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Generally cool spring conditions delayed the start of the 2018/19 U.S. winter wheat harvest, but the combines are now in the fields and U.S. Wheat Associates (USW) published a preliminary Harvest Report on May 25. USW Harvest Reports are published every Friday afternoon, Eastern Daylight Time, throughout the season with updates and comments on harvest progress, crop conditions and current crop quality for hard red winter (HRW), soft red winter (SRW), hard red spring (HRS), soft white (SW) and durum wheat.

The weekly Harvest Report is a key component of USW’s international technical and marketing programs. It is a resource that helps customers understand how the crop situation may affect basis values and export prices.

USW’s 14 overseas offices share the report with their market contacts and use it as a key resource for answering inquiries and meeting with customers. USW also publishes the report in Spanish as  “Trigonoticias,” distributed to Latin American wheat buyers and millers and posted on www.uswheat.org.

Anyone may register to subscribe to an email version of the Harvest Report. For the first time this year, USW includes links in the email to additional wheat condition and grading information, including the U.S. Drought Monitor, USDA/NASS Crop Progress and National Wheat Statistics, the official FGIS wheat grade standards and USDA’s World Agricultural Supply and Demand Estimates report. Harvest Reports are also posted online at www.uswheat.org/harvest.

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By Jennifer Latzke, High Plains Journal, May 22, 2018, Excerpts Reprinted with Permission

Editor’s Note: This article covers innovative ways wheat farmer organizations and public universities in several Plains states are investing to produce more wheat with improvements for farmers and end users in ways that are most sustainable.

The reports from the U.S. Department of Agriculture can feel bleak. This year farmers are projected to plant the second lowest total wheat acreage on record for the U.S. since 1919 — 47.3 million acres.

Winter wheat acres for 2018 are at the second lowest acreage since 1909, at 32.7 million acres. From new branding efforts, to new structures, to innovative research many scientists and industry professionals across the High Plains are working to ensure that the breadbasket of the world stays right here.

Farmers growing hard white (HW) winter wheat have dealt with a “Catch-22” situation for years. To grow demand, they must grow more white wheat. But to grow the quantities to meet demand, they must have an established market for the wheat that makes segregation worth the price.

Kansas Wheat is rolling out a branding campaign, “High Plains Platinum,” that aims to capture the added value of hard white wheat while still growing production.

Aaron Harries, vice president of research and operations with Kansas Wheat, explained that Platinum is a project developed with a grant from the Kansas Department of Agriculture to establish and promote the high quality of hard white winter wheat grown in Kansas. Farmers plant Platinum-identified hard white winter wheat varieties that have excellent quality characteristics that millers and bakers demand. At harvest, the farmer takes his Platinum white wheat grain to a participating elevator that can then market that wheat to buyers as meeting the standards established by the program.

“It’s an effort to differentiate by establishing a market for hard white wheat through branding,” Harries said … In this case, Platinum white wheat must have: a minimum 12 percent protein; a minimum 60-pound test weight; less than 11.5 percent moisture; and contain less than 2 percent other classes of wheat. However, because of grain inspection rules a label or certificate can’t be attached to white wheat coming from a producer’s field.

With this attempt to establish a level of quality under the Platinum name, the hope is farmers and elevators can fully capture the value of their crop. And if this proves successful, the hope is neighboring states can come on board under the Platinum umbrella too.

Oklahoma Builds Capacity. In November 2017, [Oklahoma Foundation Seed Stocks] (OFSS) cut the ribbon on its new 20,000-square-foot facility at the Oklahoma State University Agronomy Research Station in Stillwater … to support the growing demand for certified seed from the public breeding program at Oklahoma State University.

Jeff Wright, coordinator of production and operations at OFSS, said this facility’s improved storage space means they can keep larger numbers of seed available for seedsmen to increase earlier in the variety release process.

“We are trying to have a larger amount of seed available so that when we do release a variety, it can get to the farmer at the end certified level quicker,” Wright said …

Currently, the Oklahoma Wheat Commission estimates that half of all the state’s wheat acres are planted with OSU-bred varieties. Sales revenue from those varieties goes back to OFSS to support future wheat breeding and research efforts. OFSS also licenses certain wheat varieties to Oklahoma Genetics, Inc.

Colorado Releases Grassy Weed Control. Grassy weed control in wheat acres is a challenge to growing high quality grain the market demands. But a new discovery out of Colorado State University is poised to revolutionize the market.

