger demand, increased marketing opportunities, and potentially stronger prices.

Trade policy experts often remind us that 95 percent of all potential customers (global population 7.6 billion) reside outside of the United States (population 350 million). In the wheat industry on average 85 percent of the annual production leaves North Dakota (population 750,000) for premium markets in other parts of the U.S. and hundreds of individual premium market destinations in nearly 80 foreign countries each year. On average North Dakota produces more than 50 percent of total U.S. HRS production. There is typically a 50/50 split between domestic consumption throughout the U.S., and the export market, where U.S. hard red spring (HRS) wheat also garners the highest prices of any wheat traded in the global market.

Sales to Asian destinations with high quality tastes and demand have accounted for more than 70 percent of that export business, with the remainder moving to quality conscious markets in Europe and Latin America. Explosive market growth is expected to continue in Asia, particularly in the Philippines, Indonesia, Taiwan, Korea, Vietnam, Malaysia, Korea, and China where most of these countries are centers of growth in population, middle class incomes, and quality wheat demand. The Philippines has already surpassed Japan, the longtime top destination for U.S. and North Dakota HRS. Nearly all of these countries are on the U.S. HRS top 10 customer list. Total U.S. HRS exports to Asia alone averaged 175 million bushels over the past five years and reached 210 million last year. These hard-won markets have been earned with high quality, reputation, trade service, and significant producer checkoff investment.

North Dakota is very likely affected more by trade policy and other agriculture related policy decisions than almost any other state. A recent USDA map shows 2018 total prospective acreage of principal crops at 24.0 million acres in North Dakota, topped only by Iowa’s 24.3 million. Kansas came in third, at 23.5 million, Illinois fourth, at 22.7 million and Texas fifth, at 21.8 million. After Minnesota’s 19.5 million acres and South Dakota’s 17.6 million, planted acreage of USDA’s principal crops falls off pretty quickly in the rest of the U.S. with 30 states under 5 million.

North Dakota production of primary crops and livestock over the past decade has been valued at an average of $8.2 billion as annual gross cash farm gate sales (simply price X quantity). Over the same 10-year period those annual values have ranged from $6.1 billion in 2009 to 11.6 billion in 2012, according to USDA-NASS reports. Crop insurance and Government payments would add an average of $680 million to the 10-year average, raising it to $8.9 billion per year over the decade from 2008 through 2017. As expected these additional payments tend to augment the gross cash value of actual production in the lower performing years, helping to stabilize producer incomes and the value or contribution of the industry to the economy year over year, as intended.

Agriculture remains an extremely important part of the economy of the state of North Dakota and the nation as a whole. The continued productivity of our agricultural sector and the phenomenon of international trade makes much of this possible.

thumbnail

By Stephanie Bryant-Erdmann, USW Market Analyst

Every year USW sends board teams overseas to give leading U.S. wheat farmers the opportunity to learn from customers about the wheat quality characteristics their markets prioritize, and to strengthen the relationship between wheat farmers and their customers. One of those teams returned from a trip to Asian countries in mid-March.

The 2018 Asia Board Team, led by USW Market Analyst, Stephanie Bryant-Erdmann, traveled to China and Taiwan. The team included: Mike Carstensen, a wheat farmer from Almira, Wash., and a current USW director representing the Washington Grain Commission; Clark Hamilton, a wheat farmer from Ririe, Ida., and a current USW director representing the Idaho Wheat Commission; Gordon Stoner, a wheat farmer from Outlook, Mont., and the past president of the National Association of Wheat Growers (NAWG), and Scott Swenson, a wheat farmer from Elbow Lake, Minn., and Treasurer of the Minnesota Wheat Research and Promotion Council.

In Qingdao, China, the team met with traders, millers and bakers who provided a unique perspective on the processing and marketing sectors of the wheat value chain. They also toured retail bakeries where they sampled traditional Chinese baked goods and visited an instant noodle and puff snack factory. The team was impressed with the freshness, variety and quality of the products and were particularly fond of a chocolate bread with mango filling. The team learned that stability time, water absorption, protein and color are especially important to the Chinese baking industry.

