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Agricultural News

US Wheat Associates Tells Global Wheat Buyers- We Have the Protein You Want

Thu, 11 Aug 2016 19:50:28 CDT

US Wheat Associates Tells Global Wheat Buyers- We Have the Protein You Want For customers looking to meet their needs for higher protein bread wheat, the United States remains the supplier of choice after carrying in a strong supply of hard red winter (HRW) from the 2015/16 crop with a protein average of 12 percent or more (on a 12 percent moisture basis). Higher protein HRW does carry a premium that is significantly higher than it was when harvest started, but low futures prices take some of the bite out of that market factor for buyers.

Large U.S. carry-in stocks partially offset concern about the high-yielding, lower protein 2016/17 HRW crop and the challenging production and quality issues in the European Union (EU). On July 25, the European Union Crop Monitoring Survey reported abundant rain fell across the EU in June and July. While the rain helped the wheat crop in some countries, it hindered harvest and caused local damage in others. In particular, France, Germany and Poland received 50 percent more rain than normal from June 1 to July 20. As a result, Strategie Grains lowered its EU soft wheat production estimate to 138 million metric tons (MMT), down 9 percent from the 2015 record crop on Aug. 11.

Not only has the rain affected production quantity, it has also hurt quality with France being the hardest hit. According to Strategie Grains data, an average of about 80 percent of French wheat production is milling quality, or roughly 30.0 MMT, in a typical year. However, total French production this year is expected to fall below 30.0 MMT. On Aug. 4, FranceAgriMer lowered its estimate for French wheat production to a 30-year low of 29.1 MMT, down 29 percent year over year, if realized.  

While EU production will be lower, the United States is currently harvesting the largest HRW crop since 2008/09. In July, USDA pegged 2016/17 U.S. HRW production at 28.1 MMT, up 25 percent from 2015/16 despite an 8 percent reduction in planted area year over year.

Preliminary test results from the USW Wheat Harvest Report on Aug. 5 show a very sound, healthy crop with high test weight (TW), above average thousand kernel weight (TKW) and below average total defects. Average TW of samples to date is 79.7 kg/hl (60.6 lb/bu) compared to the 2015 final average of 78.0 kg/hl (59.3 lb/bu). Average TKW is 31.8 grams, significantly higher than the 5-year average of 29.1 grams. Total defects are 1.3 percent, down from 1.7 percent in 2015. The average grade is #1 HRW, and average protein is 11.1 percent on a 12 percent moisture basis.

Though the average 2016/17 HRW protein is lower than normal due to very favorable growing conditions, the United States has large HRW carry-in stocks from the 2015/16 harvest, which averaged 12.4 percent protein according to the US Wheat Crop Quality Survey. This year, U.S. HRW beginning stocks totaled 12.1 MMT, compared to the 5-year average of 8.57 MMT. In 2015/16 Gulf-tributary HRW averaged slightly higher protein at 12.5 percent protein and the PNW exportable supply averaged 12.0 percent protein. U.S. 2016/17 high-protein, carry-in stocks allow U.S. exporters to meet any specification requirement. This can be seen in the year-to-date Federal Grain Inspection Service (FGIS) export inspection data. FGIS reported 45 percent of 2016/17 U.S. HRW exports were 12 percent protein or higher.



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