Wheat Letter
July 13, 2017
U.S. Wheat Associates (USW) is the industry’s market development organization working in more than 100 countries. Its mission is to “develop, maintain and expand international markets to enhance wheat’s profitability for U.S. wheat producers and its value for their customers.” USW activities are funded by producer checkoff dollars managed by 18 state wheat commissions and USDA Foreign Agricultural Service cost-share programs. For more information, visit www.uswheat.org or contact your state wheat commission.
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In This Issue:
1. U.S. Wheat Production to Fall to Lowest Level Since 2002/03
2. USW Board Seat New Officers at 2017 Annual Meeting
3. Profiling U.S. Wheat Sustainability: Bob Johns, Soft White Wheat Farmer
4. African Wheat Buyer, U.S. Industry Learn Much From Each Other
5. Chilean Trade Team Visits United States to Discuss U.S. Wheat Quality
6. USW Announces Staff Transitions and Promotions
7. Wheat Industry News
Online Edition: Wheat Letter – July 13, 2017 (http://bit.ly/WheatLetter07132017)
PDF Edition: (Attached)
USW Harvest Report: http://www.uswheat.org/harvest
1. U.S. Wheat Production to Fall to Lowest Level Since 2002/03
By Stephanie Bryant-Erdmann, USW Market Analyst
[Note: An expanded version of this story appears in the “Online Edition” here.]
USDA forecast U.S. 2017/18 wheat production at 47.9 million metric tons (MMT), down 24 percent year over year and 18 percent below the 5-year average. The reason: an anticipated 12 percent decline in average yield and the lowest planted acres since USDA records began in 1919. The largest beginning stocks since 1988/89 will partially offset lower production. Total 2017/18 U.S. wheat supply is forecast at 80.1 MMT, down 10 percent from 2016/17 but still 1 percent above the 5-year average of 79.3 MMT.
On June 30, USDA estimated total planted wheat area would fall 9 percent year over year to 45.7 million acres (18.5 million hectares). If realized, that would be 17 percent lower than the 5-year average. USDA expects 2017/18 harvested area to drop 13 percent from last year and 18 percent below the 5-year average to 38.1 million acres (15.4 million hectares).
USDA forecast 2017/18 hard red winter (HRW) production to total 20.6 MMT, down 30 percent from 2016/17 and 14 percent below the 5-year average. A smaller planted area and sharply lower harvested area led to the decline. USDA forecast 2017/18 HRW beginning stocks at 16.1 MMT, up 33 percent year over year and 81 percent above the 5-year average. Total 2017/18 HRW supply is expected to total 36.8 MMT, down 12 percent from 2016/17.
Soft red winter (SRW) production is also expected to decline 11 percent to 8.33 MMT in 2017/18 due to fewer planted acres. USDA estimated total 2017/18 SRW area at 5.61 million acres (2.27 million hectares), 15 percent lower than 2016/17 and 30 percent below the 5-year average. USDA estimates that SRW 2017/18 beginning stocks totaled 5.85 MMT, up 37 percent from 2016/17 and 47 percent above the 5-year average. The total 2017/18 SRW supply is expected to increase by 500,000 MT year over year to 14.2 MMT.
USDA reported white wheat production will decrease 11 percent from 2016/17 to 6.91 MMT, but still 1 percent above the 5-year average, if realized. The decline is due to 3 percent fewer planted acres and slightly lower forecast yields. Larger beginning stocks are expected to offset the lower production, leaving the 2017/18 SW supply unchanged year over year at 9.77 MMT.
Hard red spring (HRS) production is expected to plummet in 2017/18 to 10.5 MMT, down 22 percent from the prior year and the lowest since 2002/03, if realized. The sharp reduction in HRS production is due to significantly lower expected yields and smaller planted area. The average spring wheat yield is forecast down 15 percent from 2016/17. USDA estimates farmers planted 10 percent fewer acres compared to 2016/17. USDA anticipates a 14 percent drop in beginning stocks. Estimated 2017/18 HRS supply will total 16.9 MMT, down 19 percent year over year, which would lower the HRS stocks-to-use ratio to 22 percent in 2017/18, compared to 41 percent one year prior.
