Wheat World

Lower Production Equals Lower Exports, Says USDA Economist
Remove China and the former Soviet Union from the U.S. wheat export trend line, and the trend for U.S. wheat exports is a steady increase, according to USDA chief economist Keith Collins, who briefed the U.S. Wheat Associates (USW) Board of Directors at their annual spring meeting held recently in Washington, D.C.  His analysis indicates that U.S. wheat is going to developing markets, where wheat consumption is increasing because of population growth.  He also points to an outlook for reduced wheat acreage, less production, increased domestic food use, less exports, and lower carryover having a positive affect on the wheat price.

USW Asks U.S. Government To Start Protocols For Biotech Wheat
Also at the USW spring board meeting, directors agreed to urge the U.S. government to begin work immediately to develop protocols with U.S. trading partners in anticipation of the eventual commercialization of genetically modified wheat. Although wheat derived from biotechnology is not due to be commercialized until 2003 at the earliest, the USW board is trying to anticipate and address the export market implications.

USW intends to work with the U.S. government to reach out to U.S. trading partners to identify and define potential problems that may be encountered with contract specifications, tolerances, testing and liability. Beginning the process now will give the world market enough time to address the potential issues in a deliberative manner.

Robert Riemenschneider, director of the Grain & Feed Division of the USDA Foreign Agricultural Service, told board members that, in his view, “genetic modification is the trade policy issue of the future.” After relating some of the recent USDA experiences with shipments containing StarLink corn, he urged the board to “consider, as best you can, the
foreign market implications” of genetically modified wheat commercialization.

USW intends to work with USDA to consider the market implications and avoid potential missteps that may cause unnecessary market disruptions while allowing the technology to move forward.

Latin American Buyers Want Cleaner Wheat; Pleased with USW
In its continuing responsibility to measure the effectiveness of USW export market development programs, the board has received a report from Hugh Henderson, an independent consultant who interviewed wheat buyers for his evaluation of the efficacy of the U.S. Wheat Associates Latin American Buyer’s Convention. In evaluating the impact of the program on long range sales, Henderson related positive and negative feedback. Henderson reported that many Latin American buyers want cleaner wheat from the U.S.; something USW has long suspected while it has been urging the grain trade to install cleaners at the gulf ports. On a positive note, Henderson reported that the feedback on U.S. Wheat Associates programs and staff was outstanding. “You are doing the right things in Latin America,” he said. “The only thing you need to do is do more of it.”

Brazil Starts Buying U.S. Wheat Again
Following the recent announcement that Brazil is once again open to U.S.
wheat shipments, a buyer there recently informed USW that his company had purchased 15,000 metric tons of soft red winter wheat from North Carolina, with shipment in April. Pablo Maluenda, USW senior marketing specialist based in Santiago, Chile, reports that “from what we hear, this is only the first of several purchases being considered by Brazilians.” Brazil is an 8 mmt (about 294 mil bu) export market. The U.S. has had a market share of less than 3% since bans were first imposed in 1996. After agreeing last October to reopen its markets to three classes of U.S. wheat, Brazil informed the USDA in February that it was once again banning shipments, citing concerns about a wheat nematode. USW strongly and vehemently protested Brazil’s action and urged immediate U.S. government action. In March, after a Brazilian technical team came to the U.S. and conducted an extensive wheat survey, trade resumed. But even as it became clear that the Brazilian government had dropped their objections to U.S. wheat, without written official assurances that the wheat would be allowed in, importers were hesitant about purchases. Maluenda quickly provided shipment requirements to Brazilian customers, and the first sale occurred on the same day.

USW Helps Korea Secure Credit
In February, the USDA increased by $95 million the amount of operational credit guarantees available for wheat to Korea under GSM-102 fiscal year 2001. Accordingly, a total of $150 million has been currently allocated. The Korea Flour Mills Industrial Association subsequently expressed its thanks to USW, USDA-FAS, and the U.S. Embassy in Seoul for helping to secure the additional allocation. “The GSM-102 credit program has been highly instrumental in securing U.S. wheat market share in Korea,” USW country director Won Bang Koh reports. “Millers use this type of credit effectively for their business.” Korea was the fifth largest U.S. wheat customer last year, and has bought more wheat from the U.S. than from any other source in each of the last ten years.

Mexico Setting Record Export Pace: Buy/Sell Workshop to be Held
Mexico continues to rank among the top five U.S. wheat buyers, purchasing 1.96 million metric tons so far this marketing year. Hard red winter wheat purchases continue to account for the bulk of the purchases, but the growth in soft red winter (SRW) purchases has been “phenomenal,” according to USW regional vice president Mitch Skalicky, based in Mexico. SRW exports to Mexico are at record levels, nearly 600,000 tons. Skalicky met recently with key northern Mexico wheat buyers to discuss wheat imports by rail into northern Mexico and to invite the buyers to the USW Co-op Elevator Buying Workshop in Monterrey on April 24. This one-day seminar will bring together representatives from U.S. and Mexican rail companies, U.S. country elevator operators, and Mexican wheat buyers so that they can explore the growing opportunities of buying and shipping U.S. wheat via direct rail to Mexico.

U.S. Sets New Wheat Export Record In The Philippines
The Philippines imported 2.85 mmt of wheat last year, setting a new record high of wheat importation from different sources, USW country director David Villanueva reports from Manila. The U.S. also set a new record level of wheat export here, with a 23% increase. Almost half of the total is hard red spring.  Villanueva reports that the feed milling industry is a significant factor in the healthy increase of wheat imports by the Philippines. A lot of the reason they buy American wheat is because of the long term U.S. commitment to meeting their market needs, he says.

USW To Hold Wheat Conferences For South Asia Millers
USW is presenting two educational conferences for technical milling staff and buyers in South Asia. A Technical Conference in June will include presentations on wheat quality, utilization of all classes of U.S. wheat in both Asian and Western style products, new technology in predicting the end-use quality of imported wheat and changes in the U.S. quality assurance methodology. A Wheat Buyers Conference, also in June,  will cover, among many relevant topics, the outlook for world wheat trade, price and risk analysis, quality assurance, and regional and worldwide economic trends.

“In this new millennium, changes in all segments of the wheat industry are inevitable. Our collective challenge is to identify and take advantage of the opportunities created by the changes,” explains Mark Samson, regional vice president for USW, based in Singapore. “We want to help our customers identify and plan for these inevitable market changes. And just as importantly, we want to listen to their perspectives on issues that affect their ability to take full advantage of new opportunities.”

WHEAT WORLD is brought to you by the checkoff funded Minnesota Wheat Research and Promotion Council.
The majority of the activities cited here are carried out by U.S. Wheat Associates, your checkoff funded international market development affiliate, with offices located in 15 counties around the world.