CoAXium is a wheat production system using the genetic trait, AXigen, identified through traditional wheat breeding methods at Colorado State University. Wheat varieties with the AXigen gene are immune to … a Group 1 ACCase inhibiting herbicide that controls grassy weeds, such as brome, feral rye, jointed goatgrass and wild oats.

Brad Erker is the new executive director for the Colorado Wheat Research Foundation. The CWRF takes ownership of CSU wheat varieties, and provides money to the wheat breeding program from royalties charged on those varieties …

“If we have a successful launch of a trait from a public institution like this, it shows that trait development at CSU is fruitful,” he said. “It could be the start of more patentable traits, and proving we can tackle the big problems wheat farmers face.”

Texas Drones Gather Data … Jackie Rudd, Texas A&M University wheat breeder, explained how his breeding program is utilizing new technology to better capture and crunch data.

“We’ve used a lot of sensor type data collecting rigs…” he said. “But this year we jumped in and we are using a drone to fly over plots and collect data.” Texas A&M invested in a data processing system that … tabulates that data and in a day’s time Rudd has at his fingertips plot by plot data and can make breeding decisions.

“We are increasing our efficiency and doing more with the resources we do have. We can reduce the time frame new varieties come out, and provide growers more and better material.”

And, the drone flyovers can happen on a daily basis, allowing Rudd to see how the plant changes day by day according to weather and other stressors. This year alone he’s been able to see daily changes to moisture on the dryland plots that he’s never been able to capture and quantify before. That makes a big difference when you’re trying to breed the next wheat variety that will perform well in harsh environmental conditions.

Nebraska Uses Genetic Markers for Improvement. Data is the key to finding the next great wheat variety. Today, with the sequencing of the wheat genome, Stephen Baenziger, wheat breeder for the University of Nebraska, can use genetic markers along with estimated breeding values to better select what lines to advance in his purebred and hybrid wheat variety trials.

“So, let’s say you go to a field and a couple of lines look similar, but you can predict one will work better,” Baenziger said. “Phenotypic data augmented with genotypic data shows us which is better.” It’s evaluating by sight, but also with genetic information found from DNA sequencing.

In 2016, … genomic data saved six years of wheat breeding and countless dollars invested. Ultimately, this tool means his program can be more efficient and provide a quicker return on investment for wheat growers …

“We are committed to the economic sustainability of the American farmer,” Baenziger said. “We’re going to try to get high quality and profitable wheat and save farmers money while they produce more.”

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By Jeff Coey, USW Regional Vice President, Hong Kong

The Baking Science and Technology course at AIB International in Manhattan, KS, is an intensive, 16-week program combining science, hands-on lab work and baking tradition. It is the “gold standard” for baker training and is well attended by aspiring, industrial scale bakers from around the world.

U.S. Wheat Associates (USW) has helped many bakers participate in this and other AIB International courses over the years. This year, however, USW invested some of its activity funding to send USW Technical Specialist Dr. Ting Liu from our Beijing, China, office to the course. With her doctorate in food science and experience in cereal chemistry, we knew she would do well — but she far exceeded our expectations.

We are so happy and proud to report that Ting represented herself and USW with distinction, earning top student honors and an “Excellence in Laboratory Leadership” award for her participation in the course!

The context for Ting’s achievement at AIB is the changing nature of wheat food in China. Traditional Chinese wheat foods have been successfully made for thousands of years using local wheat. However, demand today is sharply skewing toward non-traditional baked goods like chewy breads and fluffy cakes, products that rely on the functionality of higher and lower strength gluten flours that are best made with the classes of U.S. wheat specifically bred for those purposes.

There is intense interest in professional baking expertise, especially in the scaling up of industrial sized operations in China. USW intends to help channel that interest in ways that work for U.S. wheat, whether through Ting’s work, our consulting experts or through our long, respected collaboration with the Sino-American Baking School in Guangzhou.

Ting brings the unique set of tools needed to enhance our customers’ effective processing of U.S. wheat flour and how its functional attributes perform for the baker. Now, after succeeding so well in AIB International’s prestigious Baking Science and Technology course, she will be better prepared to lead such services and, in concert with our milling experts, to troubleshoot and solve customer problems as they come up.

So, we say congratulations to Ting and, along with our other talented colleagues, we look forward to much more success representing U.S. wheat farmers in the challenging but growing Chinese market.

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By Stephanie Bryant-Erdmann, USW Market Analyst

Since the beginning of the calendar year, export cash prices for hard red winter (HRW) wheat prices have rallied an average 73 cents at the Gulf across all protein levels. However, export cash prices are made up of two components — wheat futures and export basis. Most of the export price rally matches the futures market, which climbed from $4.37 per bushel in January to $5.64 per bushel on May 25. However, U.S. Wheat Associates (USW) and the farmers it represents also face historically high rail rates that support the export basis.

