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REPRESENTATIVES FROM NO.1 EXPORT MARKET FOR SPRING WHEAT TO VISIT AUG. 23
Three leaders from the Japanese Food Agency will be in
North Dakota on Aug. 23 for an update on production prospects and projected quality of the 2000 hard red spring and durum wheat crops.
The North Dakota Wheat Commission has arranged a program for the team that includes discussions at the Ag Foundation building in Bismarck with NDSU grain quality experts and tours of South Central Grain at Sterling and the Goetz farm near Baldwin.
Japan purchases an average 50 million bushels of spring wheat annually, enough to consistently rank the country first among importers.
The JFA controls about 90 percent of these imports.
"Japan is our largest and most dependable cash wheat customer in the overseas market," says Jim Peterson, NDWC marketing director. "They are also among
our most quality conscious customers." Last year, the JFA tightened maximum dockage specifications on shipments of U.S. wheat to 0.4 percent. The agency is now considering a maximum 0.3 percent limit
beginning in 2001, but wants to first determine if U.S. farmers, country elevators and the grain trade are capable of meeting this demand.
The JFA is also interested in the U.S. plan to segregate wheat derived from biotechnology from that developed through more traditional breeding techniques.
Japan does not want any biotech commodities currently because many of the country's businesses export products to Europe, where there is more concern among consumers.
This visit by the JFA to the United States is an important element of the market servicing program of U.S. Wheat Associates, an organization of 19 state wheat
commissions.
For information contact:
Neal Fisher, Administrator
Jim Peterson, Marketing Director
Phone 701-328-5111
CBOT TO INCREASE DAILY LIMITS
The Chicago Board of Trade (CBOT) gained approval by the Commodity Futures Trading Commission
(CFTC) this week to increase daily price limits on its futures and options contracts. The move will clear the way for the CBOT to start using the Eurex exchange computer based trading platforms later this month.
Currently, price changes on wheat futures and options contracts are limited to twenty cents per bushel. Trading is suspended for the rest of the day if the
limit is hit. The suspension is designed to provide traders a "cooling off" period and provide producers with greater market stability. Beginning August 27, the new limit will be thirty cents. Similar
increases were approved for the CBOT's contracts that are based on other commodities.
NAWG and other commodity and farm organizations had opposed the increase sighting fears that greater market fluctuation could lead to greater risk by producers
and an unstable marketplace.
Responding to the CFTC's decision, NAWG Director of Government Relations Wayne Hammon stated, "We are of course very disappointed. The CBOT sought these
changes based upon the need to make their computer system work more efficiently with that of their new European partner - not for any sound, market-oriented reason. It's unfortunate that farmers, through greater
uncertainty and market fluctuation, will have to pay the price to make things more convenient for the CBOT."
It is anticipated that the other U.S. exchanges that trade commodity contracts will soon follow suit by seeking increased limits themselves.
SOLID EXPORT MARKET FOR U.S. WHEAT
Competitive prices and the high quality of the U.S. wheat supply are attracting renewed
importer interest, including from buyers in Brazil and Egypt who set the pace on another strong week of wheat sales. Reported sales for 2000/01 are pacing 7.4% ahead of last year, and those numbers do not
include the most recent purchases by Brazil and Egypt.
As northern hemisphere harvests come to a close, markets will focus on import activity which has tended to purchase on a hand-to-mouth basis during recent
months.
Brazil
Buyers in Brazil indicate that they have been disappointed in the high prices and poor quality of the remaining Argentine wheat stock, and
Brazil's late season frost has caused significant production losses.
Although we won't have official USDA numbers until next week, reports from buyers indicate that recent sales of hard red winter wheat to Brazil may exceed
100,000 metric tons. There are predictions for substantially higher sales, ranging up to 250-750 TMT, but some caution must be taken in this situation, as Argentine prices for the remaining crop have fallen
dramatically, following the U.S. sales.
Over the past three years, Brazil has imported an average of only 54,000 MT of U.S. wheat.
Brazil's wheat consumption has been growing steadily, along with population growth and rising incomes, and some analysts are predicting that their wheat imports
could increase to more than 7.5 MMT, making them the 2nd largest wheat importer in the world.
In July, USW sponsored and accompanied a Brazilian "wheat trade mission" as they met with U.S. wheat industry representatives, wheat growers, and USDA
officials in Washington D.C., Maryland, Kansas, North Dakota, and Texas.
