Agricultural News
US Wheat Promoting Lower Protein New Crop HRW Wheat
Wed, 09 Jun 2010 15:58:31 CDT
U.S. Wheat Associates (USW), the industry's export market development organization, is aware of the situation with the burdensome supply of low-protein hard red winter wheat as the harvest progresses in the southern plains. Producers fund USW with checkoff dollars and matching federal export development funds. From 15 offices around the world and two offices in the U.S., USW specifically represents the interests of producers in overseas markets. Its representatives are aggressively getting the word out to customers about the unique value opportunity with HRW and all other U.S. wheat classes since late summer of 2009.
The differential advantage of U.S. wheat is value, a wide-range of choices for all end-product uses, and its reliable supply. Building on those characteristics has offered significant returns to U.S. wheat producers over the years. In January, USW released the results of a comprehensive study showing that U.S. wheat producers saw a $23 return in net revenue for every $1 they invested between 2000 and 2007.
USW's message to buyers is that considering price in relation to quality, performance, and service, there is no doubt that value is peaking when we look at the situation with hard red winter (HRW) - the largest and most versatile class of bread wheat produced in the U.S. In addition, the new crop has other potential benefits including excellent test weights that promise strong milling characteristics.
USW is working to identify markets where lower protein HRW fit best, and will focus as much effort as possible in those markets to promote its value. Baguette and flat bread markets are good targets...in fact markets that have taken Russian wheat fit this category. PGI is working to make early baking quality information available which will be useful for buyers who are uncertain about how lower protein HRW may perform. USW will share that information, especially with those markets that show the most promise, and will follow-up on any requests for additional information as needed. USW posts crop quality information in its weekly Harvest Report.
There are also several opportunities to be face to face with customers over the next few weeks to educate buyers about the unusual value opportunity with HRW and other U.S. classes. Specifically:
USW President Alan Tracy and Vice President of Overseas Operations Vince Peterson were at the International Grains Council annual meeting in the UK this week and took the opportunity to inform the large number of buyers who attend this event about the current U.S. wheat market situation.
An Egyptian Government Technical Team, including the head of GASC, is in the U.S. this week to learn more about our grain inspection, quality assurance, and crop quality with a goal to increase their trust in the U.S. system and gain their influential support for tender terms that make U.S. wheat as competitive as possible in this key market.
USW holds its biennial Latin American Buyers Conference soon and the emphasis will be on the unique value story, especially to those markets where our HRW crop best fits. Registration has been strong for this event.
A team of Brazilian millers will be in the U.S. toward the end of June to get a look at the current crop.
USW has also been very aggressive on the trade policy front because market access and breaking down trade barriers are increasingly important to U.S. wheat producers. For example, the organization is working with NAWG to advocate for submission and ratification of the U.S.-Colombia FTA that puts a significant amount of U.S. HRW sales at further risk if Canada ratifies its own FTA with Colombia. Ending the U.S. trade embargo with Cuba to allow free flow of U.S. wheat and other agricultural commodities would also have a direct, positive impact on market expansion for HRW.
U.S. wheat producers can help by continuing to contact their congressional delegations and support the work of their state association affiliates and NAWG to get our government moving.
It is important to remember that in the context of U.S. wheat exports, until recently, U.S. HRW export prices were significantly higher than Russian and other Black Sea region supplies, as well as European supplies. That is now changing and U.S. HRW is very competitive with alternate sources; in fact when Egypt's GASC tendered for wheat last week, it received a competitive bid offering HRW (Egypt specifies 11% protein). In addition, USW has also heard that important overseas customers are taking a much more serious look at U.S. HRW the past few weeks that should boost demand.
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