The futures rally is based on two fundamental factors — drought in the U.S. HRW-growing area, which is shrinking the U.S. HRW supply, and concern about poor crop conditions around the world, which the market believes is increasing potential demand for U.S. HRW.

On May 10, USDA forecast global world wheat consumption to outpace global wheat production in 2018/19 for the first time since 2012/13 due to reduced production in Russia, Ukraine and Kazakhstan. The growing demand for wheat around the world and the expectation of smaller Black Sea supplies are pushing up U.S. export prices.

As of May 31, the U.S. Drought Monitor reported that the Oklahoma and Texas panhandles and 75 percent of Kansas are still in a moderate to exceptional drought. The corresponding wheat condition ratings reflect the effects: USDA rated 48 percent, 63 percent, and 54 percent of HRW in poor or very poor condition, respectively, in the region.

The market also expects the drought to help increase new crop HRW protein levels (although the data to support that expectation is not yet available). This has caused protein premiums and discounts to erode. In the Gulf, the protein premium for 12.0 percent protein (12 percent moisture basis) HRW over 11.5 percent protein (12 percent moisture basis) fell from an average $23 per MT ($0.64 per bushel) in January to $8 per MT ($0.21 cents per bushel) year to date in May (See “HRW Export Basis and Rail Rates”). Similarly, the average protein premium for 11.5 percent protein over 11.0 percent protein (12 percent moisture basis) fell an average ($0.35 per bushel) during the same time frame.

The declining protein premiums for HRW partially offset the futures rally, and export cash prices for 12.0 percent protein and 11.5 percent protein (12 percent moisture basis) HRW in the Gulf remain below the respective 5-year averages.

However, while the weather fundamentals are dominating the news, there is also a third factor that is quietly playing a role in U.S. export prices — increased U.S. rail rates. According to USDA/Agricultural Marketing Service Grain Transportation Report data, year-to-date in 2018, the average cost of railcar transportation for wheat from Kansas to the Gulf is $45 per MT ($1.21 per bushel). That is the highest level since USDA began tracking rail rates in 2010. Rail rates for wheat will increase to a new record high this summer according to notices that went out to customers in March and April.

Rail rates are a key component of export basis, which also includes elevation, barge freight and labor costs. Yet the cost of transporting wheat is shared by the farmer and the overseas customer through country elevator basis levels and export basis levels. Consequently, higher rail rates act as both a ceiling for farm gate prices and simultaneously as a floor for export prices.

On the export basis side, this can most easily be seen in the export basis levels for ordinary or unspecified protein wheat. Year-to-date in 2018, ordinary protein HRW export basis has averaged $42 per MT ($1.15 per bushel), compared to $27 per MT ($0.74 per bushel) in 2017, when the average rail rate from Kansas to the Gulf (See “HRW Export Basis and Rail Rates”) was $43 per MT ($1.18 per bushel).

As customers ride out the market volatility that always occurs this time of year, they should keep in mind that U.S. export basis levels are supported by increased transportation costs, and the 2018/19 global stocks to use ratio without China is forecast at a tight 20 percent as noted in the USW May 17 Wheat Letter article “Chinese Wheat Stocks Mask Tight Stocks to Use Ratio.”

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By Stephanie Bryant-Erdmann, USW Market Analyst

With the small, stressed hard red winter (HRW) wheat crop getting the lion’s share of attention, it was an initial surprise to read in USDA’s May World Agricultural Supply and Demand Estimates (WASDE) that U.S. wheat production is expected to increase to 49.6 million metric tons (MMT) in 2018/19. That would be up 5 percent year over year, if realized.

The forecast increase is a result of greater harvested area and slightly higher average yield in the other classes. USDA forecast 2018/19 all wheat average yield at 46.8 bushels per acre (3.15 metric tons [MT] per hectare), up from 46.3 bushels per acre (3.11 MT per hectare) last year. Harvested area is expected to increase 1.3 million acres (526,000 hectares) in 2018/19. Crop condition ratings also matter in this forecast, and as the following by-class reviews show, HRW is clearly the exception to the up-trend in production.

HRW production is expected to be the smallest since 2006/07 at 17.6 MMT. If realized, that would be down 14 percent year over year and 22 percent below the 5-year average. Low farm-gate prices and poor planting weather last fall reduced 2018/19 U.S. HRW planted area to 23.2 million acres (9.4 million hectares), the second lowest planted area on record. That poor start coupled with widespread drought throughout the U.S. Southern Plains set up the current situation where harvested HRW acres are expected to fall 5 percent from 2017/18 to 16.5 million acres (6.68 million hectares).

