By Matthew Weaver, Capital Press; Reprinted with Permission

Most U.S. wheat farmers will never meet Roy Chung, but during the last four decades he’s played a vital role in selling the wheat they grow. As the bakery consultant for U.S. Wheat Associates based in Singapore, Chung meets with customers around Asia to show them how to use U.S.-grown wheat in the cakes, cookies, crackers and noodles they sell. U.S. Wheat is the overseas marketing arm of the industry.

His hard work pays off. The countries Chung visits in south Asia — Singapore, Thailand, Malaysia, Indonesia, the Philippines, Vietnam, Myanmar and Sri Lanka — purchase about 4.4 million metric tons of wheat worth $1.1 billion each year, according to U.S. Wheat. That’s more than 16 percent of all U.S. wheat exported each year.

Chung’s secret: He tells buyers they will not find another, more sincere farmer-owned wheat organization anywhere in the world. U.S. wheat may not be the cheapest option, he says, but it offers the best value.

“In business, all people want to make money; our motivation is to assist them (making) money while getting the satisfaction of selling our products to them,” Chung said. “Hard work and sincerity never fails.”

Industry leaders light up when they talk about Chung.

“It’s in his soul,” said Mike Miller, the U.S. Wheat chairman, a member of the Washington Grain Commission board and a Ritzville, Wash., farmer. “This is who he is. He doesn’t do it for any other country. He’s trying to do it so we can sell more wheat at a better price.”

Chung’s “unparalleled” knowledge of wheat starch properties and how they perform in a food product leads people to seek out his expertise. He helps companies design production lines and new products, said Dana Herron, a Connell, Wash., seed dealer and grain commission board member.

“We would be 20 years behind in marketing and sales if there’s no Roy Chung,” Herron said.

Getting his start. Kah Hee “Roy” Chung, 63, has worked for U.S. Wheat for more than 40 years.

Before that, he assisted in his father’s bakery in Malaysia. Chung was home during college vacation and helping his father, who immigrated from China to Malaysia during World War II, when a consultant from Western Wheat Associates asked to use the bakery for a product demonstration. Western Wheat later merged with Great Plains Wheat to form U.S. Wheat Associates.

“My father was generous in allowing his competitors into the bakery to observe the demonstration as well,” Chung said.

Chung’s father did not speak English and the consultant was working alone, so Chung served as his assistant and interpreter for the event. Months later, he received an offer to join Western Wheat, but declined, as he was not yet finished with school. He was studying production engineering at the Ungku Omar Polytechnic in Malaysia.

Western Wheat waited two years for Chung to complete his education, and he was interviewed by Tom Mick, who would later become CEO of the Washington Grain Commission. Mick hired him to join WWA.

“He has a unique ability to teach people how to make a superior end-product and at the same time reduce costs that would make it profitable,” said Mick, who is now retired.

Mick said Chung could “pull miracles,” convincing reluctant bakers to change wheat or flour sources.

“I think (Chung is) one of the greatest hires I’ve ever been involved with,” Mick said. “To the wheat producer, he is a godsend.”

Selling U.S. wheat. If a buyer is new to U.S. wheat, Chung goes back to basics. He explains the difference in U.S. wheat classes, their uses and the suitability of different classes for the products they make in each country.

He likens this to teaching them the ABCs before turning the letters into words, then the words into sentences.

“For the more experienced buyers, it gets even more exciting if you can string sentences to make paragraphs,” Chung said. “And then paragraphs to make a chapter and eventually chapters into an entire book.”

U.S. Wheat employees, he said, show a company the possibilities they can get from the wheat American farmers produce.

“We will provide examples of how others are making money from the wheat that they buy from the U.S.,” he said.

Chung says he is always sincere in his approach and communication.

“Don’t bring the buffalo to the river to make it drink if the buffalo is not thirsty,” he said.

If a buyer is similarly sincere, U.S. Wheat will hold his or her hand all the way and show them how to extract value in any market, Chung said.

“He’s made those companies so much money using Pacific Northwest soft white wheat, he is highly respected,” Herron said. “People listen to his every word, because he has their best interest at heart.”

