Wheat Quality-Export Market-John Oades, USW

Report
Wheat Quality Needs In
The Export Market
North Dakota Wheat Commission
County Representatives Meeting
December 7, 2010
John Oades, Vice President
U.S. Wheat Associates
Serving Your International Customers
• As wheat growers you know the
importance of your international customer
base
– On average 57% of U.S. HRS production is
exported annually
• Average HRS production is 13.0 MMT (478 mb)
annually
• Average HRS exports are 7.42 MMT (273 mb) annually
Columbia Grain
Wheat Movement to Export
• HRS wheat moves to export by truck, rail
and barge
35 tons
1,500 tons/barge
Shuttle train: 11,000 tons
HRS Exports Movements
• HRS exports: By mode and location
Duluth, 13%
Superior
St. Law.
.
Portland
5%
Exports
7.42 MMT
annually
57%
Interior
5%
Rail
Huston,
Galveston
Barge/Laker
New Orleans
20%
Knowing Your Export Customers
• In a typical year HRS exports will go to
more than 150 buyers in 30 countries
– Question: Buyers on which continent import
the most HRS wheat?
• Answer: Asia (about 55% of HRS exports)
– Question: Which country is consistently the
largest (#1) HRS wheat importer?
• Answer: Japan (1.59 MMT or 59 mb)
– Question: Which group of countries is
generally the #2 buyer of HRS wheat?
• Answer: The EU-27* (962 TMT or 36 mb)
*Primarily Italy, Spain and the UK
Knowing Your Export Customers
• Our Top 10 HRS Customers (5 yr. avg.)
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Japan:
1.59 MMT (59 mb)
European Un: 962 TMT (36 mb)
Philippines:
950 TMT (35 mb)
Taiwan:
555 TMT (20 mb)
Venezuela:
440 TMT (16 mb)
Korea:
384 TMT (14 mb)
Mexico:
298 TMT (11 mb)
Thailand:
225 TMT (8 mb)
Dominican Rep: 178 TMT (6 mb)
Indonesia:
132 TMT (5 MB)
Knowing Your Competition
• Your primary HRS competitors are:
– Canada (CWRS)
– Australia (APH)
– Kazakhstan (?)
• World markets are extremely competitive
– Price, Quality and Service drive the market
– Customers want VALUE: The best possible
quality and service for the price paid
– We are frequently “price challenged”
• We therefore must provide superior quality and
service to compensate for our higher prices
Customer Quality Demands
• Customers control quality through their
contract specifications
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U.S. grade
Wheat class/subclass
Protein
Moisture
Dockage
Falling number
Vomitoxin
Other (some non FGIS)
• Quality & quantity assurance provided by
USDA/FGIS at the export elevator
Customer Quality Demands- HRS
• U.S. grade:
– Most customers buy U.S. #2 or better
– A few customers buy exclusively U.S. #1
– Many customers contract for “above grade” quality
on individual grade factors
• Test weight above the #2 grade limit of 57 lbs/bu
• Damaged kernels below the #2 grade limit of 4%
• Shrunken & broken kernels below #2 limit of 5%
• Wheat class & subclass:
– Most customers buy NS/DNS (min. 25% DHV)
– Some buy exclusively DNS (min. 75% DHV)
– Many define a specific DHV minimum:
• Minimum 50%, 55%, 60% or 65% DHV
Customer Quality Demands- HRS
• Protein (12% moisture basis)
– Most customers buy minimum 14% protein
– Some buy as high as 15%
– A few buy as low as 13%, usually in low
protein years (like last year and this year)
• Moisture (lower moisture = higher value)
– Most customers specify maximum 13.5%
– Some specify as low as 12%
– Several are considering “price
incentive/scale” specifications for lower
moisture
Customer Quality Demands- HRS
• Dockage (non wheat material)
– Dockage specifications vary greatly based on
customer view of value and wheat cleaning
capability at the exporting elevator
• The Lakes and PNW export elevators have wheat
cleaning capacity permitting specifications as low as
maximum 0.3%
• Gulf of Mexico elevators do not have wheat cleaning
capacity, thus HRS dockage specs range from 0.8 to 1%
• Falling Number (control for sprout damage)
– Most customers spec between 300 & 350 seconds
minimum
– A few will take lower FN’s around 250 seconds
Customer Quality Demands- HRS
• Vomitoxin
– Most customers spec maximum 2 ppm Vomitoxin
– Some spec less, as low as maximum 0.8 ppm
• Other:
– Limit pesticide residues
– Limit mycotoxins (Zearalenone, Ochratoxin)
– Phyto-sanitary limitations: plant diseases, weed
seeds and insects
– Thousand kernel weight minimum
– Gluten functionality requirements (more to come)
• Farinograph values
• Alveograph values
• Wet gluten &/or gluten index
Japanese Quality Specifications- HRS
– Class/subclass: NS/DNS
– Grade: U.S. #2 or better
• Sprout damage: Average not to exceed 0.3% with no sublot
above 0.5%
• Scab damage: Average not to exceed 0.0%
• Heat damage: Average not to exceed 0.0%, no sublot above
0.2%
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Protein: Minimum 14.0%
Moisture: Average not to exceed 13.5%
Dockage: Maximum 0.3% (non deductible)
Falling number: Minimum 330 per sublot
Vomitoxin: Maximum 1.1 ppm (at loading 0.8 ppm)
Treated seeds: No treated seeds
Ergot: Average not to exceed 0.04%
Residues: ppm limits on 229 chemical compounds
Italian Quality Specifications- HRS
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Class/subclass: NS/DNS
Grade: U.S. #2 or better
Protein: No sublot below 14.0%*
Moisture: Maximum 13.0%
Falling number: Minimum 300
Vomitoxin: Maximum 1.0 ppm
*This year taking mostly 13.5%
Taiwan Quality Specifications- HRS
− Class/subclass: DNS
− Grade: U.S. #1
• Sprout damage: Maximum 0.5%
− Protein: Minimum 14.0%, and some minimum 14.5%*
− Moisture: Maximum 13.0%
− Dockage: Maximum 0.3%,
• Discounts apply: Dockage content 0.01-0.2% = 1:1discount
Dockage content 0.21-0.3% = 2:1 discount
• Ocean freight on dockage content to be reimbursed
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Fall number: Minimum 300 sublot average basis
Vomitoxin: Maximum 2 ppm
Aflatoxin: Maximum 15 ppb
Residues: ppm limits on 38 chemical compounds
* This year taking some NS/13 in-lieu of HRW/13
Venezuela Quality Specifications- HRS
– Class/subclass: NS/DNS
– Grade: U.S. Grade #2 or better
• Sprout damage: Maximum 0.5%
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Protein: Minimum 13.5%, and minimum 14.0%*
Moisture: Maximum 13.5%
Dockage: Maximum 1.0%, all deductible
Falling number: Minimum 300 sublot average
basis
– Vomitoxin: Maximum 4 ppm
*This year taking 13.5%
HRS Protein- 2010 Crop
• HRS ‘10 crop average protein 13.7%
– ND ‘10 crop average protein 13.9% (13.0% LY)
• HRS five year crop average protein 14.2%
– ND five year average protein 14.2%
• Export demand is mostly 14% and higher
• Recent export market prices
PNW
Gulf
NS/DNS 13.0 @ $392/MT $343/MT ($10.67, $9.32/bu)
NS/DNS 13.5 @ $403/MT $357/MT ($10.97, $9.72/bu)
NS/DNS 14.0 @ $440/MT $383/MT ($11.97, $10.42/bu)
It’s All About VALUE
• NDWC efforts in promoting quality in varietal
development and production are appreciated
– Several states have developed “Recommended
Variety List” based on wheat quality
• Ratings based on multi year, multi location data
– Growers are encouraged to select the best quality
varieties from among those that are their top
agronomic performers
– This helps improve the overall quality of the crop
without giving up yield
• Thereby increasing Value to the customer
Varieties That Make Money & Market
GROWN & TESTED ACROSS NORTH DAKOTA – QUALITY & END-USE FACTORS *
Quality Factors5
Ed-Use7
Test
Weight
LB/BU
Test
Wheat
KG/HL
Wheat
Protein %
Wheat
Falling #
Seconds
Farinogram
Stability
(Min)
Absorption
%
Loaf
Volume CC
Gluten Strength
Description7
Mill & Bake
Quality Rating8
Alsen
60.2
79.2
15.4
387
11.4
65.8
1009
traditional strong