The large decrease in harvested acres is centralized in the U.S. Southern Plains where HRW crop condition ratings remain poor. In top HRW-producing states of Kansas, Oklahoma and Texas, 51 percent, 65 percent, and 59 percent of HRW is rated poor or very poor, respectively. As a consequence of the drought and resulting poor crop conditions, USDA expects harvested area in Oklahoma to fall 31 percent year over year to 2.0 million acres (810,000 hectares). On May 10, USDA rated 25 percent of HRW in the states surveyed in good to excellent condition, while 45 percent is rated poor or very poor. Read more about the all too evident challenge of wheat farming on the High Plains.

Soft red winter (SRW) production is expected to increase to 8.57 MMT in 2018/19. If realized, that would be up 8 percent year over year, but still 22 percent below the 5-year average. 2018/19 U.S. SRW harvested area is expected to increase 8 percent from the year prior to 4.0 million acres (1.62 million hectares). USDA also expects record high yields in Indiana, Kentucky, Maryland and Michigan due to favorable growing conditions this spring.

On May 14, USDA noted week over week crop condition rating improvements in nearly all SRW-growing states, with 67 percent of the SRW acres surveyed rated good to excellent. Week over week improvements were noted in Illinois and Arkansas where 63 percent of SRW was rated good to excellent, up 10 percentage points and 5 percentage points, respectively, from the week prior.

White wheat.* 2018/19 white winter wheat production is forecast at 6.24 MMT, including 5.66 MMT of soft white (SW) winter wheat and 577,000 MT of hard white (HW) winter wheat. If realized, SW winter wheat production would be up 2 percent year over year, due to increased planted area, while HW winter wheat production would be down 11 percent from 2017/18 due to forecast reduction in average yield. SW winter wheat production is centralized in the Pacific Northwest (PNW) states of Idaho, Oregon and Washington. As of May 14, 71 percent of Idaho SW, 80 percent of Oregon SW and 85 percent of Washington SW was rated in good to excellent condition.

Desert Durum®. USDA expects Desert Durum® production — centralized in Arizona and California and planted in the winter — to total 332,000 MT, up 6 percent from 2017/18 due to significantly better yields in California. In Arizona, the Desert Durum® crop was 90 percent headed by April 29, significantly ahead of the year prior’s pace.

Spring wheat and Northern durum. Snow covered, frozen fields delayed spring wheat and Northern durum planting this year, but U.S. farmers are beginning to catch up. As of May 14, spring wheat and durum planting is 58 percent complete, up from just 30 percent complete the week prior, but still behind the 5-year average pace of 67 percent.

With spring planting still underway, USDA did not provide a by-class breakdown of production for hard red spring (HRS) and durum on May 10. However, USDA did note that combined spring wheat and Northern durum production is projected to increase 34 percent year over year due to “both increased area and yield.” With total U.S. wheat production projected at 49.6 MMT and U.S. winter wheat production projected at 32.4 MMT, that puts 2018/19 spring wheat — including soft white spring, HRS, and hard white spring — and durum production at 17.2 MMT.

Back on March 29, USDA projected U.S. HRS planted area at 12.1 million acres (4.9 million hectares). If farmers are able to realize their planting intentions despite the late start, that would be up 17 percent year over year. Northern durum planted area was forecast at 1.88 million acres (760,000 hectares), down 14 percent, if realized. Still, weather will play a role in farmers’ decisions, and a late spring in Montana and western North Dakota tends to favor increased wheat area. Conversely, it tends to favor increased corn and soybean acres in Minnesota.

To stay in touch with U.S. wheat harvest progress, subscribe to the U.S. Wheat Associates Weekly Harvest Reports, which will start later this month.

*In the May 10 report, USDA combined data for soft white winter wheat and hard white winter wheat. Both soft white (SW) and hard white (HW) can be grown in either the spring or fall. USDA will provide a wheat by-class outlook in July. Similarly, data for HRS, SW spring, HW spring and spring-planted durum were combined into a general “spring-planted wheat” category.

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By Stephanie Bryant-Erdmann, USW Market Analyst

On May 10, USDA forecast the 2018/19 global wheat supply to hit a record 1,018 million metric tons (MMT) despite the expectation that global wheat production will fall for the first time in 5 years to 748 MMT.

At the same time that global wheat production is expected to decrease, global wheat consumption is expected to reach a new record of 754 MMT, 5 percent above the 5-year average.