“At each meeting, the team heard how Chinese millers use U.S. wheat to improve flour products to meet customer demands. In return, team members shared information about the research programs in the United States and the focus on improving quality through the adoption of preferred variety lists,” said Bryant-Erdmann. “The message to customers was U.S. wheat farmers are committed to producing a high-quality product that meets their customer needs.”

U.S. wheat faces several challenges in China, including perennial trade policy issues and strong competition from Canada. U.S. soft wheat represents a good opportunity for continued growth in a market that is growing in sophistication both from the consumer side and from the milling and end-product manufacturing side.

In Taiwan, the team met with the Taiwanese Flour Millers Association, where they learned more about the high-quality Taiwan flour market. Carstensen, Hamilton, Stoner and Swenson each spoke about current growing and planting conditions on their farms and provided an early outlook for the 2018/19 wheat crop — noting that weather would play a big role in final planting decisions, yields and production. Stoner also gave the group a U.S. farm bill update, highlighting the importance of the various programs to U.S. farmers and their customers.

As a first-time board team traveler, Mike Carstensen said “the opportunity to meet with customers and learn more about their business is invaluable. The feedback on wheat quality characteristics is important for us to hear and bring back to share with our wheat breeders.”

Customers in both countries also expressed interest in buying hard white (HW) wheat. Hamilton was able to share his perception of the challenges and opportunities facing U.S. HW production and marketing.

The team also toured Taiwanese wheat food manufacturing plants, retail bakeries and a flour mill with the representatives from the American Institute of Taiwan and the U.S. Agricultural Trade Office. One highlight was visiting the Chimei showcase bakery and trying traditional Taiwanese pineapple cake. Swenson was impressed with the wide range of products, some of which are available in the United States.

“The world is a small place and maintaining the strong relationship between the U.S. wheat farmer and their overseas customers is crucial to the continued success of both,” he said.

U.S. wheat enjoys a strong loyalty from its Taiwanese customers, with the strongest competition coming from containerized shipments of Australian wheat. Improving U.S. logistics for containerized wheat was a long-term concern the team identified and plans to share with their fellow commission members.

The team will report to the USW board later this year. To see pictures from the trip please visit the USW Facebook page at www.facebook/uswheat.

thumbnail

By Vince Peterson, USW President

U.S. Wheat Associates (USW) President Vince Peterson traveled to Australia last month to speak to an Australian farmer organization about what the future might hold for wheat farmers around the world. His message was far more upbeat than might be expected at a time when U.S. wheat planted area is historically low and Russian wheat production and export demand in on the rise.

Peterson shared this summary of his presentations for Wheat Letter.

There is no doubt that Russian wheat has benefited from record yield after record yield for the last five years leading to an 85 million metric ton (MMT) year in 2017. That yield was about two-thirds of a metric ton per hectare greater than its trend line projection. Digging deeper, though, it is interesting to note that Russia has not increased its wheat planted area all that much. It is about 3 million hectares on the trend line. Its farmers have increased land area planted to “other crops” at more than double the rate they increased wheat. Russian farmers and investors, like their counterparts around the world, will be looking for the best possible return on that land. As the cropping trend continues, it implies a shift in future growth away from a wheat concentration to broader diversification of crops.

Buyers and other industry analysts also need to remember that Russia has, on average over the past five years, sold more than 80 percent of its wheat exports to buyers in Africa and the Middle East. Those regions are wheat production deficient — and per capita wheat consumption in many of those countries is very high. Population in those regions will grow by 1.3 billion people who will collectively eat at least another 60 MMT of wheat every year and about 50 MMT of that increased demand will likely need to be imported.

In addition, the final cost of imported wheat, rather than end-product quality, weighs most heavily in these same markets. The signals from these buyers back to Russian wheat farmers will continue to be a need for low to moderate protein wheat at very low, delivered prices.

Rightly so, markets in Russia’s “backyard” will represent its most profitable export opportunity. In turn, these market factors offer limited incentives for Russian farmers to produce high performing wheats for far off markets.

Freight costs matter, too. The cost of moving wheat has shifted wildly over the past 15 years. The commodity spikes in 2007 to 2012 in both prices and trade volume, fueled by the price of petroleum reaching $140 per barrel, pushed ocean freights to outlandish numbers about 10 years ago. That provided an incentive for ship building and expansion that more than doubled the dry bulk carrier fleet.