Teaching bakers. U.S. Wheat cooperates with United Flour Mills in Thailand to offer specialized baking courses at the mill’s baking and cooking school in Bangkok. Chung was instrumental in offering the first course. The program has continued for 38 years.

“U.S. Wheat finds value in educating young bakers to see and feel the differences in quality when compared to wheats of other origins,” Chung said. “The lasting impression we impart to these bakers (stays) for their entire lives.”

Many bakers trained at the school move on to the upper ranks of their organizations, helping their company expand and securing a stable supply of U.S. wheat.

“I like to say that I impart knowledge that will enable my students to make good judgment,” Chung said. “More importantly, I leave them to pursue their careers in a more passionate way knowing that I, as a representative of U.S. Wheat, will always be there for them. I am sincere when I make this offer.”

As a result of working with Chung, when mills go to grain purchasers with their specifications for U.S. wheat, they know what they want and how to ask for it, Miller said.

“He’s actually helped raise them in the wheat world,” Miller said. “He can go into their mill, they know exactly what he’s talking about.”

And they listen.

“When they hear Roy’s in the house, it’s like Paul McCartney just showed up,” Miller said. “They flock to him. He engages them, he remembers their names, asks them how they’re doing, ‘Have you addressed this problem?’ or they ask him, ‘Hey, we have this.’ They trust him. He’s no-nonsense. He stands behind his work.”

An ‘encyclopedia’. Chung worked closely with Vietnamese flour millers and bakeries to help them understand the uses of U.S. wheat, said Dinh Xuan Quang, technical manager of Vietnam Flour Mills. It took a long time because U.S. prices were higher than those of competing countries.

“Now, in Vietnam, the cookies and cake industry can’t live without soft white wheat,” Quang said.

Wilma Bocaya, vice president of Jollibee Foods Corp., a fast food bun manufacturing company in the Philippines, attended Chung’s course in 1994, after a colleague attended the year before. Her company sends students every year.

“When we met Roy in 1993, we only had 105 Jollibee stores,” Bocaya said. “This number has now grown into more than a thousand in the Philippines.”

The company is expanding its baking operation this year to support further growth.

“Suffice it to say that the technical support we got from U.S. Wheat through Roy as consultant or as course instructor enabled us to provide products that meet our customers’ expectations,” Bocaya said.

Wantana Thongthai, president of United Flour Mills Food Center Co. Ltd., and operator of the baking school, has known Chung since 1988. The company feels strongly that U.S. wheat quality best matches its needs, she said.

“Through my tenure at UFM, I have not met a consultant more knowledgeable in his trade than Mr. Chung,” she said. “He is known among us as ‘the walking baking encyclopedia.’”

Changing times. With the internet, many customers are more knowledgeable and demanding, Chung said. Few countries produce generic flour for breads, cakes and cookies, and most bakeries use specialized flour for specific products.

“We must justify these sales with scientific facts and examples of how this basic information has been used to produce more specialized flours for specialized products,” Chung said.

U.S. Wheat must keep re-educating itself technically to sell wheat at an advantage, Chung said.

“If we fail to do that, we will be just another generic seller, and worse still, a residual seller,” he said.

Chung said it’s not currently possible to retire, since there are few people with his technical expertise in the industry. He’d like to leave his customers in good hands, he said.

He hopes to leave the U.S. Wheat office with a younger team of technical staffers who would work “as passionately and sincerely with our customers as I have.”

If U.S. Wheat hired someone he could begin to train this year, he said, he could see retiring in five years.

Miller, the U.S. Wheat chairman, knows at some point Chung will want to slow down.

“I don’t know if you can replace that type of historical knowledge and energy with one person,” he said. “I bet you’d have to do it with two.”

That could be a good thing for wheat farmers, Herron believes.

“If we had a couple more Roy Chungs, we wouldn’t have to worry about competition overseas,” he said. “He makes that big of a difference.”