Smaller planted area and 30 percent lower yields are expected to reduce durum production to 1.55 MMT in 2017/18, down an estimated 45 percent from 2016/17 and 26 percent below the 5-year average. USDA expects average durum yields to sink to 30.9 bu/acre (2.08 MT/ha), compared to 44.0 bu/acre (2.96 bu/acre) in 2016/17. Durum planted area decreased this year as farmers responded to lower prices and large carry-out stocks. USDA expects the U.S. durum supply will fall to 2.53 MMT, 29 percent below 2016/17 levels and 9 percent below the 5-year average. The U.S. durum stocks-to-use ratio will fall to 24 percent, on par with the 5-year average.
Even with reduced production for 2017/18, U.S. farmers stored significant levels of grain last year ensuring that customers can continue to purchase reliable, high-quality wheat. Customers are encouraged to contact their local USW representative to discuss purchasing strategies in this volatile global wheat market.
2. USW Board Seat New Officers at 2017 Annual Meeting
The USW Board of Directors seated new officers at its annual meeting July 11, 2017, in Annapolis, Md. USW officers for 2017/18 are: Chairman Mike Miller of Ritzville, Wash.; Vice Chairman Chris Kolstad of Ledger, Mont.; Secretary-Treasurer Doug Goyings of Paulding, Ohio; and Past-Chairman Jason Scott of Easton, Md. Vince Peterson succeeded Alan Tracy as USW President, a staff officer position, on July 1, 2017. USW officers were elected to these one-year positions at the February 2017 Winter Wheat Conference in Washington, D.C.
Also during the USW board meeting, committees met on July 9 and 10, including the Joint Wheat Breeding Innovation and Joint International Trade Policy committees that operate in conjunction with the National Association of Wheat Growers (NAWG). Official business was called to order at 1:30 p.m., EDT, July 10 and continued through 10 a.m. July 11.
USW’s next Board meeting will be held jointly with NAWG Oct. 16 to 19, 2017, in Charleston, S.C.
Mike Miller is a fourth-generation farmer who operates a dryland wheat farm and grows multiple crops on a separate, irrigated farm in east central Washington. He has served on many local, state and national boards. He is the current Chairman of the Washington Grain Commission and this is his sixth year as a USW director representing Washington. Miller is also very active in supporting wheat research and development. He and his wife, Marci, have three children.
Chris Kolstad is the fourth generation of his family to farm in Montana’s “Golden Triangle” region. He and his wife Vicki have four children, including their son Cary who is a partner in their operation. They grow HRW wheat, dark northern spring wheat, durum, barley and dry peas. A commissioner of the Montana Wheat and Barley Committee, Kolstad has been a USW director since 2012. He is also a member of the Montana Grain Growers Association and Montana Farm Bureau. His community leadership includes serving on his local school board, as treasurer of his family’s church and as a regular blood donor.
Jason Scott is a sixth generation wheat farmer from Maryland’s Eastern Shore, where he is farm manager of Walnut Hill Farms and produces SRW wheat, row crops and vegetables. He is also an Independent Sales Representative for Pioneer Hi-Bred Int’l, under the title Scott’s Seed, L.L.C. Scott is a founding member of the Dorchester County Young Farmers, past president of the Maryland Grain Producers Utilization Board and the Maryland Grain Producers Association. In 2011, he won the Maryland Young Farmers Achievement Award. He and his wife Dr. Casey Scott have two children.
Doug Goyings’ family has been farming in northwestern Ohio since 1884. Goyings and his family grow SRW and have hosted numerous trade teams on their farm. He has served in Ohio and national agricultural leadership positions for 36 years. Goyings has been a member of the USW board since 2009 and is a past chairman of the USW Long-Range Planning Committee. He serves as a director for the Ohio Small Grains Checkoff Board, is a past-president of his local Farm Bureau and has served as a director for the Ohio Veal Growers Inc., Creston Veal, Inc. and Paulding Landmark, Inc.