The growing cargo fleet capacity peaked in 2015. In 2016, for the first time in a dozen years, the fleet capacity began to decline. Ocean freight rates quickly hit bottom so Russia could afford to move wheat almost everywhere. That pendulum is now starting to swing back. Oil prices have moved back up; the ship supply will continue to shrink with fewer new commissions and increased demolition/scrapping. It is likely the next cycle will “normalize” with freight rates back at least at moderately higher levels that are profitable for ship owners. The next cycle is going to make it far more expensive, and far less economical, for Russia (and any origin, for that matter) to be shipping their wheat half way around the globe into a competitor’s backyard. Particularly if those supplies are just of moderate to fair quality parameters.

So, my crystal ball conclusion is that the influence of Russian wheat is not done growing, but the outlook for other global suppliers is much more positive. While Russia’s wheat industry is here to stay as a main player in the world market, it will behave more responsibly to these changing market signals in the next 20 years, making this next cycle far different for the United States, Canada, Australia and other suppliers than it has been in the past 20 years.

thumbnail

By Stephanie Bryant-Erdmann, USW Market Analyst

According to the March 29 USDA Prospective Plantings report, U.S. total spring-planted area will jump to an estimated 14.1 million acres (5.71 million hectares), 12 percent above 2017/18, if realized. The estimate includes 12.1 million acres (4.90 million hectares) of hard red spring (HRS), up 17 percent from 2017, if realized. It is important to note that this is an estimate, as farmers in the top four HRS producing states of Minnesota, Montana, North Dakota and South Dakota have not started planting due to extremely cold, snowy weather across the region.

USDA expects a 1.05 million acre (425,000 hectare) increase in North Dakota spring wheat area, which is forecast at 6.40 million acres (2.59 million hectares). If realized, that would be up 20 percent year over year. Spring wheat acres in Minnesota are also expected to increase 38 percent from 2017/18 levels to 1.6 million acres (648,000 hectares). South Dakota 2018/19 HRS planted area is forecast at 1.05 million acres (425,000 hectares), up 80,000 acres (32,000 hectares). However, the planting window for spring wheat in North Dakota and Minnesota is no more than three weeks; after that the yield potential starts to decrease and farmers choose to plant alternative crops.

“This cold, wet spring could work against spring wheat planting in eastern North Dakota and western Minnesota,” said Mike Krueger, an independent market analyst based in North Dakota. “Farmers in these areas are reluctant to plant spring wheat after late April and right now the forecast is calling for another two weeks of cold weather and snow. If planting is delayed until May, we will probably see a switch to soybeans or other crops.”

USDA forecast Montana HRS planted area at 2.50 million acres (1.00 million hectares), in line with 2017/18 planted area. But, in contrast to eastern North Dakota and western Minnesota, the late spring may increase HRS planted acres in parts of Montana according to Cassidy Marn, marketing program manager with the Montana Wheat & Barley Committee.

“Farmers in Montana have fewer alternatives and, since we can only grow limited quantities of corn and soybeans here, wheat tends to be the last alternative,” said Marn. “Planting peas and lentils is possible, but given the amount of snow we still have on frozen ground, some farmers could miss the window for those crops. Planting spring wheat in June is not ideal, but it is preferable to planting nothing.”

USDA expects U.S. durum planted area to total 2.00 million acres (809,000 hectares), down 13 percent from 2017/18, if realized. The predicted decline is driven in large part by USDA’s expectation that North Dakota farmers will switch from durum to HRS or oilseed crops due to lower returns on durum in recent years. In addition, growers near the border are frustrated by a large volume of durum freely crossing the border from Canada that increases pressure on durum prices. Weather conditions will also affect durum planting decisions.

USDA also updated the winter wheat planted area from its January 2018 estimate, increasing winter wheat planted area by 50,000 acres (20,000 hectares) to 32.7 million acres (13.2 million hectares). The new estimate is still 2 percent below the 2017/18 planted area. The increase came from hard red winter (HRW) area, estimated at 23.2 million acres (9.39 million hectares), up slightly from the previous projection, but still 2 percent below the year prior and 17 percent below the 5-year average.

The decreased HRW planted area makes crop conditions even more crucial. The April 2 USDA Crop Progress report rated 10 percent of Kansas HRW, 9 percent of Oklahoma HRW and 17 percent of South Dakota winter wheat as good, with virtually none of the crop rated as excellent in those states.

