Wheat market may be turning corner
Jan 3, 2002 12:00 PM, By Ron Smith Farm Press Editorial Staff
After four years of declining acreage in the United States, coupled with low prices, wheat may be poised for a comeback.
“Globally, stocks are declining,” said Alan Tracy, president of the U.S. Wheat Associates during the recent Texas Commodity Symposium in Amarillo. “Markets could open up where we have not sold wheat before,” he said. “But farmers need market incentives.”
Tracy said U. S. farmers count on exports for half the wheat they produce each year. “That's where our growth potential is,” he said.
And that market is changing. “Nigeria is now the number two importer of hard red winter, that's mostly U.S. wheat.”
He says association sponsored baking schools help new users, such as Nigeria, learn how to use hard red winter wheat.
He said food aid accounts for 10 percent of wheat exports. “The united States sent more than 350,000 tons of wheat to Afghanistan, even before September 11. Afghanistan has been a primary recipient of U.S. food aid.”
Tracy said fears that the grain market would collapse after the September 11 attack proved unfounded. “It did not happen, even though the United States exports more than 30 percent of our wheat to countries where the Muslim religion is dominant. We saw no fallout.”
Sales have run only slightly below last year, he said, mostly because “Egypt was finding other sources in June and July.
“We have solid prospects in Europe, where we ship a lot of high quality wheat. Exports to Europe are up 30 percent compared to last year.”
He said China's recent inclusion into the World Trade Organization also bodes well for U.S. wheat. “The Chinese recently signed a good contract to buy more wheat.”
Tracy said farmers are gaining access to “markets where we've been excluded for some time. And customers are changing. After the fall of the Berlin Wall, we saw more private enterprise involved in the wheat market. Before, governments were the big buyers. That's not the case today.”
Tracy said the United States holds a significant advantage with hard red winter wheat. “It's hard for other countries to duplicate the quality we produce,” he said. “Our HRW is far better than European wheat. It's also better than the wheat Australians grow.
“We also are excited about the potential to sell wheat to Cuba. Cuba is almost entirely an HRW market.”
Daren Coppock, CEO, National Association of Wheat Growers, NAWG, said the industry is concerned about biotechnology and karnal bunt.
“Our customers' needs come first,” he said. Consequently, customer demand will determine how rapidly the industry embraces genetically modified wheat.
“We expect to see Roundup Ready wheat launched from 2003 to 2005, probably toward the latter part of that period.”
He also expects to see changes made in karnal bunt regulations. We want it “changed to non-regulated status.
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