3. Profiling U.S. Wheat Sustainability: Bob Johns, Soft White Wheat Farmer
By Emily McGarry, USW Policy Intern
Bob Johns farms in northeast Oregon, and he would tell you that he’s been farming since the day he was born. Johns’ 5,000-acre farm has been in the family since 1873, but he is ready to retire soon. Since there is no family to take over, he is handing the reins to his business partner, Chris Williams, a long-time family friend who began working summers for Johns when he was in high school.
“I have been around agricultural stuff my whole life,” said Williams. “I am fascinated with starting with a bare piece of ground, seeing what you can grow and watching it progress through the season.”
Together, Johns and Williams grow wheat, green peas and alfalfa. They make sustainability a priority on the farm through no-till practices, clean water programs and new farming technology.
“Farming is my life and it’s what I’ve always wanted to do — I never thought of doing anything else,” said Johns. “My father’s life was farming and he passed that on to me. I hope to pass it on to my business partner, Chris.”
Johns is the fifth of six U.S. wheat farmers featured in USW’s series on wheat sustainability. He manages regional agricultural nuances by adapting his practices to be sustainable for his region’s soil and environmental conditions. Part of that also includes planning for the future and a non-traditional transition so that his farm business is still successful for years to come.
“Chris loves the land,” said Johns. “He keeps me on the cutting edge and pushes me to look at the latest technology. We are a good team.”
Northeast Oregon is known for its extremely steep farmland, which often requires special equipment and makes soil erosion a challenge. Johns sees wide variation in his soil quality and the amount of rainfall on his farm, so individual fields often require different levels of attention and inputs. In the past, steep slopes on his farm caused erosion. However, in 2011, Johns switched to no-till practices, which has cut his erosion to nearly zero and greatly improved soil health.
In order to protect the region’s natural resources, Johns and Williams also had their farm certified as “salmon-safe,” which means they restrict the products they use on their land that is near water sources. They also grow plants in those areas that increase the biodiversity on their farm and promote beneficial insects and wildlife.
“We value the environment and we value what we’re doing on the ground,” said Johns. “It’s important to us; we don’t just go out without thinking about those things.”
For Johns, this means finding ways to improve practices through new technology and innovation. Last year, Johns and Williams started experimenting with a drone on their farm to see if aerial photos of their fields could give them insight on crop health and stress levels, soil fertility and input requirements.
Johns and Williams are constantly finding new ways to improve the sustainability of their farm, whether through certification opportunities, government programs, or new technology and practices. But the piece that is most important is the plan for transition. Because Johns partnered with Williams, he knows that his farm will be in good hands when he retires — with someone who loves the land as much as he does.
Learn more about John’s and Williams’ farming partnership at www.uswheat.org/factsheets. U.S. farmers, ranchers, fishermen and foresters also share their values, sustainability experiences and conservation practices at the U.S. Sustainability Alliance.
4. African Wheat Buyers, U.S. Industry Learn Much From Each Other
By Steve Mercer, USW Vice President of Communications
U.S. wheat industry representatives from five states expected to answer a lot of questions from a team of Nigerian and South African flour milling executives, but they did not expect to learn so much from their customers. Their dialogue continued as the millers observed the entire U.S. wheat supply chain on stops in Nebraska, Kansas, Oklahoma, North Dakota and Minnesota June 18 to 29, 2017, as part of a trade team sponsored by USW and wheat commissions from those states. Funding also came from the USDA Foreign Agricultural Service (FAS).
Gerald Theus, assistant regional director with USW in Cape Town, South Africa, led the team and noted two key reasons why this was a good time to emphasize the benefits of buying U.S. wheat.