Soft red winter (SRW) planted area decreased from the previous estimate to 5.85 million acres (2.37 million hectares), but is still 4 percent above 2017/18 planted area. Overall, conditions for SRW are similar to what growers faced at the same time last year with a majority of the crop rated in good to excellent condition.

USDA expects white wheat acres — planted in both winter and spring — to reach 4.15 million acres (1.68 million hectares) for 2018/19, up 3 percent from 2017/18, but in line with the 5-year average. The U.S. Drought Monitor shows adequate moisture for Washington, but southern Idaho and Oregon are experiencing abnormally dry to moderate drought conditions. Still, USDA reported that the majority of the white wheat crop in those states are in good to excellent condition.

The expected increase in spring wheat area would increase total U.S. wheat planted area to 47.3 million acres (19.1 million hectares) in 2018/19, up 3 percent year over year. The increase was unexpected, but if realized it would still be the second lowest planted wheat area since 1919 when USDA records began.

As always, spring brings the waiting game — all we can do is watch how the crops respond to conditions going forward.

thumbnail

Excerpts from “How Does Trade Affect Me?,” the March 13, 2018, blog entry in “Big Sky Farm Her. Navigating Life as a Montana Farmer” by Michelle Erickson-Jones.

Trade has become an area I am increasingly interested in studying as well as advocating for. In order to advocate for trade, a notoriously complex, slow moving, and polarizing policy issue, I needed to convey why trade is important to me. Why it is important to our farm, our state, and our national agriculture economy.

Why is trade important to our farm? 

We rely on export markets to provide us with consistent outlets for our grain. Unfortunately, there is not enough demand domestically for wheat. Also unfortunately, we do not necessarily have the ability to change the crops we raise for numerous reasons. We pride ourselves in our ability to produce high quality hard red winter and spring wheat that is in high demand in the Asian [and other] markets. They need/want our wheat to produce products that are popular in those markets. We want to maintain these markets as an outlet for our production.

My personal feelings on trade and its impact on our operation are that current trade policy and the shift towards protectionist policies keep me up at night. Never before have policies and government regulations caused me to lose sleep. I lose sleep [now] because I know agriculture trade is incredibly competitive, our ability to increase market share is limited, trade policy is incredibly slow to develop (and requires at least two willing partners), and because I know every day that goes by under our current policies risks our market share. It risks decades worth of work done by individual farmers through our commodity commissions, trade negotiators, other government officials and others.

Like most farmers I dream of the day my children take over the farm, I dream of giving them a better agricultural economy and a better operation than I started with (not that there was anything wrong with our operation but there is always room for improvement). Our current trade policy puts that dream at risk.

Why is trade important to our state? In 2016 Montana exported $1.6 billion in agricultural products. Agriculture is also the number on economic driver in Montana. We depend on our export markets to maintain that economy for the state.

Montana has a proud history of producing high quality wheat, barley, and beef among many other products. These products are in high demand across the globe, largely because of the high quality. We produce some of the highest quality hard red wheat (both winter and spring) as well as durum in the world. Many of the most competitive markets for these products demand Montana raised products. The Montana Wheat and Barley Commission (MWBC), in conjunction with [U.S. Wheat Associates] has spent decades developing relationships with Japanese buyers to ensure we can supply them with the quality they demand. The Montana Wheat and Barley Commission has traveled to Japan countless times as well as welcoming their trade teams to our farms. Despite their hard work, their ability to attract and maintain those relationships hinges on our free trade agreements. The TPP 11 agreement without the United States gives Canada and Australia a $65 per metric ton discount compared to U.S. sourced wheat; this is a tariff reduction that we will not be able to overcome, despite years of market building.

Why is trade important to our country? Agriculture trade has been growing exponentially over the past 50 years. So much so in fact that we have had a trade surplus in agricultural goods for the past 50 years. Across the nation agriculture maintains our rural economies and creates vital jobs throughout our communities. Trade policy throughout the past several decades has opened up new markets for agricultural exports, increased access in existing markets, and lowered or eliminated various tariffs and technical barriers to trade. Opportunities for improvement still abound; however, the benefits far outweigh the drawback for the agricultural community.