Three elite bakers earned the honorary title of 2018 “World Master Baker” at the “Masters de la Boulangerie” competition, organized by Lesaffre, Feb. 3 to 6 in Paris, France. They are Peng-Chieh Wang of Taiwan for “Artistic Bread Making,” Déborah Ott of France for “Gourmet Bread Making” and Peter Bienefelt of The Netherlands for “Nutritional Bread Making.”

“U.S. Wheat Associates and the farmers we work for congratulate these winners and all the bakers who competed in the event,” said USW Vice President of Overseas Operations Mark Fowler. “They represent the growing number of professional bakers who recognize that wheat foods are an essential and traditional part of human lives, with an infinite capacity to change with consumer tastes. We also thank Lesaffre for supporting that vision through its prestigious baking competition cycle.”

A panel of six jurors evaluated 18 candidates on technique, sales, marketing and communication skills, economic factors and “social and environmental responsibility linked to bread making,” according to the competition website. Each category included specific challenges for the candidates “linked to evolutions in baking and the profession’s future.”

For example, Mr. Wang’s winning creation came from his entry in the “Art of Dough” challenge with support from the Taipei Bakery Association, Uni-President Enterprises Corporation, Shakespeare Bakery, the Taiwan Baking Competition Council and his baking coach Wu Pao Chun. His “Taiwanese Folklore Art,” was a multi-colored spectacle of a general and his officers, which is often celebrated in Taiwanese religious art, and included the battle crown, mask, drum and trident. The amazing bakery sculpture included a section for tasting that revealed flavors of prune and flowers.

There is much more information online on the official website, Facebook, Twitter and Instagram. Also follow along at #BakeryMasters2018 and #MastersBoulangerie2018.


By Stephanie Bryant-Erdmann, USW Market Analyst

USDA will issue its first 2018/19 U.S. wheat production estimate on Feb. 23 at its Annual Agricultural Outlook Forum, rounding out the estimates already available for Northern Hemisphere wheat exporting countries. Following is a by-country summary of current production estimates.

Canada.  Agriculture and Agri-Food Canada (AAFC) forecasts 2018/19 Canadian common wheat (excluding durum) production at 24.3 million metric tons (MMT), down 3 percent from 2017/18.  A return to average yields is expected that would more than offset a 4 percent increase in wheat planted area. 2018/19 Canadian wheat planted area is forecast at 9.51 million hectares (23.5 million acres). AAFC anticipates an increase in spring wheat planted area that would also offset an 11 percent decrease in winter wheat planted area. Canadian durum production is expected to reach 5.70 MMT, up 15 percent due to increased planted area and increased yields.

European Union. Strategie Grains estimates 2018/19 European Union (EU) common wheat production at 142 MMT, in line with 2017/18 production. A forecasted increase in average yield is expected to offset a slight decrease in planted area. 2018/19 EU wheat planted area is expected to fall slightly to 23.2 million hectares (57.3 million acres) due to lower prices. EU durum production is expected to increase slightly in 2018/19 to 9.20 MMT due to increased planted area in Italy.

Kazakhstan.  Stratégie Grains anticipates 2018/19 Kazakhstan wheat production will reach 13.7 MMT, down 2 percent year over year, if realized. Wheat planted area is expected to decrease slightly in 2018/19 to 11.7 million hectares (28.9 million acres) due to lower prices. Nearly all of Kazakhstan production is spring wheat.

Russia. The Russian Ministry of Agriculture expects 2018/19 Russian spring wheat planted area to decrease slightly to 12.9 million hectares (31.9 million acres), down 50,000 hectares (123,000 acres) year over year, if realized. 2018/19 winter wheat planted area remained stable year over year at 14.9 million hectares (36.8 million acres). Stratégie Grains predicts 2018/19 Russian wheat production will fall 9 percent from 2017/18 to 77.3 MMT on the expectation of lower average yields.

Ukraine. UkrAgroConsult forecasts 2018/19 Ukrainian wheat production to total 25.1 MMT, down 4 percent from 2017/18, if realized. An expected reduction in average yields will more than offset an estimated 2 percent increase in wheat planted area. 2018/19 Ukraine winter wheat planted area is estimated at 6.28 million hectares (15.5 million acres).


