Feb/March 1998
Wheat World News
Library
Home
E-Mail
Back
Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
Following is a region-by-region look at global U.S. wheat market development highlights, funded in part by the wheat checkoff. For the full report, request U.S. Wheat Associates' full-color 1997 special edition Wheat World, volume 8, issue 1, available through the Minnesota Wheat Research and Promotion Council at 1-800-242-6118, the North Dakota Wheat Commission, 701-328-5111, or the South Dakota Wheat Commission, 605-773-4645
Mexican-Central American-Caribbean Region
U.S. wheat exports to Mexico continue to increase, due in part to greater market access from the North American Free Trade Agreement. Exports totaled 1.49 million metric tons (MMT) in the 1996/97 marketing year, up from 1.06 MMT in 1995/96, and up from an average of 750,000 metric tons per year in marketing years 1992/93 through 1994/95.
South American Region
USW/Santiago scored a major success in Chile last year when, after a 19-month halt in U.S. wheat imports, the Chilean Phytosanitary Authority announced last October that Chile would accept U.S. wheat. The Chilean government had halted imports after Karnal bunt was discovered in the U.S. in March 1996. Future shipments must carry a label indicating the wheat comes from areas that are free of Karnal bunt. Historically, Chile imports about one third, or approximately 200,000 metric tons, of its wheat requirements from the U.S. each year.
European Region
In 1997, USW/Rotterdam continued to build upon a trend of increasing sales of U.S. spring and durum wheat to Western Europe. In the first six months of the 1997/98 marketing year, U.S. wheat sales topped one million metric tons (MT), surpassing 1996 annual cumulative exports, with Italy the largest purchaser at approximately 500,000 MT. Europe is now the single largest export market for U.S. durum.
North African Region
A potential crisis was averted in Morocco in 1997 when USW/Casablanca acted quickly to help modify Moroccan testing methodology to avoid confusion between Karnal bunt and rye grass smut, heading off potential trade losses. Also in Morocco, USW worked with banking and government representatives to extend the U.S. GSM-103 export credit program to private importers.
Middle East-East African Region
Egypt was the second leading market for U.S. wheat in marketing year 1996/97, importing 2.83 million metric tons of U.S. wheat. USW/Cairo cites its "American Quality Wheat Seal" campaign as influencing at least some of those purchases. The popular campaign includes television commercials, print advertising, bakery contests and an American Wheat Information Center. USW also added in-store retail sales promotions to the campaign in 1997. A spring 1997 survey found that 85% of the campaign's target audience was aware of the quality seal.
Sub-Saharan African Region
Trade servicing, baking seminars and milling and technical services continued to be the backbone of USW/Cape Town's activities in the region in 1997. Last March, USDA Secretary Dan Glickman got a first-hand look at USW programs in the region when he toured a USW-sponsored baking training facility outside of Cape Town in one of the major township areas, which now account for 92% of South Africa's bread consumption. USW/Cape Town continues to provide assistance to the growing number of fast food outlets and restaurant chains in South Africa by working with local bakeries to develop bread products for these establishments. McDonald's, Subway, Domino's and Planet Hollywood have all benefited from this assistance.
People's Republic of China/Hong Kong Region
U.S wheat exports to China were down in the last marketing year due to a variety of factors, including a large Chinese wheat crop, the impasse on the TCK issue and a slowdown in China's economy. However, USW continued to make progress in the region with its market development efforts now concentrated more on the country's growing private grain sector. USW consultant visits and trade servicing to foreign-invested mills in China last year helped improve the image of U.S. spring wheat. Chinese imports of U.S. spring wheat could exceed 200,000 metric tons (MT) in marketing year 1997/98, up from only 48,000 MT two years ago.
North Asian Region
In Japan (the leading importer of U.S. wheat in marketing year 1996/97) an effort by USW to improve the cleanliness of U.S. wheat began to pay off last February, when the maximum permissible dockage for U.S. wheat cargoes was lowered to 0.5%. The effort began in 1994, when USW started working with the Japanese Food Agency to help U.S. wheat meet increasingly stringent cleanliness standards. Today, U.S. wheat is much cleaner, and Japanese flour millers are more satisfied with U.S. wheat quality.
In Taiwan, USW/Taipei moved on several fronts to demonstrate the U.S. commitment to selling a high-quality product that meets customer needs. USW encouraged the development of new dockage standards by the Taiwan Flour Millers Association. The new standards, which take effect in February 1998, set a maximum dockage level of 0.5%.
South Asian Region
South Asia continued to be an important market for U.S. wheat in 1997. Pakistan and the Philippines were the fourth and fifth largest market for U.S. wheat. A highlight in the region in 1997 was Vietnam's first purchase of U.S. wheat since the U.S. lifted its 19-year trade embargo in 1994. The purchase was made by a Vietnamese flour mill, which bought 5,000 tons each of hard red spring and hard red winter wheat. Many activities conducted by USW/Singapore during the last several years helped pave the way for U.S. wheat purchases by Vietnam, which currently does not import large amounts of wheat, but could become a one-million-metric-ton wheat importer in the next several years. In the Philippines, noncompetitive U.S. prices proved to be a test of customer loyalty - and loyalty passed the test. Despite discounts offered by other suppliers, especially Canada, five of the Philippines' 12 flour millers continued buying U.S. wheat long after other millers found it unprofitable to do so. USW/Manila credits its extensive trade servicing and technical assistance programs as the key to securing this level of customer loyalty. n
Overall wheat impact of Asian financial crisis may be minimal
The overall impact of the Asian economic crisis could result in an 5% decrease in U.S. exports to the various Asian countries, according to USW research and marketing analyst, Dawn Deberry. A 5% reduction would result in the loss of about 9 million to 11 million bushels of wheat exported to the region (Philippines, Korea, Bangladesh, Sri Lanka, Thailand, Malaysia, Indonesia).
Pakistan, India, Japan and Vietnam were excluded due to the nature of their import and production situations. India will not likely be a major importer this year, as it has had excellent production. Japanese imports are likely to be unaffected by the current situation, and the Vietnamese market is still within the infancy stages.
"Although we believe the current situation may not impact the wheat market quite as severely as some other industries, we are closely monitoring the economic implications and the potential threat such conditions may present for the wheat industry," says DeBerry.n