The increase in market access and increase in economic activity has been a significant driver in the improvement of our rural economy. Unfortunately, that rural economy continues to be under threat, a threat that risks significant economic impacts, as well as a domino effect that impacts every facet of our economy.

In conclusion, I have become passionate about international trade, I am passionate about the agricultural industry and our export partners, and I am passionate about the future of our industry. We depend on trade to maintain our export markets, ensure we have the ability to pass on our farmers to a future generation, and to ensure the rural economies stay strong for decades to come. I also understand trade is not perfect. International trade, bilateral agreements, and multi-nation free trade agreements will always have winners and losers. It is a difficult situation to deal with, it is delicate to advocate for, and it is a fact that does cause me great concern. It is also increasingly difficult to stand by and watch protectionist trade policies risk the future of agriculture and more importantly risk the future of my own farm.

Agriculture, particularly the wheat and barley industry, depend on maintaining our current market access, increasing access to new markets through free trade agreements, and improving our current agreements. Trade does not thrive on protectionism and uncertainty.

Michelle Erickson-Jones is a 4th generation farmer in South Central Montana, married to a 4th generation Montana rancher. They are raising two little boys who hopefully will be the 5th generation on their farm. The family raises wheat, malt barley, safflower, sunflowers, corn, alfalfa, forage grains, and maintains a small cow/calf operation. Michelle is the current president of the Montana Grain Growers Association but notes that all views expressed in her blog are her own. She recently worked with Farmers for Free Trade to record a national television ad focused on the importance of trade. 

thumbnail

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 January and February to promote all six classes of U.S. wheat in an ever more complex world grain market.

Hong Kong. In February, the management of Hong Kong’s restaurant, hotel, resort and supermarket retailing scenes turned out in force to welcome the new USDA Foreign Agricultural Service (FAS) Agricultural Trade Officer, Alicia Hernandez. Hernandez will lead the trade promotion office that covers the agricultural import markets of Hong Kong and Macau. The Consul General hosted a reception at his residence, which featured a U.S. Food and Beverage Showcase event. Long-time baking consultant Heinz Fischer, who created pastries for the event, USW Assistant Regional Vice President Jeff Coey represented U.S. wheat farmers. In addition to undertaking baking demonstrations, Fischer is a mainstay of the USW sponsored Sino-American Baking School in Guangzhou, with a branch-training center in Hebei province, North China.

Panama. In February, USW Technical Specialist Marcelo Mitre attended the 41st Annual International Association of Operative Millers (IAOM) Latin American Regional Millers’ Conference and Expo in Panama City, Panama. Mitre met with representatives of several mills in the Mexico-Central American-Caribbean region. Technical presentations covered a variety of industry topics, as well as a panel discussion on “challenges of the milling industry in the next decade.”

South Korea. In February, USW Country Director Chang Yoon (CY) Kang and Food/Bakery Technologist Shin Hak (David) Oh carried out trade and technical service for two snack food manufacturers in Korea, including one that has applied research done at the Wheat Marketing Center (WMC) Whole Wheat Cookie /Cracker course in 2016. USW staff provided an updated world supply and demand report and forecast for 2018, and encouraged manufacturers to test new U.S. wheat blend formulations to enhance their biscuit and whole grain product quality.

The Philippines. In February, USW Manila Baking Consultant Gerry Mendoza presented as a guest lecturer for a Filipino milling company’s baking course. His presentations on yeast performance and cake science reach 20 participants from both small bakeries and large industrial bakeries. Mendoza also conducted a one-day seminar workshop for 22 participants at the Filipino Chinese Bakery Association Research and Training Center as one of the many regular seminars offered by the Philippine Society of Baking.

South Asia. In January, USW Vice President for Overseas Operations Mark Fowler traveled to USW’s offices in Singapore, Manila and Hong Kong to meet with several customers and members of the grain trade, as well as to conduct supervisory discussions on activities in the region.

thumbnail

By Matt Weimar, USW Senior Advisor and Regional Vice President, South Asia

After 34 years of service to U.S. Wheat Associates (USW), Shi Pu “Andy” Zhao is stepping down from his position as China Country Director. Andy joined USW in 1984 during the establishment of the Beijing Representative Office, serving as a driver and assistant to the country director and secretary at the time. In the early years of the USW Beijing office, he supported liaison with the local grain industry in Beijing and the Sino-U.S. Model Flour Mill, which was established as a training facility for millers across China.