By Elizabeth Westendorf, USW Assistant Director of Policy

On Feb. 12, President Trump unveiled a FY2019 budget proposal that included several areas of support for agriculture. It was disappointing, however, to see that the proposal eliminates federal funding for Food for Peace, the most effective U.S. emergency food assistance program helping populations in need around the world. The budget would also de-fund USDA’s McGovern-Dole Food for Education program, which addresses nutrition and literacy goals in rural schools overseas, and Food for Progress, an innovative program combining U.S. commodity donations with commercial purchases and agricultural development.

U.S. farmers are proud of these programs and the important role that U.S. commodities play in international assistance. Wheat farmers have long been the leading suppliers, and in 2017, the United States sent more than 800,000 metric tons (MT) of wheat overseas as food aid.

U.S. Wheat Associates (USW) has been a partner in supporting these programs for their more than 60 years of existence and works hard to make sure that wheat is used appropriately and that wheat buyers and NGOs can use the programs effectively. We are proud of our long partnership with USDA and USAID in accomplishing those goals.

This year, the world faces even more need with famine on the horizon in Nigeria, Somalia, South Sudan and Yemen. The overriding moral imperative demands that we maintain our international food assistance efforts. Beyond the help for those in need around the world, these programs have vital benefits for domestic constituents. International assistance fosters goodwill, which helps with national security efforts. The use of U.S. commodities ties farmers directly to program beneficiaries, allowing them to connect with the programs’ goals in a way that simply using cash (or not being involved at all) does not. Additionally, development programs boost burgeoning economies, which benefits the entire global economic system by encouraging trade with the full participation of poorer nations.

We strongly urge the Administration to reconsider the value and effectiveness of these programs in future budget proposals. We are grateful that most U.S. lawmakers seem to appreciate the importance of international food assistance. As its members did last year, we hope Congress once again ignores the ill-conceived call to eliminate these successful and indispensable programs and keeps them intact in the final 2019 U.S. budget.


Between record low commodity prices, extreme natural disasters and unfair trade practices in the global marketplace, wheat growers across the country have experienced a multitude of challenges the past couple of years. To educate the Administration, Members of Congress and their staff on just how expansive and important the entire wheat value chain is to the economy and to global food supplies, the National Wheat Foundation (NWF) is hosting a wheat industry educational event Feb. 8 in Washington, D.C.

“This event featuring organizations throughout the entire wheat value chain is the first of its kind for the Foundation and for Congressional staff,” stated Foundation Board Chairman Phil McLain. “We hope to give our policy makers and all attendees a better understanding of the how each component of the wheat value chain functions. We were also particularly pleased to be able to have USDA Deputy Secretary Censky, Chairman Roberts, and Ranking Member Stabenow walk through the event during a special preview.”

U.S. Wheat Associates will join other participating organizations in the event, including the NWF, American Bakers Association, American Seed Trade Association, Association of Equipment Manufacturers, BASF, Bayer, BNSF Railway, CropLife America, Farm Credit Council, Flowers Foods, Food Marketing Institute, General Mills, Grain Foods Foundation, Monsanto, North American Millers’ Association, Texas A&M University, Syngenta, U.S. Custom Harvesters, Wheat Foods Council, Wheat Marketing Center and Wheat Quality Council.


By Stephanie Bryant-Erdmann, USW Market Analyst

Farmers will tell you that winter wheat is a hardy plant; but for the current U.S. winter wheat crop, one of its most important inputs, water, is increasingly in short supply. The Feb. 1 U.S. Drought Monitor showed that drought ranging from abnormally dry to extreme, affects most of the winter wheat production area across the country. Specifically, 81 percent of Oklahoma is in a severe to extreme drought, while 65 percent of Kansas is in a moderate to extreme drought. In South Dakota and Colorado, 64 percent and 59 percent of the topsoil moisture was rated as short to very short, respectively.