“First, the price of imported milling wheat weighs heavily on buyers in Sub-Saharan Africa, and U.S. hard red winter and other U.S. wheat classes have become more price competitive,” Theus said. “On the other hand, the millers are concerned about protein levels and other functional measures in the new crop. After the tour, we think they understand how to minimize their price risk and still get the performance they need from this U.S. wheat crop.”
Theus said consumers in Nigeria and South Africa prefer “high-loaf” pan bread, which is best produced with flour from medium protein wheat sourced mainly from the central and southern Plains states. Mike Schulte, the executive director of the Oklahoma Wheat Commission, said it was important for breeders, farmers and the grain trade to learn more about the specific quality and consistency these millers need.
“For example, they told us their baking customers need flour that provides minimum protein and dough stability time, but they cannot get consistent supplies like that from Russia.” Schulte said. “That helped us direct the discussion at our tour stops toward how the trade handles wheat to meet different specifications, and how the inspection system provides assurance they won’t have to make big and expensive adjustments from one delivery to another with U.S. wheat.”
“I was surprised about how U.S. wheat grading and testing is so comprehensive and consistent for every load of wheat coming from the farm by truck or rail to export locations,” said Hayi Emmanuel Dauda, quality assurance manager with Nigeria’s Dangote Flour Mills. “It was also good to see how the process of blending wheat from different sources achieves consistent protein levels and test weights for the buyer.”
Hosts at the Kansas Wheat Commission, the Nebraska Wheat Board, the Oklahoma Wheat Commission and the North Dakota Wheat Commission each featured research and breeding programs, supported directly by farmers in those states, which impressed the buyers.
“It was very informative to learn about the challenges of ensuring the current and future production of all the U.S. wheat classes,” said Tanya Erwee, a grain procurement executive with Premier Milling in South Africa. “The wheat breeders are doing a great job, still striving to get better yields to benefit the farmer but also to keep the quality benefits strong for millers, too.”
The team’s visit to North Dakota and the major Great Lakes grain export system added a timely opportunity to learn more about sources of U.S. HRS wheat and durum.
“We wanted to show these buyers that there is a chance this year to purchase spring wheat at relatively attractive prices to blend with hard red winter wheat to meet higher protein and stability times if needed,” said Theus. “For the Nigerian millers, we also wanted to demonstrate that northern durum could be an attractive alternative this year for pasta flour.”
Nigeria’s standard pasta flour is HRW with 12 percent protein (on a 12 percent moisture basis). There are limited supplies of that specification, and the large supply of durum could be an alternative, said Erica Olson, Marketing Specialist with the North Dakota Wheat Commission.
“This team was valuable for us to host as they are not our typical customer,” Olson said. “While these are smaller markets for hard red spring and durum, interest in quality is growing. It was extremely beneficial to visit with them to learn more about what their quality needs are and how we might expand export opportunities in the future.”
In North Dakota, spring wheat and durum specialists at the North Dakota State University Spring Wheat Quality Laboratory and the Northern Crops Institute briefed the team members. From Fargo, N.D., the team travelled to their final stop at the ports of Duluth, Minn., and Superior, Wis., for meetings with private exporters.
“I must say the experience with the farmers, breeders, traders and other experts on this trip was second to none,” said Mr. Dauda. “What we learned from each other will be very important, particularly related to meeting the potential challenges associated with getting the protein levels we need.”
“This trip helps give us the confidence that U.S. growers, breeders, grading agencies and private exporters are committed in ensuring that quality standards of all wheat classes are met when exporting to other countries,” said Ms. Erwee. “The United States is still the exporter we can trust to supply good, consistent quality wheat.”
5. Chilean Trade Team Visits United States to Discuss U.S. Wheat Quality
By Amanda J. Spoo, USW Assistant Director of Communications
Good customer service is the foundation of any successful business or industry, and for the U.S. wheat industry that means building trust, good communication and consistency in order to forge strong partnerships with overseas customers. That also means providing customers with timely, reliable crop information and demonstrating a commitment to improvement.