In 1998, Andy became Country Director and Chief Representative, tasked with helping maintain relationships with the national State Administration of Grain, the national grain reserve (Sinograin) and COFCO, along with north China milling companies. He helped develop, plan and participate in annual crop quality reporting seminars with a growing number of attendees from across China’s flour milling industry and grain trading companies. The event is now firmly established as one of the milling industry’s most important opportunities to meet, network and understand the U.S. wheat production and export marketing system.

Andy also accompanied several Asian and End Products Collaborative groups to Portland, Ore., and the Pacific Northwest, working with USW’s West Coast Office and the Wheat Marketing Center to increase understanding of U.S. wheat milling and flour processing quality among key milling and wheat foods processing companies. These activities were a key to increasing opportunities in China for hard red spring (HRS), soft white (SW) and hard red winter (HRW) wheat.

His work with USW colleagues helped assure that Quality Samples Program (QSP) containers of northern spring/dark northern spring wheat from North Dakota, Montana and Minnesota successfully improved miller’s knowledge of the HRS wheat class. From those events, which took place after China’s accession to the WTO in 1999, along with QSP programs for Pacific Northwest grown soft white (SW) wheat, USW has helped increase demand for both classes in recent years.  Because of Zhao’s dedication to U.S. wheat farmers, industry participants on both sides of the Pacific have come to better understand what each stakeholder needs and can offer to the others.

Thank you, Andy, for your faithful service. Your colleagues all wish you the best of luck as you begin your pursuit of “new adventures!”

thumbnail

By Ben Conner, USW Vice President of Policy

After more than a year, the Office of the U.S. Trade Representative (USTR) finally has its full leadership team in place as Deputy USTR Jeffrey Gerrish was sworn in this week to join Deputy USTRs Dennis Shea and C. J. Mahoney, Chief Agricultural Negotiator Gregg Doud, and USTR Robert Lighthizer. While Ambassador Lighthizer had been supported by a team of very capable career staff at USTR, there is no substitute for having the full suite of Senate-confirmed leadership in place to set direction for the agency.

Particularly exciting for U.S. Wheat Associates (USW) and the agriculture community, was the confirmation of Gregg Doud as the Chief Agricultural Negotiator. It is critical for U.S. agriculture to have a strong voice at the table for trade discussions. Ambassador Doud, who is a former market analyst at USW, will certainly provide that, along with Ted McKinney, USDA Under Secretary for Trade and Foreign Agricultural Affairs, and Ray Starling, the White House Special Assistant to the President for Agriculture, Trade and Food Assistance.

Getting the team in place comes at a critical time for U.S. agriculture, our trade relationships and the global trading system in general. Negotiations of the North American Free Trade Agreement (NAFTA) could be in the home stretch, steel and aluminum tariffs threaten to disrupt trade relationships with some of our best customers and the United States and China are gearing up for the largest trade conflict in the post-World Trade Organization (WTO) era. Not to mention the desperate need for the United States to re-engage with the Trans-Pacific Partnership (TPP) and start working to support other customers around the globe.

The USTR team has a big task ahead that will affect the global trading system, U.S. agriculture and our customers overseas for decades. For the U.S. wheat value chain, the best course of action is negotiating new and stronger trade rules, and enforcing them along with existing rules through an effective, binding dispute settlement system. That will be a far better course for U.S. farmers and their loyal overseas customers than any misguided trade war.

thumbnail

By Stephanie Bryant-Erdmann, USW Market Analyst

The end of March heralds not only the beginning of spring — a crucial time for both winter and spring wheat production — but also the first round of winter wheat condition reports.

Black Sea — Snow across Russia and Ukraine is providing much needed protection from the recent cold snap in the region, but is delaying spring planting, according to Ukrainian consultancy UkrAgroConsult and the Russian Meteorological Service. As of Feb. 26, the Russian Meteorological Service reported 95 percent of Russian winter grains were rated in fair to good condition, unchanged from the last crop condition report on Nov. 30, 2017. UkrAgroConsult rated 49 percent of Ukrainian winter wheat in good to excellent condition, compared to 40 percent the year prior. Stratégie Grains forecast 2018/19 Russian wheat production at 77.0 million metric tons (MMT), down sharply from 2017/18 due to an anticipated return to trendline yields and smaller planted area. Ukrainian 2018/19 wheat production is estimated at 26.5 MMT, compared to 26.1 MMT in 2017/18.