USDA noted the drought’s impact on winter wheat crop conditions in its monthly winter wheat crop condition report* on Jan. 29, which showed 29 percent of the area assessed by the survey is in good to excellent condition, down from 41 percent good to excellent at the end of December. USDA rated 35 percent in fair condition and 37 percent in poor or very poor condition, up from 22 percent last month. The assessment covered 69 percent of the estimated 32.6 million acres (13.2 million hectares) planted for 2018/19.

Deteriorating crop conditions could multiply the effect of low planted area to decrease 2018/19 U.S. winter wheat production. USDA noted the 2018/19 winter wheat planted area is 15 percent below the 5-year average in its Jan. 12 Winter Wheat and Canola Seedings report, which is the second lowest number of planted winter wheat acres on record.

Of the winter wheat classes, hard red winter (HRW) is the most severely affected by drought. USDA reported 23 percent of HRW assessed acres are in good to excellent condition, compared to 35 percent in December. Forty-two percent of HRW acres were rated in poor or very poor condition, up from 25 percent one month prior. The only major HRW state not assessed last week was Texas, where 5 million acres (2.02 million hectares) of winter wheat were planted for 2018/19. However, precipitation maps show it has not rained in 110 days in Northern Texas (accounting for about 60 percent of Texas wheat production). In response to these reports, the Kansas City Board of Trade (KCBT) March wheat contract rallied 20 cents last week to $4.63/bu ($170/MT), the highest point since July 2017.

Soft red winter conditions are variable. USDA rated 58 percent of soft red winter (SRW) wheat assessed acres in good to excellent condition compared to 68 percent four weeks prior, and just 7 percent were rated in poor or very poor condition. However, SRW crop conditions were not uniformly positive. Better crop conditions in Ohio and Tennessee mask worsening moisture conditions in the Southeast and Mid-Atlantic regions. Ninety-five percent of Virginia, 61 percent of North Carolina and most of Maryland are abnormally dry or in moderate drought. Ratings were not available for several southern SRW states where drought conditions are more severe. Deteriorating crop conditions also helped push Chicago Board of Trade (CBOT) March wheat futures price to its highest point in five months at $4.47/bu ($164/MT).

Winter wheat crop conditions were not reported this month for Idaho, Oregon or Washington where exportable soft white wheat supplies are concentrated. However, the Feb. 1 Drought Monitor shows southern Idaho and nearly all of Oregon are abnormally dry. However, precipitation is expected in the next 5 to 10 days that should be beneficial for most of the estimated 3.56 million acres (1.44 million hectares) of white wheat.

Some rain this week pressured wheat prices, showing that the futures markets will likely be volatile until the spring green up tells the final story. It is a long way until harvest, but customers should closely watch weather conditions across the United States and be ready to take advantage of price moves in their favor.

If you have any questions about the current crop conditions or the U.S. marketing system, please contact your local USW representative.

To track U.S. wheat prices, drought conditions and more, subscribe to the USW Weekly Price Report, here.

*From December through March, USDA assesses winter wheat crop conditions in select states on a monthly basis. Weekly crop progress reporting will resume in April.


It is a busy week in Washington, D.C., for wheat industry leaders. They have gathered to participate in joint board meetings between U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG), and for an educational event on Capitol Hill Feb. 8 (see separate story).

Official USW business was called to order Feb. 7 at the organization’s headquarters office in Arlington, Va., with a budget committee meeting and a comprehensive orientation for new farmer directors. USW and NAWG farmer directors are meeting in joint committee meetings to learn more about plant breeding innovation and international trade policies that affect wheat farmers and their customers. USW’s individual committees are also meeting on long-range planning, sanitary and phytosanitary issues affecting wheat trade, hard white (HW) wheat production and export demand, and topics related to wheat quality.

Of significant interest is the status of three-country negotiations between the United States, Mexico and Canada on the North American Free Trade Agreement (NAFTA). USW and NAWG strongly support maintaining NAFTA rules that have benefitted U.S. wheat farmers as well as their customers primarily in Mexico, while improving parts of the agreement. Many directors are also learning more on the real concerns about the sustainability of U.S. wheat imports by Japan under the new Trans-Pacific Partnership recently negotiated by 11 of the original member countries without the United States.

