Industry events
US Wheat Associates Crop Quality Seminar by Rebecca Sherratt, Production editor, Milling & Grain On Monday 12th November 2018, at the Radisson Blu Portman Hotel in London, UK, the US Wheat Associates (USW) presented their annual Crop Quality Seminar to a group of millers, bakers and national food industry figureheads. The three-hour conference discussed a variety of contemporary issues surrounding wheat, not just of American origin, but at an international capacity. The event provided vital feedback on the outlook for the six types of US wheat (hard red winter, hard white, hard red spring, soft red winter, soft white and durum), along with how they have performed under market conditions. The conference was hosted 41 times in total, in 28 different countries. The conference consisted of three speakers, the first of whom being Mr Ian Flagg, Regional Vice-President of the USW, who introduced the event and discussed in depth the elephant in the room: the Chinese tariffs on US imports, and how this has affected US soybean stocks. Following this, USW’s Regional Marketing Director for Europe, Mr Rutger Koekoek, gave a detailed overview on the world’s wheat supply and demand. Systematically analysing key countries in the wheat industry one-by-one, Mr Koekoek informed attendees on 2018 market conditions, and the USW’s predictions for 2019 wheat prices and production rates. To conclude the event, Mr Jim Peterson, Policy and Marketing Director of the North Dakota Wheat Commission, focussed more upon US hard red spring and durum wheat crops, delivering an attractive proposal to suppliers and shippers in the audience, concerning the benefits of US wheat. The audience, consisting of a variety of industry colleagues, including members of the National Association of British and Irish Millers (NABIM), Frontier Agriculture, Whitworth Bros, Allied Milling and Baking and much more, listened attentively to the discussions presented, and were given the opportunity to ask questions and explore topics further, in the delightful lunch following the conference.
The soybean dilemma
The trade dispute between China and the US, which has been hot on everybody’s lips since its announcement back in April 2018, was discussed at length during the conference. The 25 percent tariff has caused catastrophic issues for the US soybean market, with a bushel of soybeans in March costing US $10, which took mere months to then reduce to a mere $7 per bushel. American soybean farmers have had no choice but to either sell their soybeans at a significant loss, or store them, in the hope of a profitable solution. In the passing months following China’s announced tariffs, Ian Flagg explains the issues the US have been 116 | January 2019 - Milling and Grain
having, with allocating space for their ever-expanding soybean harvests. “One of the major implications we have, is that the US are designed to produce a lot, store a lot, and sell when the market is in our favour. But, right now, we have so many soybeans, with a very low cash price, the farmer can either sell at a loss, or store it. And when there is no end in sight, how long can you store it? It is very difficult to make decisions”, says Mr Flagg. The US have had to diversify where they sell most of their soybeans, but the issue still persists. In relation to this, China’s lack of soybeans has reportedly led them to diversifying into an expanded use of oilseeds, sunflower seeds and canola. Ian Flagg suspects that much of the US soybean area will be replaced with wheat and corn in the upcoming months of 2019, in an attempt to rectify this issue. “It is causing a big issue with logistics. China counts for more than 50 percent of soybean exports, we have to increase sales to other destinations but it’s not enough to replace China”, he continues. “If the trade dispute continues, and I see no reason why it would not at this point, some US soybean area would be replaced with corn and wheat in 2019.” Russia was also mentioned, as an alternative source of crops for China, in light of the ongoing tariffs. Planted areas and production of oilseeds in Russia also increased in 2018. The unfulfilled quote for US soybeans that are now no longer being exported to China, comes to an alarming 125 million metric tonnes. The US is clearly under duress and are hopefully for an efficient and profitable solution to this ongoing issue.
The global market
The USW’s Marketing Specialist, Mr Koekoek, gave an engaging presentation, discussing the worldwide outlook of wheat in 2018. Wheat production worldwide, he noted, has reduced 28 million metric tonnes (mmt), to 731mmt, compared to 2017 where 759mmt were produced. To add to the problem, this is the fifth year in a row where consumption is outpacing production. “Globally, wheat production is down 29mmt. The biggest production increases this year are recorded in the US, of four mmt, and North Africa, Morocco and Nigeria, Indonesia, have very favourable, moister conditions this year, and their production