European Union (EU) — According to the March EU crop monitoring service (MARS) report, EU winter conditions were adequate for winter wheat development despite unusual temperature fluctuations. Temperatures in December, January and the first half of February were generally 1°C to 6°C warmer than normal across Europe before plunging the last half of February to as low as -15°C and -20°C across Poland, Denmark and Sweden. Precipitation in excess of 20 cm (8 inches) in France, the EU’s top wheat producing country, flooded some fields. On March 16, FranceAgriMer rated 80 percent of French common wheat as good to excellent, compared to 81 percent the week prior and 92 percent last year. Stratégie Grains expects 2018/19 EU wheat production to total 141 MMT, down an estimated 900,000 metric tons (MT) from 2017/18 due to expected increases in winterkill and smaller planted area in France and Germany.

India — Wheat harvest is currently underway in India, the world’s second largest wheat producing country behind China. While crop condition ratings there are not available, Stratégie Grains anticipates 2018/19 Indian wheat production will fall to 91.4 MMT, down 7 percent year over year due to a 5 percent reduction in planted area and unfavorable weather and disease pressure.

United States — On March 19, USDA released weekly crop progress reports for top hard red winter (HRW) producing states of Kansas, Oklahoma and Texas that showed continued deterioration of topsoil and subsoil moisture and winter wheat crop conditions in Kansas and Texas, but an improvement in Oklahoma. USDA rated 55 percent of Kansas, 66 percent of Oklahoma, and 60 percent of Texas winter wheat in poor or very poor condition, compared to ratings of 53 percent, 72 percent and 53 percent, respectively, the week prior. USDA will resume weekly U.S. crop progress reports on April 4.

Subsoil moisture in Kansas was rated 71 percent short or very short, 28 percent adequate and 1 percent surplus, while 68 percent of Oklahoma and 63 percent of Texas subsoil moisture was rated short or very short. USDA’s evaluation took place before this week’s rain event, so its effects will appear on next week’s report. However, additional precipitation will be needed to make up the shortfall. According U.S. National Oceanic and Atmospheric Administration (NOAA) data, accumulated precipitation across the majority of the HRW-growing area in Kansas, Oklahoma and Texas is 3 to 6 inches (8 to 15 cm) below normal.

We are months away from knowing what the 2018/19 world wheat crop will look like and, as always, the weather will have the final say on yields and production. Buyers can be sure the U.S. wheat store will continue to supply high-quality wheat, regardless of what happens in 2018/19.

thumbnail

By Gary Baily, Washington Grain Commission Chairman, USW Director and a wheat farmer from St. John, Wash.

As Washington Grain Commissioners, trade has consumed a great deal of our time this past year. Relationships with our international partners are critical to the survival of our trade with countries such as Japan. Most of us have seen the proposed effects on our trade with Japan if the United States stays outside of the Trans-Pacific Partnership (TPP): a phased in $65/MT tariff reduction for TPP countries, U.S. market share for wheat falling from 50 percent to about 23 percent, and a reduction of baseline futures prices of $0.50 at a time when prices are already depressed.

I have been raising wheat in Eastern Washington for almost 30 years and have seen wheat fall victim to political whims several times. Looking back, however, I have not been as anxious about the future of our industry since the financial crisis of the 1980s. The divisive nature of the North America Free Trade Agreement (NAFTA) negotiations and the conclusion of the above mentioned TPP trade treaty without the United States cause concern about the long-term heath of our profession. This is especially true for young farmers who may not have the equity or financial backing to weather these storms.

Adding to the current trade environment is President Trump’s announcement that tariffs on steel and aluminum imports are being considered. The effects of those tariffs have yet to be quantified. If enacted, agriculture exports will likely be targeted for retaliation.

It is time for the President to consider the ramifications of his proposed tariffs, and acknowledge the positive contributions that our industry has for trade, and re-engage in TPP.