Committee meetings continue on Feb. 9, followed by a joint meeting of USW and NAWG governing boards. USW will hold its own board meeting Feb. 10 to review committee actions and recommendations and to hold its annual election of officers for the 2018/19 fiscal year (July to June).


According to the United Nations, over a quarter of the world’s population will live in Africa by 2050. That will be something like 2.5 billion people. With less than 4 percent of the world’s wheat production, Africa will require significant imports to feed its growing population. A major factor in in ensuring a predictable, stable supply of a staple food like wheat is through predictable, rules-based trade policies.

That is one reason why the Office of the U.S. Trade Representative (USTR) should start transitioning countries from the one-sided preferential arrangement of the African Growth and Opportunity Act (AGOA) to a more reciprocal trading relationship based around free trade agreements (FTAs).

Gerald Theus has represented U.S. wheat farmers in Sub-Saharan Africa as U.S. Wheat Associates (USW) Interim Regional Director in Cape Town, South Africa for nearly three decades. He highlighted the need for reciprocal trade, for the benefit of both U.S. farmers and African millers and consumers, in recent submission to the U.S. International Trade Commission.

The submission points out that the United States only has one FTA in Africa – with Morocco – and that FTA has significant limitations. There is a pressing need to negotiate new agreements with African countries so that trade policies can be reciprocal and those countries can benefit from both exports and imports.

Theus laments that the European Union (EU) has managed to outmaneuver the United States by converting its trade preferences into reciprocal access, pointing to the 300,000 ton duty-free quota enjoyed by its exporters into southern Africa, sidelining U.S. opportunities in that region.

If U.S. farmers are to be competitive in Africa, the U.S. government needs to negotiate new market access (the same holds true in Latin America, the Asia-Pacific region, and elsewhere). No new deals have been struck since 2007.

USTR Robert Lighthizer recently stated that it was his intention to negotiate a “model” FTA with an African country. That is an encouraging step, because the United States clearly needs to develop closer trading relationships with its African partners. As Theus notes, there should be strong affinity between the views expressed in his submission and the statements of USTR Lighthizer on reciprocal free trade.

There is plenty of opportunity in Africa. U.S. farmers hope to see their wheat play a part in a bright future for the continent.


The “Masters de la Boulangerie” competition, organized by Lesaffre, will be held Feb. 3 to 6 in Paris, France, as part of the “Europain” trade show. It is the final stage in a prestigious, three-year team competition cycle, comprised of the 2014-2015 Louis Lesaffre Cup and the 2016 Coupe du Monde de la Boulangerie.

Based on talent and potential from the competition cycle, 18 experienced candidates will compete in one of these categories: Nutritional Bread Making, Gourmet Baking and Artistic Bread Making. A panel of six jurors will evaluate candidates on technique, sales, marketing and communication skills, economic factors and “social and environmental responsibility linked to bread making,” according to the competition website. Each category includes specific challenges for the candidates “linked to evolutions in baking and the profession’s future.”

Related demonstrations during the competition, following a “Sharing and The Future” theme, include sharing how the candidates responded to challenges, their bakery “tips and tricks,” innovations from competition sponsors and a spotlight on “Young Bakery Hopefuls.”

Like USW, Lasaffre is committed to helping the world’s baking industry grow to its fullest potential. USW admires the mission of its baking competition cycle. We wish all the candidates good luck, including bakers from the United States, as well as bakers from U.S. wheat importers Japan, Taiwan, South Korea, China and Brazil.

Read more online at, or follow the competition on Facebook, Twitter and Instagram, and by following #BakeryMasters2018 and #MastersBoulangerie2018.



By Stephanie Bryant-Erdmann, USW Market Analyst

In the Nov. 2, 2017, issue of “Wheat Letter,” we analyzed the tight supply of high protein U.S. wheat (minimum of 13.0 percent protein at 12 percent moisture basis (mb)) and its effects on pricing. The latest production and quality analysis suggests that global high protein wheat production in marketing year 2017/18 is down as much as 39 percent from average. That strengthens the conclusion that price premiums will continue at least into the first quarter of marketing year 2018/19 (June to May).