The reason global wheat supplies continue to grow is because of an anticipated 6 percent year over year increase in beginning stocks — 47 percent of which are in China. This large percentage of global wheat stocks residing in China’s wheat stocks are masking an otherwise declining global wheat supply.

By the end of 2018/19, USDA expects Chinese ending stocks to total 139 MMT, 52 percent of global wheat ending stocks.

Because China’s endings stocks are masking the declining global wheat supply, the traditional stocks-to-use ratio is 35 percent.

However, when Chinese stocks and use are removed from the ratio, the 2018/19 global stocks-to-use ratio falls sharply to 20 percent, the tightest stocks-to-use ratio since 2007/08.

Buyers should continue to monitor conditions around the world and recognize that global wheat supplies are much tighter than traditional global supply and demand estimates show.

View the U.S. Wheat Associates full 2018 May World Wheat Supply and Demand Situation Graphic Summary.

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By Steve Mercer, USW Vice President of Communications

Several colleagues from U.S. Wheat Associates (USW) had a great experience on May 16 on a visit to Bayer Corporation’s main North American wheat breeding laboratory and nursery near Lincoln, Neb. They had a true look at the future, one that includes a more stable supply of high quality wheat for millers and wheat food processors around the world.

Bayer has made a substantial commitment to overcoming an age-old wheat breeding challenge: to develop and commercialize hybrid wheat.

The process of producing hybrid plant seeds can be simply described. Two distinct varieties of the same plant, each with unique characteristics are cross-bred. One plant has sterile female flowers, the other produces pollen and the fertilized plant produces a new, unique offspring.

But with a complex plant like wheat with three whole genomes in each cell and often 6 copies of each gene, that process is not easy. In fact, it was described as downright complex. Some of the scientists USW met with have worked toward hybrid wheat for more than 10 years. They say the work requires collaboration with a wide range of scientific disciplines; a true team effort. And the team at Bayer certainly represent that. They are focused on the hybrid goal, their comradery is quite evident and they are very excited about the potential of the work. The team includes experienced winter and spring wheat breeders, as well as plant pathologists who are testing new varieties for resistance to diseases like Fusarium head blight, or scab. Perhaps most important for the world’s U.S. wheat buyers, this team includes wheat quality specialists who are determining if new hybrid varieties meet or exceed grade and functional milling, baking and processing standards for the wheat class. If a new line does not meet or exceed standards, it is rejected.

Bayer and other public and private breeders are working toward hybrid lines for several reasons. Hybrid wheat demonstrates a productive yield increase. This is needed by farmers, especially small holder farmers, around the world to offset the currently limited profitability of growing single line wheat varieties. It is also needed to continue meeting record setting use of wheat by a growing global population. They see much more stable production levels across a variety of growing conditions with hybrid wheat. Hybridization also allows breeders to “stack” native and non-GM traits into wheat seed more precisely and efficiently than other breeding methods.

There is much work to be done, especially to screen and refine the new lines being produced, and it will be many years before hybrid wheat seeds are fully ready for farmers’ fields. However, the USW colleagues saw why the Bayer team is so enthusiastic about their work in the field trial plots around the Nebraska facility. What was described as a “radical transformation” of the tools available to conduct this complex research is accelerating the ability to bring new wheat lines to market. Most encouraging was the company’s willingness to incorporate into their work USW’s knowledge of what overseas millers, bakers and wheat food processors need to improve the quality of and demand for their end products.

USW wants to thank not only the Bayer team for their transparency and interest in our work with the world’s wheat buyers and users, but also wheat breeders around the world, who are working day and night to improve this staple crop for an increasingly hungry world.

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In an ominous, smoke-filled room, the black wings of a hundred crows scatter to the rafters at the sound of a fist pounding at the head of an ancient table. A menacing voice demands to know how the poor soul cowering at the other end has failed to submit notifications on Current Total Aggregate Measurement of Support for over a decade. Utter silence pervades the room except for the subdued voice of a distant translator speaking into a headset. The cowering soul, finally comprehending the question, hurriedly vows that notifications will cover the table before the rooster awakens the dawn.

If only.

Notifications play a vital role in the workings of the World Trade Organization (WTO). The WTO is supposed to be much more than a court for litigation; it is also a forum for negotiation and monitoring how its members comply with the rules to which they agreed. Notifications feed information into the system on a variety of topics, from quota administration to trade-related phytosanitary measures to agricultural domestic support, among many others. Centralizing this information along with active discussions between officials helps facilitate negotiations and sheds light on problems in the marketplace.