USW welcomed a trade team of four Chilean executives from major wheat purchasing and flour producing companies June 18 to 24. USW collaborated with the Oklahoma Wheat Commission (OWC), California Wheat Commission (CWC), Washington Grain Commission (WGC) and the Idaho Wheat Commission (IWC) to organize and host this trade team. Funding also came from the USDA FAS.
“Chile is a sophisticated wheat food market where bakers demand specific flour quality for a wide variety of products – led by bread consumption,” said USW Marketing Manager Casey Chumrau from the USW Santiago Office. “Over the past five years, the United States was the top supplier of wheat to Chile three times, with an average of 383,000 metric tons.”
Chumrau, who led the trade team, said that when the buyers learned that the 2017 HRW wheat crop will be low in protein, they were open to discuss potential adjustments to their purchases to help meet their functional needs.
The team began its trip in Oklahoma, where it immediately took a broad look at the complete supply chain with visits to grain and seed companies, a train loading facility and marketers. The team also visited the OWC Baking Laboratory, which provided an opportunity to discuss the characteristics that Chilean millers and bakers need for their competitive market.
Next the team traveled to California, where they had the unique opportunity to meet with Nicolas Cobo Lewin, a Chilean PhD candidate at the University of California-Davis, who specializes in wheat breeding.
“Breeding was one of the main topics of interest for this team, and Mr. Cobo was able to explain the process and importance of breeding in a very understandable manner,” said Chumrau.
While in California, the team also visited the Port of Stockton, a Federal Grain Inspection Service (FGIS) grading facility and the CWC Lab.
“California wheat farmers value building strong relationships with our customers, and this was a crucial and very important opportunity for us to build those relationships with millers and wheat buyers from Chile,” said CWC Executive Director Claudia Carter.
Next, the team traveled to Washington and Idaho where the two state wheat commissions worked together to focus on the team’s interests. Chile is the largest buyer of SW in South America, and earlier this year the WGC organized a team of wheat farmers to travel to Chile to meet with buyers.
“Having this Chilean team come to the Pacific Northwest strengthens our relationship with an important customer and allows those millers who do not yet purchase soft white wheat to gain a better understanding of what it has to offer their operations,” said Washington Grain Commission CEO Glen Squires.
Additional visits in Washington and Idaho included HighLine Grain, LLC, a 110-car rail facility; the Lewis-Clark Terminal barge loading facility; and a farm visit. During their visit to the USDA Agricultural Research Service (ARS) Wheat Quality Lab, the team met with Dr. Kim Campbell to learn more about club wheat and its potential end product applications.
One participant shared that he thought it was important to see and experience the link between wheat breeding, farm production and grain handling that results in the wheat used in the organization’s mills.
“This trip featured almost every point of the supply chain,” said Chumrau. “The team repeatedly emphasized the importance of quality and was impressed with the extensive work being done in Oklahoma, California and the Pacific Northwest to produce new varieties with the buyer in mind.”
6. USW Announces Staff Transitions and Promotions
There is lots of staff news from USW summarized below. Click on the links provided to read more.
· Alan Tracy has retired as President June 30, 2017, and will serve as a Senior Advisor with USW for the foreseeable future.
· Vince Peterson became the fourth President of USW since the organization was formed in 1980 by the merger of Grain Plains Wheat and Western Wheat Associates. He joined USW in June 1985, most recently serving as the Vice President of Overseas Operations.
· Mark Fowler joined USW as the new Vice President of Overseas Operations on June 30, 2017. He will be responsible for providing program and personnel direction to USW’s 15 overseas offices, as well as technical and marketing guidance in support of USW’s trade servicing activities.
· Amanda Spoo is promoted to Assistant Director of Communications. She joined USW in March 2015 as Communications Specialist.
· Erica Oakley is promoted to Director of Programs. She joined USW in July 2015 as Program Manager.
· Elizabeth Westendorf is promoted to Assistant Director of Policy. She joined USW in October 2014 as Policy Specialist.