Based on available data, U.S. Wheat Associates (USW) has estimated that the world’s wheat suppliers produce about 50 million metric tons (MMT) of high protein wheat in an “average” year. Of that total, USW estimated that about 27 MMT on average are available to export markets, including:

  • 0 MMT of hard red spring (HRS) from the United States;
  • 0 MMT of Canadian Western Red Spring (CWRS);
  • 0 MMT from Kazakhstan, Russia and Ukraine; and
  • 0 MMT of Australian Prime Hard (APH) and Australian Hard (AH).

Looking at 2017/18, high protein wheat production was well below average.

USDA data showed that total U.S. HRS production was down 26 percent year over year at 10.5 MMT, with about 9.0 MMT having at least 13.0 percent protein (12 percent mb). Roughly half of U.S. HRS is exported annually, putting U.S. high protein HRS exports at 4.5 MMT. Carry-in stocks from 2016/17 totaling 6.4 MMT push total HRS supply higher, and potentially also enlarge the supply of high protein HRS. In 2016/17, the average protein was 14.6 percent (12 percent mb), but the protein content of the remaining stocks carried into 2017/18 is unknown. Year to date, the Federal Grain Inspection Service has inspected 3.94 MMT of HRS, 98 percent of which had at least 13.0 percent protein (12 percent mb), and USDA reported an additional 1.26 MMT of HRS sales that have not yet shipped as of Jan. 25. To meet that demand, high protein HRS stocks will need to be pulled out of storage, indicating premiums for HRS are unlikely to shrink in 2017/18.

Of the 19.2 MMT of CWRS produced in 2017/18, about 78 percent, or 15.0 MMT, graded #1 CWRS according to Canadian International Grains Institute (CIGI) data. The average protein for #1 CWRS is 13 percent (12 percent mb), with roughly 75 percent of #1 CWRS samples averaging above 13.0 percent (12 percent mb). If production values match sampling ratios, then Canada produced roughly 11.0 MMT of high protein wheat in 2017/18. On average, Canada exports roughly 70 percent of total wheat production putting total high protein wheat exports at an estimated 8.0 MMT. Weber Commodities, a Canadian-based analyst firm, believes Canada carried in just 1.0 MMT of high protein stocks, putting the estimated total Canadian high protein wheat exportable supply at 9.0 MMT.

Black Sea high protein exports are expected to fall to 3.0 MMT — all from Kazakhstan — due to above average rainfall that significantly lowered protein levels in Russian and Ukrainian wheat.

Australian Prime Hard is only produced in Queensland and New South Wales where La Niña-related drought conditions have sharply cut yields. Generally dry conditions are also expected to hurt Australian Hard wheat yields. USW estimates that Aussie high protein exportable supplies will only reach about 1.5 MMT.

The shrinking supply of high protein wheat can be seen in the prices of the top suppliers. According to the International Grains Council (IGC), the average price for 13.5 percent protein (12 percent mb) HRS exported from the Pacific Northwest (PNW) is up 16 percent year over year. IGC uses the Canadian designation of CWRS as 13.5 percent protein (13.5 percent mb). It reports CWRS prices from both Vancouver and St. Lawrence show an increase of 24 percent year over year. Meanwhile, lower protein wheat producers, such as Argentina, have seen prices fall 4 percent year over year due to the large supply of lower protein wheat.

Here is a table summarizing USW’s estimate of the big cut in global high protein wheat supplies in 2017/18 compared to an average, or “typical” year.

                                    Average Export Supply            2017/18 Estimated Supply

U.S. HRS                        6.0 MMT                                   4.5 MMT

CWRS                          11.0 MMT                                    8.0 MMT

Black Sea                       7.0 MMT                                   3.0 MMT

APH/AH                          3.0 MMT                                   1.5 MMT

Total                            27.0 MMT                                  17.0 MMT