In reality, many countries do not submit notifications or delay for so long that they are practically worthless by the time other countries can review them. Fully one-third of WTO members had outstanding notifications on agriculture that were at least two years overdue in 2017, and some much older than that. For example, Turkey – a major wheat producer – submitted domestic support (or subsidy) notifications in July 2017 covering the three years from 2002 to 2004.

The notification system works well enough when countries are abiding by their WTO commitments and are reasonably committed to the system, but it has become clear that many countries need some extra motivation, particularly those that are sources of major distortions in agricultural markets. That is why we are glad that the United States government has taken steps to highlight this issue through a transparency proposal it made in advance of the latest World Trade Organization ministerial meeting in Buenos Aires.

The U.S. proposal would provide for a proportionate response to failures by countries to fulfill basic WTO transparency and notification requirements. After a certain period when a country is delinquent in its notifications and uncooperative in providing information, it will lose basic privileges and access to WTO materials and activities. If it remains delinquent for no more than three years beyond a notification deadline, the WTO will designate the country as an “Inactive Member” of the WTO until its notifications are current.

This approach seems reasonable and logical – if a country is failing to meet basic obligations, it should lose benefits of membership. Today there are no consequences for noncompliance with transparency commitments except the consternation of frustrated colleagues.

Maybe it’s time to give that soul a reason to cower.

By Ben Conner, USW Vice President of Policy

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By Stephanie Bryant-Erdmann, USW Market Analyst

This week I joined the annual Wheat Quality Council (WQC) Hard Red Wheat (HRW) Tour for an early survey of the new crop. Each year, participants gather in Manhattan, Kan., and spend the next two and a half days in small scout teams, randomly stopping at 14 or more fields in a full day along the same routes followed for many years. The teams measure yield potential, determine an average for the route and estimate a cumulative average for the day when all the scouts come together in the evening. Last year, tour participants faced snow and muddy fields. This year, the snow is a distant memory, as fields on days one and two were all bone dry. A violent storm rolled through central Kansas on Day 2, which cut some scouting short, but brought much needed moisture to the wheat fields.

Just a few hours before U.S. Wheat Associates (USW) published this issue of “Wheat Letter,” the tour estimated a final average yield potential of 37.0 bushels per acre (bu/ac) or about 2.49 metric tons (MT) per hectare for the 2018/19 Kansas HRW crop. This year, the tour participants made 644 stops to scout fields. Combining seeded area with per-acre yield potential, the total production potential estimate was 243.0 million bushels [(6.61 million metric tons (MMT)]. Last year’s total production estimate was 282 million bushels (7.67 MMT).

On the first day, the tour traveled from Manhattan along several routes covering most northern Kansas counties. The cumulative Day 1 average yield potential was 38.2 bu/ac, which is equivalent to about 2.57 MT per hectare, compared to 43.0 bu/ac (2.89 MT per hectare) in 2017. To reach that average, participants surveyed a record 317 fields recording a range from a low of 17 bu/ac to a high of 93 bu/ac. We saw very short wheat that was two to four weeks behind developmentally. Fields were very dry, which has prevented disease establishment, but threatens yield potential.

Participants also received a report on the Nebraska and Colorado wheat crops. Nebraska estimated an average 43.0 bu/ac (2.89 MT per hectare) for a total production estimate of 43.7 million bushels (1.19 MMT), down roughly 7 percent from last year’s tour estimate. Colorado estimated an average of 35.0 bu/ac (2.35 MT per hectare) with total production estimated at 70 million bushels (1.90 MMT), down 19 percent year-over-year, if realized.

On the second day, the tour traveled on routes that led from the city of Colby to Wichita, making 284 stops. The number of observations was up significantly from last year due to much better field conditions this year, though severe weather including tornados and hail, did cut some scouting short. Scouts reported most wheat was one to two weeks behind normal development, but continued to see very little disease pressure. This year, the tour estimated Day 2 average yield at 35.2 bu/ac (2.37 MT per hectare), for a combined two-day average of 36.8 bu/ac (2.47 MT per hectare) across 601 stops. Last year, the combined two-day average was 44.9 bu/ac (3.02 MT per hectare) on 427 stops.

Participants also received a crop report from Oklahoma, where drought conditions severely impacted the panhandle of the state which received less than 0.1 inch (less than 0.5 cm) of rain between September and mid-February. The estimated average yield in Oklahoma is 24.8 bu/ac (1.67 MT per hectare), for a total production estimate of 54.8 million bushels or about 1.49 MMT. If realized, that would be down 44 percent year over year. With decreased yield potential, many farmers have chosen to graze out the wheat fields to feed hungry cattle whose pasture has been impacted by the drought as well. As a consequence, harvested area in Oklahoma is expected to be sharply lower in 2018/19.