7. Wheat Industry News
· Quote of the Week: “As my wife reminded me, we have lots to be thankful for! The Hand from above is watching over our fields and yes, I … am thankful for that ‘extra’ touch and gift of farming knowledge that allows our fields to produce to their full potential.” — Vida, Mont., farmer and past USW Chairman Leonard Schock, after checking his crops that were withered from extreme drought.
· Congratulations to Matt Weimar on 30 Years of Service. Matt is the Regional Vice President in the South Asian Region based in the USW Singapore Office. We are so fortunate to have such devoted, loyal colleagues at USW. Thank you, Matt, for your years of service to our organization, to U.S. wheat farmers and to our customers around the world.
· Funding Wheat Quality Research. A team of wheat breeders and geneticists at Kansas State University (KSU) has received a substantial grant from USDA’s National Institute of Food and Agriculture, or NIFA, and the Kansas Wheat Commission for a project that could help determine more quickly which new candidate varieties of wheat will produce greater yields and improved baking quality. “New DNA sequencing technology has enabled the determination of genetic differences between candidate wheat varieties as well as the development of genomic prediction models for important traits such as milling and baking,” said KSU associate professor of plant pathology and wheat geneticist Dr. Jesse Poland. “These prediction models can then be used for selection of superior candidate varieties.” Read more here.
· MAP and FMD Get Hearings. USW and the National Association of Wheat Growers were pleased to hear Kansas Sen. Pat Roberts mention today how USW is using the Foreign Market Development (FMD) program and the Market Access Program (MAP) to fund trade service and technical support for overseas customers that promotes U.S. wheat benefits. Sen. Roberts chairs the U.S. Senate Committee on Agriculture, Nutrition & Forestry and mentioned USW programs in his opening remarks at a committee hearing on “Opportunities in Global and Local Markets, Specialty Crops, and Organics: Perspectives for the 2018 Farm Bill.” Watch Chairman Roberts’ remarks online here.
· Visit centerfornutritionandathletics.org. At the Center for Nutrition and Athletics, the goal is to be the source of science-based, credible nutrition information tailored to Personal Trainers, fitness professionals and their clients. This site is funded by the Wheat Foods Council, a non-profit organization of wheat farmers and other members of the wheat industry from around the United States. The Center harnesses the insights and knowledge of leading nutrition and exercise experts who understand the needs of the Personal Trainer community.
· The Masters de la Boulangerie is a global baking competition focused on nutritional breading making, gourmet baking and artistic bread making, which is a part of a four-year international competition cycle. Only 18 candidates are invited to participate for the World Master Baker title. Twelve candidates are selected based on the best scores during the previous competitions, and the additional six are selected for their promising potential. The 2018 Masters de la Boulangerie will be in Paris, France, Feb. 3 to 6. Visit http://www.coupelouislesaffre.com/ for more information.
· Cereal Science Events Calendar. Prof. Dr. M. Hikmet Boyacýoðlu, associate editor of Cereal Science, contributing editor to World Grain and a cereal science consultant continues to track industry events. Contact him at mhboyaci@gmail.com to receive the calendar.
· Subscribe to USW Reports. USW has added a “Subscribe” menu at www.uswheat.org where visitors may subscribe to this newsletter, the weekly Price Report and the weekly Harvest Report (available May to October.) Click here to subscribe or unsubscribe.
· Follow USW Online. Visit our page at www.facebook.com/uswheat for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter at www.twitter.com/uswheatassoc and video stories at www.youtube.com/uswheatassociates.
Nondiscrimination and Alternate Means of Communications
USW prohibits discrimination in all its programs and activities based on race, color, religion, national origin, gender, marital or family status, age, disability, political beliefs or sexual orientation. Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USW at 202-463-0999 (TDD/TTY – 800-877-8339, or from outside the U.S., 605-331-4923). To file a complaint of discrimination, write to Vice President of Finance, USW, 3103 10th Street, North, Arlington, VA 22201, or call 202-463-0999. USW is an equal opportunity provider and employer.
Source: U.S. Wheat Associates