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News from the Minnesota Association of Wheat |
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EU BECOMES NET WHEAT IMPORTER EU soft wheat export commitments during the 2000/2001 crop marketing season, which began on July 1, stood at 183,000 tonnes on July 27. That was dramatically below the 576,000 tonnes at the same point a year earlier, according to EU Commission data. By comparison, EU 2000/2001 soft wheat import commitments as of the same date totalled 292,000 tonnes. Analysts and traders said EU wheat imports are outpacing exports because of fears Europe will not produce enough milling-quality wheat to meet domestic demand, let alone sell to traditional clients in North Africa and the Middle East. As a result, EU millers are turning to other world suppliers to secure high-quality wheat. "Given the the way the market stands at the moment, it's difficult to say whether the EU is going to produce enough milling wheat this year to have an exportable surplus," said James Dunsterville, grains analyst at agricultural commodities website: agrinews-online.com. FRENCH WEATHER WOES France's farm ministry last month pegged the country's soft wheat crop at 36.1 million tonnes, up slightly from 1999. However, that estimate was made on July 1 -- on the eve of four weeks of torrential rains and cold weather that turned what had been a promising French wheat crop into a largely feed-grade one, traders and analysts have said. Accordingly, EU feed wheat prices have dropped to historic lows on ideas that supplies will be more than adequate, while extra premiums have been placed on high-quality milling wheat. Wheat quality concerns have also dashed European Union grain exporters' hopes of selling hundreds of thousands of tonnes of wheat in the opening weeks of the new export campaign. EU wheat exporters, whose livelihood depends on the amount of wheat they ship to places like Algeria, Morocco and Tunisia, have seen sales dry up. Traders look back at the just-ended 1999/2000 crop year, when the EU exported more than 16.4 million tonnes of soft wheat, including flour and food aid. "You're lucky if you can find a tonne of wheat available for export," a French trader said gloomily as more heavy rains fell in northern France, heightening fears about poor quality. U.S., CANADA MEET DEMAND According to USDA export sales figures released this week, U.S. exporters committed to sell 484,800 tonnes of soft and durum wheat to the EU between June 1 and July 27. That was up almost 22 percent from 398,300 tonnes of export commitments to the EU at the same point a year earlier. Sales of dark northern spring wheat, a high-protein wheat grown in northern U.S. Plains states such as North Dakota and Minnesota, accounted for more than 65 percent of total U.S. wheat export commitments to the European Union since June 1. Sales of durum wheat, used in the production of pasta, made up about 20 percent.
TAIWAN EXPECTED TO RESUME U.S. GRAIN IMPORTS Taiwan is expected to buy about a million tonnes of U.S. corn and 500,000 tonnes of soybeans in the fourth quarter. Traders expect to see a corn tender this week, and there's talk of a tender for a shipment of soybeans for September, but the tender date has yet to be set, a trader said. In the wheat market, Taiwan is expected to tender on Tuesday for just under 80,000 tonnes of U.S. wheat for delivery between Sept. 15-October 15. There's apparently interest in Australian wheat as well.
UKRAINIAN PRIME MINISTER TO PREPARE A NEW GRAIN PROGRAM The program foresees a liberalization of the grain market, a change in barter operations and a stepping away from the old-style principles of collective farm management. The government plans to attract loans from the European Bank for Reconstruction and Development, the International Monetary Fund and other international financial institutions to maintain the grain program. Ukraine's 2000-2001 grain output is expected to be about 24.5 MMT.
PRESIDENTIAL HOPEFUL GEORGE W. BUSH SUPPORT FARM EFFORTS Appropriations subcommittee for agriculture chairman, Sen. Thad Cochran (R-Miss) told reporters covering the Republican National Convention that Congress has given $22 billion in extra assistance to farmers over the past several years, and farmers can rely on that same level of support continuing, especially if Bush is elected in November. Sen. Pat Roberts (R-Kan), a senate agriculture committee member, confirmed Cochran's statement, saying the 2002 farm bill will "provide predictable and guaranteed payment so producers and their bankers can make financial management and planning decisions". Quashing the cries of opponents to the 1996 "Freedom to Farm" legislation, both legislators stressed that the 1996 legislation will be the "underlying basis for the next farm bill in 2002".