The third and final day of the tour was shorter, with each car making three to four field stops on the way from Wichita to Manhattan for the final report. The Day 3 estimated average yield was 39.8 bu/ac, (2.67 MT per hectare) across 43 stops.

View highlights and photos from the tour by searching #wheattour18 on Facebook and Twitter. The WQC also sponsors a spring wheat tour in the Northern Plains in July. For more information, visit the Council’s web site at https://www.wheatqualitycouncil.org.

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By Jonathan H. Harsch, Agri-Pulse, Excerpted with Permission

(Editor’s note: This is the third in a new series of Agri-Pulse in-depth stories dealing with the challenges and opportunities for U.S. agriculture when it comes to selling more commodities and value-added products to overseas customers. This article was sponsored by funding from the National Association of Wheat Growers, U.S. Wheat Associates, Washington Grain Commission, North Dakota Wheat Commission and Idaho Wheat Commission.)

Prospects for U.S. farm exports can change suddenly and dramatically.

Breaking into foreign markets takes decades of persistent hard work and hefty investments in building infrastructure, relationships and, ultimately, sales.

Augusto Bassanini, chief operating officer for United Grain Corp., knows firsthand the challenges of building all three. This experienced grain exporter tells Agri-Pulse that after taking years to build trust and a reputation for reliability, “any interference with that trust, that reliability, is going to have an immediate impact … So, you spend years building that rapport and everything could change overnight.”

“It takes years, especially in Asia, to build that rapport,” he says, “and you have to build it face-to-face.”

Bassanini says he’s seen major new export markets developed in South America, Asia and elsewhere thanks to vital funding from farmers’ checkoff dollars and USDA’s export promotion programs. But he warns that current concerns over U.S. trade agreements and tariff battles with China “create an environment of uncertainty,” forcing buyers and end-users to scramble to find new sources for the grain, soybeans, or other commodities they need to stay in business.

Vancouver, Wash.-based, United Grain operates grain terminals in Oregon, Montana, and North and South Dakota where, Bassanini says, “small farming communities are dependent upon grain exports for providing crucial revenue to those remote locations.” So, any threat to export growth will have a disproportionate impact on these farming areas. And he says that threat is already here.

“We continue to lose market share in terms of volume to competing major export hubs like South America, Brazil, Argentina, Russia and the Black Sea region,” he says. “If we are going to compete with them on a yield basis, I don’t think we are going to win that fight.”

Still, he says that despite headwinds, “we continue to expand our share in regions like Southeast Asia because competing countries are not able to deliver quality products on a consistent, reliable basis.” Maintaining these gains, he says, depends on the U.S. investing in improving supply chain efficiencies, upgrading the infrastructure needed to deliver product reliably, and avoiding even rumors about trade disruptions.

Disruption Concerns. Since taking office, the Trump administration has made several gains on the export front for agricultural products.

However, the administration has also unnerved trading partners by renegotiating the North American Free Trade Agreement (NAFTA), pulling out of the Trans-Pacific Partnership (TPP) and announcing tariffs on steel, aluminum and a variety of other products – prompting retaliatory threats from the Chinese and other countries.

Several U.S. agricultural groups say that one of the best ways to keep pressure on the Chinese and counter the Asian giant’s influence is for the U.S. to rejoin what used to be called the Trans-Pacific Partnership (TPP).

The U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) welcomed the possibility of reviving the full 12-nation pact. “If the United States joins TPP, U.S. wheat should be able to compete on a level playing field with Canadian and Australian wheat,” said USW Chairman Michael Miller, a wheat farmer from Ritzville, Wash.

Representing 140,000 American wheat farmers, USW and NAWG wrote USTR’s Lighthizer in March, warning that “Lost market share is incredibly difficult to regain.” They pointed out that under new CPTPP rules, Japan will cut its tariffs on imported Canadian and Australian wheat to $85 per ton but keep the current $150 per ton tariff in place for U.S. wheat. While the change will phase in over nine years, the wheat groups said the “loss in market share and its negative effect on farm-gate prices are likely to come much sooner, as Japanese millers reformulate their product mix to avoid the need to purchase artificially expensive U.S. wheat.”

Hopes were also raised that the farm sector’s major role in the U.S. economy would translate into White House support for increasing rather than flat-lining or reducing funding for the two USDA cost-share programs that, in partnership with farmer-funded checkoff dollars, have played a vital role in expanding U.S. farm sales abroad: the Market Access Program (MAP) and the Foreign Market Development (FMD) Program.

