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.)
–
–
–
–
–
–
–
–
–
–
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
–
–
–
–
–
–
–
–
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%
–
–
–
–
–
–
–
–
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
–
–
–
–
–
–
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
–
–
–
–
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%
–
–
–
–
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…