Barlow
61.3
80.6
14.8
394
10.0
68.8
1000
traditional strong

Breaker
61.8
81.3
15.1
407
18.1
66.9
1039
traditional strong

Briggs
60.5
79.6
15.0
457
11.3
66.9
964
mellow

Faller
59.1
77.8
14.4
392
10.4
64.4
1013
mellow

Freyr
60.2
79.2
14.7
462
12.9
67.4
1003
traditional strong

Glenn
62.4
82.0
15.4
375
14.6
65.9
1056
traditional strong

Howard
59.8
78.7
14.9
404
10.4
66.1
1003
traditional strong

Kelby
61.1
80.4
15.3
398
9.0
67.6
966
mellow

RB07
60.4
79.5
14.7
397
17.9
66.0
1054
traditional strong

Reeder
60.1
79.1
15.3
408
9.5
65.3
968
mellow

Steele-ND
59.7
78.6
15.0
404
10.3
66.5
993
traditional strong

Vantage
62.3
81.9
16.1
351
14.4
67.3
1011
traditional strong

Variety
* 2010 U.S. HRS Regional Quality Report
Future: Marketing Functional Quality
• Currently proxies are used to represent
functional quality: (dough mix properties)
– Wheat class, protein, DHV
– Current functionality tests to slow and complex
• FGIS is working on rapid technology that
will directly measure gluten functionality
– Gluten strength/extensibility
• If the GCA is approved for
“official criteria” (optional) use:
– Customers could buy specific
functional quality
– You could be paid for that quality
Gluten Core Analyzer
U.S. Wheat
The World’s Most Reliable Choice
It all begins with you…

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