Export promotion legislation. To support these programs, last September Sen. Angus King, I-Maine, introduced S. 1839, the “Cultivating Revitalization by Expanding American Agricultural Trade and Exports Act.” Along with the companion House bill, H.R. 2321, King’s CREAATE bill would steadily raise MAP [and] FMD funding.

The House version of the new farm bill takes a different approach. USDA’s trade programs, including the MAP and FMD, would be combined under a new International Market Development Program … Under current law, only MAP would have funding after this year under the expiring 2014 farm bill. Combining the programs would ensure all the programs have a permanent funding baseline. Boosting both ag exports and export promotion funding has become vital to both the rural and the national economy.

Success in the Philippines. Based in Manila, USW Regional VP for the Philippines and South Korea Joseph Sowers is keenly aware of … aggressive competition. He says it’s an “uphill battle” to convince buyers to opt for premium-priced but better performing U.S. wheat. He also points to significant gains.

In the Philippines, Sowers says, “We have a program here where we invest in increasing consumption of wheat-based foods. And we’ve done it.” He adds that almost all the gains benefit the U.S. with its 97 percent market share, proving that “These kinds of investments are paying off.”

Key to this level of market dominance, Sowers insists, is being on-the-ground for decades with regional offices and regular seminars. He says this presence builds trust with buyers and end-users to the point that “decision makers trust us, they look to us for advice.” He considers [state wheat] checkoff, FMD and MAP funding vital to maintaining USW’s foreign offices and “absolutely essential to everything we do.”

“Our mandate is twofold,” Sowers says. “One is to create the greatest returns to our farmers, to the people who fund us. The other mandate is to make the local industry here the most profitable they can be, to increase their profits so they will buy from us.”

To make it all happen, Sowers hosts seminars year-round, with upcoming ones set for Manila, Bangkok and Jakarta, “talking to buyers about methods that they can use to decrease their purchasing price or to plan their purchases through the year. And then at the same time, have a mill management seminar showing them how to increase their profitability using, of course, U.S. products.”

Along with working to increase exports to developing markets like Sri Lanka and Malaysia, Sowers says Thailand, Indonesia and Vietnam offer “the most opportunity for huge increases in sales” and that new trade agreements offer the best way to make U.S. products more competitive.

New Coalitions. USW’s President Vince Peterson and VP of Overseas Operations Mark Fowler [say] with the farm economy struggling in an already down market, the tariff battle with China puts 1.5 million metric tons of U.S. wheat sales at risk just when unsettled NAFTA and TPP issues threaten sales to other major buyers like Mexico and Japan.

Peterson says the trade battles have “forced us to form coalitions” with other U.S. stakeholders and with “customers overseas worried about their supply relationship with us. They don’t like this any more than we do.” He says the new coalitions aim to alert the Trump administration to escalating impacts on U.S. agriculture from recent policy changes.

Peterson and Fowler tell Agri-Pulse that the strategy to success is to sign new trade agreements, complete the NAFTA negotiations without harming ag exports, reconsider joining the TPP, use the WTO dispute settlement process, and double funding for USDA’s MAP and FMD programs as … CREAATE legislation proposes.

Trade Battles Undermine U.S. Reputation as a Reliable Supplier. U.S. Grains Council President and CEO Tom Sleight warns that due to the trade battles launched by the U.S., “our loyal, longtime customers are actively looking at alternative sources of supply … We’re hurting our reputation not only in China, but with other trading partners, with key ones like Japan, Korea, Mexico. Even in places in Southeast Asia that are new and growing markets for the U.S., we’re creating doubt.”

“There are definite consequences if these battles do not get settled expediently and with proper attention to the impact on agriculture,” he says.

National Association of Wheat Growers President Jimmie Musick explains that with his wheat, cattle, alfalfa, cotton and sorghum operation in Sentinel, Okla., “it doesn’t appear like I raise a commodity that China [is] not [targeting] in their tariff trade war.” To help remove this threat, he wants the administration to understand “how important it is that we maintain good trade relationships and how devastating it will be to our farmers when China puts a 25 percent tariff on our commodities.”

Musick’s also at work on getting more support from farm-state members of Congress. He’d like them to persuade the administration to switch from tariffs to negotiations by offering in return to support legislation that’s on Trump’s priority list.

With today’s long list of farm and trade organizations linking arms as never before, Musick and his colleagues are hopeful their concerted pressure on Congress and the White House will pay off in terms of less turbulent waters ahead and continued growth in the U.S. ag export markets that they’ve worked so diligently to build over several decades.