Team members represented Brazilian companies which account for over 3 million metric tons of consumption per year, or 36% of the Brazilian market. Two of the
three major milling companies of Brazil were represented on the team. In another positive development, USW President Alan Tracy and Chairman Bruce Hamnes have accepted an invitation to attend the annual meeting of
the Brazilian millers association in November.
Egypt
The news of purchases by Egypt could hardly be better for the U.S. wheat industry, with an incredible upturn in Egypt's purchases over
last year.
Egypt sales as of 8/17 (in TMT):
2000/2001 1999/2000
HRW 747 613
SRW 676 144
SWW 506 -0-
HRS 21 8
Total 1.950 765
The main increase, in soft wheats, would appear to be coming from Egypt's official government buyers, GASC, although the recent HRW private sector purchases are
also above last year's levels. The above numbers don't include this week's HRW purchases.
Other importers Algeria, Morocco and Tunisia are also bright spots on the wheat sales map. Evidently seeking to "blend up," to improve the quality of
French wheat, these countries are taking advantage of the competitiveness of America's soft red winter wheat. (The quality of the French and German crop, as duly noted by just about every market analyst and
commentator, needs to be watched very closely as persistent rains have evidently led to many problems, including potential sprout damage and low falling numbers.) Eastern Europe is predicted to be a net importer of
grain for the first time in four years due to an intense drought. China's current crop is predicted at 102 MMT, as compared to 114 MMT last year, with imports forecast to rise to 3.5 MMT as compared to 1 MMT in
1999/00 U.S. Wheat Associates is the industry's export market development organization, representing wheat producers in 19 states.
NAWG JOINS OPPOSITION TO EPA RULE
NAWG and other farm organizations this week filed official comments with the U.S. Environmental
Protection Agency (EPA) opposing its proposed rule on diesel fuel. The EPA seeks to reduce the sulfur levels in diesel fuel through stricter controls.
The joint comments stated several reasons for the agriculture community's opposition to the rule. These included the threat of supply disruptions in rural
areas, higher fuel costs for farmers and bankrupting farmer-owned refineries.
In addition, the comments made a handful of recommended changes to the proposed rule. These included capping the allowed sulfur level at 50 parts per million,
allowing greater flexibility and financial assistance for farmer-owned refineries and keeping the current fuel available for off-highway use.
US VISIT PLANNED BY CHINA'S NEW GRAIN AGENCY
A delegation from China's newly formed State Administration of Grain (SAG) will be
coming to the U.S., and meetings are being scheduled in Illinois and Washington DC. The visit, tentatively scheduled for early September, is designed to provide team members with an overview of U.S. grain export
operations.
The SAG, a new government policy body reporting to the State Council, is one of three key central government bodies dealing with wheat purchases, the other two
being COFCO and Sinograin. It appears that the three agencies are of about equal importance in influencing wheat imports and designating origins.
China is preparing for entry into the WTO, and is developing new structures for trade and trade-related activities. The SAG is one result of the restructuring
and, since March, USW has been encouraging the agency leaders to visit the U.S. to meet industry officials and see grain operations first hand.
"There are exciting changes in China, boding well for U.S. wheat exports," explained Matt Weimar, USW Hong Kong-based vice president. "We are
continually encouraged by the desire of Chinese officials to learn more about U.S. wheat and our marketing structures."
Weimar reports that China has made additional wheat purchases since the official government wheat buyers bought 50 thousand metric tons (TMT) in February.
Two commercial purchases bring this year's imports to about 78 TMT. He is optimistic that final U.S. congressional approval of permanent normal trade relations will yield more purchases.
EXPORTS ENCOURAGE MARKET
An unexpected purchase this week by a non-traditional customer provided a small boost in the wheat
market. Brazil is reported to have purchased 100,000 tons of hard red winter. Several factors contributed to the purchase including significant damage to Brazil's domestic crop due to frost and a decided lack of
quality wheat emerging from Argentina.
In addition to the Brazilian purchase a traditional customer also purchased wheat this week. Egypt purchased 85,000 tons of HRW.
LACK OF FUNDING HURTS FAS, IMPAIRS MARKET DEVELOPMENT
We hope our foreign readers will excuse us for a moment, while we vent our
frustration with the budgeting process of the U.S. Congress. You see, U.S. Wheat Associates and other commodity "cooperators" rely on the United States Foreign Agricultural Service to guide, advise,
assist, and otherwise bring U.S. government resources to bear as, together, we work to expand export market opportunities. Well, even though the need for export market development has never been greater, the U.S.
