Value trumps volume in wheat sales, Oades says

by Ron Sterk
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KANSAS CITY — As private buyers have replaced government purchasing of wheat over the past several years, value has become the main driver in wheat exports, said John Oades, vice-president and director, U.S. Wheat Associates.

There was a time when 70% to 75% of wheat exports were purchased by governments, but now 70% to 75% of the business is done by private buyers, Mr. Oades told about 120 public and private plant breeders, researchers and other industry representatives gathered at the Wheat Quality Council’s annual meeting in Kansas City on Feb. 18. Area specific crop data also has become important over the past 30 years because it better serves export customers, he said.

"In the future we have to think about how we define wheat classes to get value," Mr. Oades said. "Functionality will grow in importance. There will be continuing customer sophistication, market customization and globalization.

"Transgenic (bioengineered) wheat is coming."

While U.S. producers accepted it about three years ago, key importers remain resistant, he said. The change is needed for wheat to be more competitive with corn and soybeans, which have seen significant gains from genetics. As salt and drought tolerant varieties are developed and wheat yields are improved by genetics, global export competition will increase as more areas of the world are able to grow wheat and current exporters grow more wheat, he noted.

Mr. Oades, a prominent figure in the wheat industry for more than 20 years, said he will go half time at U.S. Wheat on July 1 and retire a year later. Steven Wirsching, currently deputy director, will take over the West coast office of U.S. Wheat in place of Mr. Oades on May 1.

Events at the W.Q.C. meeting were routine, compared with last year when soaring wheat prices were a major topic. Prices were near record levels for all classes of wheat a year ago, while recent values were down 50% to 70% below those levels.

Lack of research funds frustrates

Some disappointment was expressed about the lack of funding for agricultural research, and wheat research specifically, provided in the recent stimulus package. The U.S. Department of Agriculture received no additional funds for research after the House took out $50 million initially targeted for such projects, one participant said.

Jackie Rudd, associate professor of Texas AgriLife Research at Texas A&M University, listed National Wheat Improvement Committee priorities as the cereal rust initiative, day-to-day operations and facility upgrades for regional wheat quality laboratories and funding for genotyping laboratories.

Jane DeMarchi, director of government relations for the North American Millers’ Association, said there were $1 billion in overall requests for only $176 million designated for upgrading of facilities in the stimulus package.

There was good interest in Washington for the rust initiative, she said, but "it’s going to be tough" to get funding for other priorities.

Participants at the meeting indicated no major disease threats to domestic wheat, although globally the UG99 strain of stem rust had spread from Kenya to the Middle East and was being closely monitored. Most U.S. wheat varieties are susceptible to UG99, but it was treatable with fungicides, participants said.

Crop reports mostly routine

Participants at the meeting provided crop updates for hard red winter and soft winter wheat, as well as preliminary ideas about spring wheat conditions.

Crop conditions for hard red winter wheat were mixed after a good start in most areas last fall, participants from major producing states said. Mr. Rudd said Texas High Plains wheat got a good start last fall but has been slowly going downhill, although the area still may have an average crop depending on spring rains. But it was "too late" for the crop in central and southern parts of Texas, he said. Wheat stands in Oklahoma don’t look as good as last fall, Keith Kisling, secretary-treasurer of the Oklahoma Wheat Commission, said, and "the next two to three weeks will make a big difference."

In the soft winter wheat areas, some farmers that typically double crop wheat and soybeans opted to avoid the input costs of wheat last fall and will instead plant full season soybeans, said Carl Griffey, professor of crop and soil environmental science at Virginia Tech University.

And although spring wheat has yet to be planted, record snowfall in some areas of the Upper Midwest has replenished low moisture levels, which should be good for the crop once it is planted, participants said. But it’s also possible a cool, wet spring coupled with the added moisture from winter snow may result in a late start to planting, they said.

Quality reports for hard red winter, hard red spring and soft winter wheat also were presented at the meeting. Most reports were routine, although some participants said the 14.3% average protein reported for the hard red spring crop was too high, with some indicating it was closer to 13.8% on average.

Jim Peterson, North Dakota Wheat Commission chairman, said there was a wide distribution of protein levels in the 2008 spring wheat crop, with lower levels in the eastern part of the region where yields were high and higher protein levels in the west where the crop was stressed by lack of moisture. He indicated farmers still may be holding more of the higher protein wheat.

This article can also be found in the digital edition of Milling and Baking News, February 24, 2008, starting on Page 27. Click here to search that archive.

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