Sunday, April 19, 1998

South Asia continues to be a growing market for U.S. wheat

By J.T. SMITH / Abilene Reporter-News

Good moisture in the Abilene area has paved the way for possibly another good wheat harvest this spring.

Although extremely late, the 1997 wheat harvest in the Abilene region was a bumper one when the grain finally made the trip to the elevator.

Area wheat -- which has a dual purpose of grain and grazing -- already provided winter forage for some stocker cattle.

In fact, the 1998 crop has progressed at a rapid pace during April's warm days with hot, strong winds.

For wheat that wasn't grazed out, farmers now wait for the 1998 crop to ripen for grain harvest.

Emory P. Boring III, veteran Texas A&M Extension entomologist, reports that wheat across the Rolling Plains has been growing extremely fast because of the unseasonally mild winter -- coupled with the moisture.

Boring also has found only light pressure from insect pests in wheat -- for the most part -- in both March and April.

Texas wheat producers expect to harvest 125 million bushels this year -- some 5 percent above a very good 1997 crop and 66 percent above both the 1996 and 1995 crops.

As of April, the statewide condition of the wheat crop was rated at 76 percent of normal, said Doug Beirstedt of the Texas Agricultural Statistics Service.

Texas is the only state that makes an April estimate for hard red winter wheat production.

The first national wheat forecast won't come until May 12.

Growing grain is one thing. Selling it is quite another matter.

But there are some highly promising signs in the global marketplace for U.S. wheat.

Vietnam could be in the market again

South Asia was an important market for wheat from the United States in 1997.

U.S. Wheat Associates (USW) reports that Pakistan and the Philippines were the fourth and fifth largest market for U.S. wheat, respectively, last year.

Pakistan imported 1.97 million metric tons, while the Philippines bought 1.88 million tons.

Vietnam was the big news in South Asia.

"Vietnam has the potential to be an important market," notes Billy Vinson, chairman of the Texas Wheat Producers Board, Abilene. "We already are shipping wheat there."

During 1997, Vietnam made its first purchase of U.S. wheat since the United States lifted its 19-year trade embargo in 1994.

The wheat was acquired by a Vietnamese flour mill, which bought 5,000 tons hard red spring wheat and another 5,000 tons of hard red winter wheat.

At mid-year, Vietnamese mill representatives participated in a USW Buyers' Conference in Singapore. This was one of many activities conducted by USW/Singapore during recent years to pave the way for U.S. wheat purchases by Vietnam.

Vinson says the USW sees the U.S. wheat purchase by Vietnam as just a start. The export development organization feels Vietnam could become a million-metric-ton wheat customer in just the next few years.

The Philippines -- despite being heavily courted by Canadian wheat interests -- have remained loyal to the United States.

Even when Canada was offering lucrative discounts for its wheat, five of the Philippines' 12 flour millers continued buying U.S. wheat long after other millers found it unprofitable to do so.

The USW in Manila credits its extensive trade servicing and technical assistance programs as the key in securing such a level of customer loyalty.

One of USW's most successful efforts in the Philippines has been upgrading the technology level of bakers and other flour end users.

Training programs by USW, along with in-plant visits and consulting -- and sponsored attendance at expsositions -- all have assisted in this effot.

The interest in the latest technology by bakers in the Philippines is clear. By 1996, the country had become the third-largest market for U.S. baking machinery and the single largest market in Asia.

South American market looks brighter too

The U.S. Wheat Associates in Santiago, Chile scored a major victory when the Chilean Phytosanitary Authority (SAG) announced it would again accept U.S. wheat.

This lifted a 19-month halt of U.S. wheat imports by Chile. The Chilean government had stopped taking U.S. wheat in 1996 after some isolated cases of Karnal bunt were reported in some U.S. wheat.

Future shipments to Chile carry a label indicating the wheat comes from from areas that have been certified free of Karnal bunt.

The lifting of the ban on U.S. wheat resulted from work by USW, USDA and Chilean flour millers.

North American Free Trade Agreement

Exports of wheat from the United States to Mexico continued to increase during the past marketing year.

Wheat imports by Mexico totaled 1-1/2 million tons, up from just more than 1 million tons a year earlier.

The North American Free Trade Agreement (NAFTA) was at least responsible for some of the increase.

NAFTA is a tri-lateral trade agreement among Mexico, the United States and Canada.

In addition, the USW recloated its regional office from Panama to Mexico City to have a better vantage point in bringing about future market growth in that region.

In the Caribbean, the USW has built strong relations with the Caribbean Miller's Association (CMA).

Over the past three years, USW has participated in many events with CMA. For example, a one-week pasta seminar in 1997 was attended by 50 pasta manufacturers from 13 Latin American and Caribbean countries.

The Middle East remains key wheat market

Egypt was the second leading market for U.S. wheat for the past marketing year.

Some 2.83 million metric tons of U.S. wheat were imported by Egypt.

"Egypt is one of our best wheat markets," Vinson observes.

USW in Cairo reports that its "American Quality Wheat Seal" campaign had at least some influence on the purchases.

A specific example was the purchase 350,000 metric tons of U.S. hard red winter wheat by four private Egytian million organizations.

The four mills participated in USW's quality seal partner program, which obligates them to use at least 70 percent American wheat.

Beyond the partnership, television and print adverstising of American wheat products also has been a boon to sales.

Other markets will get attention

USW will continue to focus attention in the European region, including the countries of the former Soviet Union.

The former Soviet country of Georgia already has made some purchases of hard red winter wheat.

North African and Sub-Shaharan African regions also will see stepped up work by USW in the market developments for U.S. wheat.

China certainly has not gone unnoticed.

"China has a big impact on the (wheat) market," Vinson says.

During 1997, USW consultant visits and trade serving to foreign-invested mills helped improve the image of U.S. wheat.

The USW also sponsored trade teams from China who got to see first-hand the grain inspection procedures in the United States.

Japan remains top customer of U.S. wheat

Japan led all countries as the top importer of U.S. wheat at 3.26 million tons the past season.

Also in from North Asian region, Korea and Taiwan also were among the world's top 10 importers of U.S. wheat 1.65 million and 865,200 metric tons respectively.

The Japanese are highly demanding consumers.

USW has cooperated with Japan in efforts to improve the cleanliness of U.S. wheat.

Ever since 1994, USW has been working steadily with the Japanese Food Agency to help U.S. wheat meet Japan's increasingly tough standards for cleanliness in grain.

Nowadays, the U.S. wheat is -- indeed -- much cleaner than before, and Japanese flour millers are more pleased with the quality of wheat from the United States.

Exports are key to market improvement

Vinson says these export markets are key to to improving the market and price for U.S. wheat producers.

A big step in helping wheat growers would be to restore the USDA Export Enhancement Program, Vinson says.

In addition, those policymakers with any influence in Washington should work to obtain GSM-102 funds for selling wheat, the Taylor County wheat grower notes.

There's much work to be done, Vinson assures.

"Wheat is lower in price than it has been in four years," Vinson notes. "It's kind of disheartening right now."

At mid-April, area wheat was worth about $2.75 to $2.85 per bushel in the Abilene region depending on the location and grain elevator.

But Vinson adds that consumers shouldn't expect to see a corresponding decrease in the price of a loaf of bread.

How can that be? Just consider that the bread wrapper costs more than what the farmer gets for the wheat.

Vinson says a bushel of wheat will make 70 loaves of bread. At $2.75 per bushel, the farmer gets slightly less than four cents from a loaf of bread.

The wrapper?

It cost about a dime.