U.S. HRS & Northern Durum Quality, Value, Access

Transcription

1 U.S. HRS & Northern Durum Quality, Value, Access U.S. Wheat Associates Latin American Buyers Conference July 2018 Neal Fisher, Administrator N.D. Wheat Commission

2 U.S. HARD RED SPRING WHEAT DNS Wheat Second largest class produced in the U.S. (Northern areas) Known for: High protein content High vitreous kernel levels Dough strength and high water absorption Large loaf volume Planted in late March-May Harvested in Aug-September Typically used as blending wheat Increase protein content and improve protein quality Specialty bread products and Asian noodles

3 73% U.S. HRS PRODUCTION REGION / EXPORT PATH 10% 2% 15%

4 Average Share of Production by State/Region 5 Yr. Avg Production : 14.2 Million Metric Tons (2% of Global Wheat 750 MMT) 4% Washington Oregon Idaho 18% Montana 52% North Dakota South Dakota 14% Minnesota 12%

5 Recent Trends Planted area has ranged from 4.7 to 5.7 million hectares last ten years Still predominant crop for most producers in the region Competition from corn, soybeans, canola, etc. Agronomics, economics, quality pricing Yields continue to trend higher Farming practices, crop rotation, genetics & weather (except 2017) Profit margins tight for many crops, just at or below the cost of production. Little direct government support for producers, primarily crop insurance

6 HRS Region Dry in April

7 HRS Impact Issues Demand base driving need for higher quality wheat Customers willing to pay premiums Refrigerated and Frozen dough products Whole wheat Clean labels Greater consistency in and between shipments World wheat production expands, but % of higher protein, higher quality wheat shrinks

8 2018 U.S. HRS Situation Greater planted area USDA June estimate is 5.3 Hectares, up 20 % HRS gained acres from durum, corn and pulse crops Current yield prospects very favorable Cautions Subsoil moisture short Extended hot, dry weather could impact final yields Final crop not determined until late summer - promising prospects thus far

9 2018 U.S. HRS Situation Expect greater volume of exports in 2018 Prices will reflect larger HRS potential Continued growth in sales to South Asian region Better crop prospects, more aggressive sales producers/exporters Domestic mill demand for HRS tempered by higher protein U.S. HRW Market situation for higher protein, high enduse quality wheat will remain relatively tight

10 U.S. SPRING WHEAT PLANTINGS & PRODUCTION Million Hectares 8 Planted Harvested Production Million Tons * Typically includes million tons of white spring wheat. Source: USDA July 2018

11 U.S. HARD RED SPRING SUPPLY & DEMAND Million Tons Projected Change Beg Stocks % Production % Imports % Tot Supply % Dom Use % Exports % Tot Use % End Stocks % S/U Ratio 37% 49% 41% 38% 52% Source: USDA July 2018 NDWC unofficial

12 Who Buys U.S. HRS wheat? USA 52% Europe 3% Middle East 2% North Asia 18% Latin America 10% Sub-Saharan Africa 1% South Asia 14%

13 Prj U.S. HRS ANNUAL DEMAND (Export / Domestic) Million Tons Export Domestic use Million Bushels Source: USDA July 2018

14 TOP IMPORTERS OF U.S. HRS IN MARKETING YEAR Million Bushels Million Ton USDA Export Inspections Xldata/Both/Exports/Top 10 & 5 yr avg

15 EXPORT TRENDS BY REGION U.S. Hard Red Spring Wheat Million Bushels Million Tons /14 14/15 15/ Europe Africa/Mid East C. & S. America Asia 0.0

16 HISTORICAL U.S. HRS YIELDS Bushels Per Acre Annual (Drought) Linear (Annual) (Late Pltg)) (Drought)

17 U.S. HARD RED SPRING Quality Trends Recent crops have produced excellent grades, with little to no impact from Fusarium Protein levels up the past 3 crop years, averaging above 14% on a 12% moisture basis. End use performance Generally good performing crops. Dough stabilities improving past few years, thanks to some new varieties. Dough stability averaging 10 minutes for total crop Overall bake performance, water absorption and loaf volume still best available in international market

18 HRS: Grade Distribution 3% 5% % 4% 92% 91% 0% 20% 40% 60% 80% 100%

19 Percent U.S. HRS: Crop Avg Protein Content (12% Moisture Basis) Crop Year

20 Pounds/bushel U.S. HRS: Crop Avg Test Weight Crop Year

21 Minutes 15 U.S. HRS: Dough Stability Farinograph Results PEAK STABILITY In recent years dough strength has been weaker than traditional levels, but have held a more consistent range 9 to 13 minutes Seven to ten years ago, crop average stability times, much stronger to 22 minutes but also more variable Goal to get back to minutes