WEATHER THROUGHOUT THE WORLD Dryness lingers in Canada's southeastern Alberta region, and time is running out for the crop. Most spring grains are in good condition in the remainder of the Prairies, but a few locations in Manitoba are a little too wet. Most crops are filling with harvesting to begin in September. The dry winter season continues in Australia. Most crops are in good condition, but increased rainfall during the next few weeks will be needed to support spring growth in southern Queensland and northern New South Wales. Most of the crop is in a period of slow growth due to cool nighttime temperatures and a low sun angle. The planting of Argentina's winter wheat crops continued to make good progress during the week. Mostly dry weather persisted, and the warmer temperatures will aid in the germination and early growth of the crop. Colder air is expected to return to the region late next week. Frequent rains continue in the northwestern portions of Russia (CIA), causing delays in the harvesting of winter grains. Quality of spring and winter grains is also expected to suffer from the wet weather. Little change in weather patterns is expected in the next few days. Some areas in the spring wheat region from the Urals eastward are becoming too dry. Increased rainfall will be needed soon to support crops moving through the reproductive and filling stages. Scattered showers continued in most of China's wheat areas during the past week. Precipitation is slowing the harvest and may lower grain quality in a few areas. Dryland wheat yields have already been reduced by dryness and heat earlier in the season.
WHEAT HARVEST IN FULL SWING Because of more favorable rains, protein quality appears to be down, running about 8.5%-9.5% compared with last year's drought stressed, low volume crop of 11%-13%. Early rains produced some wild oats, volunteer barley and cheat grass problems, so some crops are being put through cleaners. Ritzville Warehouse Manager, Vern Regennitter, reports harvest in his area of Washington is about 50% complete with soft white winter wheat yields averaging 60-65 bu/acre and protein levels ranging between 8% and 13%. Because of low prices, many farmers are taking their CCC loan deficiency payments and putting the grain under a deferred pricing contract at the elevator, allowing them some payment for their grain immediately and the ability to take advantage of any price increases, should they occur. According to one North Dakota farmer, "I'm growing a lot of 'politician durum' this season big heads, but nothing in them". Weighted average of yield calculations taken from 98 durum fields during the first two days of the Wheat Quality Council's annual tour are showing 28.01 bu/acre. Although this exceeds last year's mid-tour average of 22.6 bu/acre, it is almost one bushel below the current USDA yield estimate of 29 bu/acre. Farmers are reporting good stands, but root rot and leaf disease, combined with scab damage of about 20%, have been extremely detrimental. Early season rains produced lush stands and large heads, but many, in some cases 30%-50%, failed to fill completely because of scab. Protein levels are expected to be close to last year's, around 13.5-15%. North Dakota produces about 80% of all US durum.
