Analysis: U.S. Wheat Still a Hot World Commodity
Date Posted: August 1, 2013
Manhattan, KSThe U.S. grain marketing system is unmatched and transparent.
Yet it can be complicated.
This is why U.S. Wheat Associates (USW) maintains 17 offices strategically located around the world to pave the way for U.S. export growth.
USW routinely gives overseas buyers, millers and wheat food processors information about crop quality, supply and the U.S. grain transportation and inspection system.
Customers also want closer ties with producers, so connecting the entire supply chain is increasingly important.
USW does that in many ways, including sponsoring trade team visits to Kansas farms, country elevators, grain exchanges and export facilities.
Recently, representatives from USW's offices around the world gathered for a world staff conference.
This meeting presented an opportunity to share experiences and review the market situation for U.S. wheat.
Here are a few notes of interest from some of the offices:
Lagos, Nigeria: Nigeria continues to be the leading customer of U.S. hard red winter wheat. In the 2012/13 marketing year, Nigerian millers purchased 93 million bushels of hard red winter wheat, reaching a 73 percent market share. The U.S. does face several new challenges in the Nigerian market. Violence in the region has caused Nigeria to close its borders into Niger and Chad, two countries to which Nigeria would typically export flour. Also, in an effort to support local cassava farmers, the Nigerian government has imposed a 15 percent levy on wheat imports and is requiring millers to blend 10 percent cassava flour with wheat flour.
Philippines: The U.S. has an 80 percent share of the Philippines' wheat market which leads USW to focus significant energy on increasing consumption. USW, together with local miller associations, started the "Celebrate Bread!" campaign. The campaign educates consumers about the nutritional benefits of bread and baked goods through events like "World Bread Day." Demand for wheat foods in this large region continues to grow and USW is working with flour millers to help them meet that demand using U.S. wheat.
Santiago, Chile: Colombia is the largest South American customer with imports of around 22 million bushels annually. The U.S.-Colombia free trade agreement was implemented May 15, 2012, permanently eliminating import duties on wheat, allowing U.S. market share to increase to 44 percent. As of July 18, current year wheat sales are up 38 percent over this time last year.
Mexico City, Mexico: USW is helping commercial milling, baking and food companies in Guatemala reduce costs and improve quality using U.S. wheat. As a result, Guatemala has all but stopped importing Canadian wheat and now imports five classes of U.S. wheat, including 6.3 million bushels of hard red winter wheat already this marketing year.
Funding activities that develop and maintain wheat export markets is a cooperative effort between the federal government and wheat producers.
Federal programs, including the Foreign Market Development program and the Market Access Program, account for about 74 percent of USW revenues.
Producer check-off funds such as the Kansas Wheat check-off, provide 26 percent of activity funding.
For more information, call 785-539-0255.