22 Percent U.S. HRS: Crop Avg Farinograph Absorption

23 HRS Impact Issues over past years Fusarium and disease pressures primary concern 1993 to mid 2000 Increased competition for planted area alternate crops Corn, soybeans, canola, pulses, specialty crops Increased pressure on cultivar development program to increase yield potential and disease resistance for wheat to compete Shuttle facilities have become dominant means of delivering to export points Trend toward tighter quality specs and residue testing have increased the quality risk in wheat versus other crops as producers choose crops to plant

24 HRS Impact Issues over past years Demand base driving need for higher quality wheat Customers willing to pay premiums Increased emphasis on Refrigerated and Frozen dough products, Whole wheat products, Clean labels Greater consistency in and between shipments World wheat production expanding (Black Sea), but percent of higher protein, higher quality wheat shrinking

25 Ongoing Quality Improvement Efforts Developed Quality Targets for cultivar development programs Input from both domestic and international customers of Hard Red Spring wheat Development of Preferred Cultivar list for HRS region Challenge is broad growing region Different cultivars required regionally due to difference in pest and disease pressures, local environmental realities

26 U.S. HARD RED SPRING Quality Target Values 1. Values are targets - tools to help the breeder/cultivar developer meet the end-use quality needs in both domestic and export markets 2. Target values are what we expect from experimental cultivars in development after several years of testing at several locations 3. Targets routinely reviewed as market needs change Updated on June 14, Adoption of breeding targets essential to providing better uniformity and consistency in commercial crop

27 HRS Preferred Cultivar List Grouping of cultivars based on evaluation against contemporaries at same locations, and weighted. Seven factors used. Weighted Quality Scores Test Weight 5% DHV 5% Milling Extraction 5% Kernel Protein 20% Farinograph Stability 20% Farinograph Absorption 20% Loaf Volume 25%

28 6/1/15 8/23/15 11/14/15 2/5/16 4/28/16 7/20/16 10/11/16 1/2/17 3/26/17 6/17/17 9/8/17 11/30/17 2/21/18 5/15/18 Average N.D. Hard Red Spring and Durum Wheat Producer Bids $ per Bushel $ % HRS DURUM $ per Ton $331 $6.00 $220 $3.00 $110 Source: AgWeek weekly prices 6/11/18

29 15-Jun Oct Feb 16-Jun Oct Feb 17-Jun Oct Feb 18-Jun U. S. FUTURES TRENDS Minneapolis Hard Red Spring Kansas City Hard Red Winter Chicago Soft Red Winter World prices $ per Bushel $9.00 MGE KCBOT CBOT $ per Ton $ $6.00 $ $3.00 $ /16/18

30 Summary 2018 HRS crop off to a promising start after some concerns due to late planting and dry conditions Crop has potential, but requires favorable weather for next 6-8 weeks yield and quality development Prices have been on a downtrend in the last month, which is beneficial for buyers, but can affect producer marketing and future planted acreage Important to watch in Black Sea, Australia, and Canada Trade issues will be watched closely by the markets

31 U.S. HRS Proven track record of providing quality wheat to customers Addressing current concerns Building a strong future for you our customers and producers

32 U.S. WHEAT PRODUCTION REGIONS / CLASSES Durum Durum Hard Red Winter Hard Red Spring Soft White Hard White Soft Red Winter Durum

33 2018 U.S. Northern Durum Lower planted area USDA estimate is 0.76 Million hectares, down 18 % Not competitive with HRS insufficient price premium Disease resistance lacking FHB still a problem Yields and production expected to increase in 2018 Current crop ratings quite good favorable conditions much improved soil moisture

34 U.S. DURUM WHEAT PLANTINGS & PRODUCTION Million Hectares Million Tons 2.0 Planted Harvested Production Source: USDA July

35 U.S. DURUM SUPPLY & DEMAND Million Tons Proj Change Beg Stocks % Production % Imports % Tot Supply % Dom Use % Exports % Tot Use % End Stocks % S/U Ratio 20% 26% 24% 29% 34% 37% Source: USDA July

36 U.S. Northern Durum Demand & Quality Trends International durum demand has proven challenging for durum exporting countries due to large domestic crops in North Africa and large crops in the EU (Primary import regions) Recent cultivars show high yield potential, strong gluten and very good color scores Strong gluten index and pasta cooking properties

37 THANK YOU QUESTIONS?