WHEAT COMMISSION EXPLORING SALES POTENTIAL U.S. Wheat Associates is bringing two directors from flour mills in Kenya and one from Tanzania to Fargo on Aug. 9 to demonstrate to them the importance of purchasing high quality wheat that meets their customers' end-use needs. The North Dakota Wheat Commission has arranged a program for the East African visitors that emphasizes the milling and baking properties of U.S. hard red spring wheat. The program will take place in the afternoon at the Northern Crops Institute and NDSU Cereal Science Department. Wheat and flour consumption in East Africa has grown dramatically in the last few years as government control over trade has been drastically reduced. New mills have been built and per capita consumption, albeit low compared to many global regions, is increasing. Combined annual wheat imports for Kenya and Tanzania currently exceed 25 million bushels. Flour mills in the countries are the wheat importers and until recently, they have often been more concerned about price than quality, especially baking quality, according to Mike Spier, USW assistant regional director in the Middle East and East Africa. "Milling quality is important to millers, but few have given adequate consideration to baking quality," Spier explains. "Generally, buyers are competent, but lack a clear understanding of correct quality factors that justify value." The Kenyan and Tanzanian markets need a hard, high protein wheat to blend with soft, low protein wheats grown in country. Millers have recently been getting by with U.S. hard red winter wheat or hard wheats from Australia andArgentina. NDWC Marketing Specialist Leland "Judge" Barth hopes that by explaining to the East African millers the economic and intrinsic advantages of using U.S. spring wheat that more sales will result. USW is encouraging export firms to offer combinations of smaller cargoes to the East African buyers and is working on ways to provide a more competitive U.S. government export credit guarantee to help counter the attractive prices and credit terms offered by Australia. The United States once enjoyed a 100 percent market share in Kenya following privatization and before the end of the Export Enhancement Program in 1995. Since then, cheaper wheat from Australia and Argentina has found its way to Kenya and replaced much of the market for U.S. wheat. Kenya relies on imports to satisfy more than 60 percent of its demand for wheat, although the government does stimulate wheat production through a system of high prices and import protection that amounts to more than double the world market price. Import taxes in Kenya are 75 percent of port value, dropping to 25 percent when the Kenyan government believes domestic wheat supplies are exhausted. The government of Tanzania, on the other hand, has a more encouraging policy for grain imports. End-users can freely import wheat and flour, but middlemen must pay a 20 percent tax. Kenya and Tanzania are part of the East African Cooperation along with Uganda. Among EAC objectives are harmonizing tariffs and other import regulations. In addition to North Dakota, the East African trade delegation is making stops in Washington, D.C.; Minneapolis; Montana and Oregon. The team's visit is sponsored in part by American wheat producers and the USDA Foreign Agricultural Service. Contact Ellen Huber
USE OF COMMODITY CERTIFICATES FOR THE REDEMPTION OF LOAN-ELIGIBLE CROPS (Bismarck) Depressed prices and good yields have many North Dakota farmers worried about payment limitations. The 1996 Fair Act set minimum price levels that a grower would receive in times of depressed prices. These prices, referred to as the loan rate, were put in place as a trigger mechanism for the government to assist in direct payments to farmers in times of low prices. The amount of payments a farmer receives from the government increases as commodity prices decrease. However, because of a payment limitation enacted in 1985, many farmers will only be able to receive these payments on a portion of their production if a law is left unchanged. A bill has been introduced by Representative Emerson to increase the payment limitation from $75,000 to $150,000 per producer. According to Paul Thomas, marketing specialist with the Northern Canola Growers Association, the payments are a necessity. "In canola, as well as other crops, cash prices received at the elevator are insufficient to even pay for variable expenses incurred in producing the crop. Farmers count on receiving the minimum price levels established in the 1996 farm program on all of their acres," stated Thomas. One option for growers to explore if they exceed the $75,000 limit is the use of commodity certificates for redemption of loan eligible crops. On February 8, 2000 the Commodity Credit Corporation (CCC) announced that it would allow the use of commodity certificates by producers to redeem loan eligible certificates in the exact dollar value needed to redeem the producer's loan and would function as an immediate exchange. In other words, there will be no actual issuance of a certificate, or generic certificate, that could be used at a later date. Certificates allow crops that have been placed under CCC loans to be redeemed at the loan repayment rate without counting towards a producer's marketing loan payment limit. Some confusion as to the process of how this system will work has surfaced. The following list of questions and answers seeks to help clarify what growers need to do. 1. Where do I begin? 2. When I go to the FSA office what do I need to have with me? 3. How long does this process take? 4. Do I need to have my bins measured and grain federally inspected? 5. After I have placed the grain under loan can I market the grain? The same rules apply as under a regular CCC loan. The grain may not be sold without prior notification and repayment of the loan at your FSA office. 6. How do I repay my loan? 7. After I repay my loan, am I free to market my grain? 8. Can I rent a bin and place the grain under loan? "Every grower will have different marketing needs that need to be met. The best advice for one grower may not be the best for his or her neighbor," stated Thomas. Growers with additional questions should contact their local FSA office. |
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