Congress has frozen the FAS budget for 3 years now, forcing them to close offices, forego travel and otherwise cut expenditures. And the funds allocated to cooperator programs have been frozen for 10 years!
As USW vice president for government affairs Nelson Denlinger said, "The Congress forced FAS to slash the fat from their program. Unfortunately, they then
forced FAS to cut into the meat of essential services, and now they are breaking the bones of an agency that is absolutely vital to the health of the U.S. wheat exports."
We're not expert in the ways of U.S. budget allocations, but we seem to recall hearing of "budget surpluses."
Spending a little bit of that surplus to help meet the needs of export markets would seem to be an appropriate priority.
SUNFLOWER 'SHOWTIME'
BISMARCK ND (August 11, 2000) - Producers have a chance to see the sunflower world on parade at the
NuSun Show Field Expo Days scheduled for August 24 at Hazelton ND and on August 29 at Carrington ND.
The Show Fields have been growing all season to display the latest NuSun and confection varieties along with new chemical applications and research. Tours of all the areas are scheduled along with exhibits and a complimentary lunch. Expo Day begins at 8:30AM for both locations. The Hazelton Show Field is located 2 miles north of Hazelton on Hwy 83 and the Carrington Show Field is adjacent to the Carrington Research/Ext. Center on Hwy 281.
"It really is a first, to have this broad representation of sunflower experts in one field for growers to see what is new and ask questions.
It will be worth their valuable time to attend", says Scott Nelson of Lakota ND, NSA board President. Nelson noted that major users of NuSun oil, including Procter and Gamble, have been invited to see the strength of the industry at the producer level and those attending can sample chips made with NuSun oil.
Over fifty NuSun hybrid varieties from ten hybrid seed companies are growing alongside check hybrids in three replications.
Five confection companies are participating also and three chemical companies are showing either new chemical applications or demonstrating unique applications offering weed control options. In addition, the fields feature a research area on Clearfield™ Sunflower and disease and weed prevention. There will be demonstrations on determining oleic content of NuSun oilseed and new methods of pest management.
A South Dakota Show Field Expo Day is scheduled for August 22 near Gettysburg SD. For more details, call the National Sunflower Association at 888-718-7033.
NSA represents the industry and US growers and is partially funded by the North Dakota Oilseed Council. NuSun refers to the new oilseed varieties that yield mid-oleic sunflower oil. NuSun sunflower oil offers distinct advantages to food manufacturers and consumers. It has great taste, needs no hydrogenation, and is low in saturated fat.
Contact Max Dietrich at 701-328-5104
or Ruth Isaak at 701-328-5105
QUOTE OF THE WEEK
Tim Galvin, Administrator of the Foreign Agricultural Service, forcefully -- and appropriately -- answered
charges leveled by the Canadian Wheat Board's president, Greg Arason. In a letter to USDA Secretary Dan Glickman, Arason had complained that "it is inappropriate for a representative of a U.S. government agency
to be offering opinion on this grain business issue."
Arason was referring to statements made during a recent hearing before the U.S. House Committee on Agriculture. Galvin had stated that "there's every
indication that... the Canadians and Australians are essentially giving away quality or giving away protein... By that, I mean those factors are not fully reflected in the prices that those boards charge."
(The full text of Galvin's response, as well as Arason's letter, can be
found on the USW website, www.uswheat.org, click News & Policy, then go to Trade Policy.)
Mr. Galvin wrote:
"I want to assure you that the statements I made at the hearing were not merely my 'opinion.' There is a rather substantial number of
academic studies supporting my statements, many of which can be found on the website for the Alberta (Canada) Department of Agriculture... www.agric.gov.ab.ca/economic/market/sdeskh.html."
[Quoting from published articles] "...The CWB often 'over services'... High quality wheat is being sold for low quality prices... The Board gives away
protein to foreign buyers... There is considerable evidence which suggests that Canadian grains are overcleaned... It costs prairie farmers."
Galvin concludes his letter by observing that "concerns about the operations of state-trading enterprises (STEs) such as the CWB could be addressed more
conclusively, of course, if STEs were more transparent in their pricing and marketing practices or they made themselves subject to a full public audit as the United States has repeatedly sought.
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