By Mary Kennedy
DTN Cash Grains Analyst
You don't hear much about soft white winter wheat in the central United States. But this lesser-talked-about variety of wheat gained national attention recently with the discovery of genetically modified SWW wheat plants in a Washington state field. The discovery prompted South Korea and Japan to temporarily halt imports of U.S. SWW wheat, which sent the cash price of SWW wheat falling right in the middle of harvest.
Soft white winter wheat accounts for only about 10%-15% of total U.S. wheat production and is grown in Washington, Oregon, Idaho, Michigan and New York, with the bulk grown in the western United States. In its July 2016 Wheat Outlook, USDA's Economic Research Service reported 2016 SWW production was forecast to rise 20.2% to 202.3 million bushels with a yield of 69.9 bushels per acre. Total white winter wheat production (SWW and hard white winter) for 2016 is forecast to total 223.5 million bushels compared to the estimated total production of 219 million bushels in 2015.
The Washington Grain Commission on its website states, "The predominant wheat class grown in Washington -- about 77% of the state's acreage -- is soft white. A subclass of soft white is club wheat, which is used in a blend with soft white to form the Western White blend sold primarily to those Pacific Rim customers interested in specialty products. Soft white is a low-protein wheat used in cakes, cookies (biscuits) and crackers in the U.S. and in sponge cakes, steam breads, noodles, biscuits and crackers overseas."
The latest find of genetically modified SWW wheat was reported by USDA on July 29. In a news release, USDA stated: "USDA has confirmed the discovery by a farmer of 22 genetically engineered (GE) wheat plants growing in an unplanted agricultural field in Washington state. The GE wheat in question is resistant to the herbicide glyphosate, commonly referred to as Roundup. APHIS has taken prompt and thorough action in response to this discovery and has no evidence of GE wheat in commerce."
South Korea promptly ceased purchasing white wheat from the Pacific Northwest region, and by Monday, Aug. 1, Japan followed suit. Late Friday, July 29, a PNW exporter told me that all SWW bids were pulled.
The last time GMO wheat was found growing in a field was in April 2013. After that find, Japan ceased buying western white wheat from the Pacific Northwest for four months, which created uncertainty and low prices for growers in Oregon, Washington and Idaho. Japan imports about 60% of its wheat from the U.S. on an annual basis, and about 800,000 metric tons of that is SWW.
This news is bad at any time, of course, but SWW harvest has started and is moving along at a good pace. SWW cash prices were fading before the announcement due to the large yields being reported, but after bids were pulled Friday, they reappeared and cash prices were down 25-31 cents per bushel on Monday.
Joseph Anderson, an Idaho farmer and Idaho Wheat Commissioner, told me: "The wheat harvest in north Idaho is just getting underway. Yields look to be above average, due to low stresses during the growing season and good rainfall. Most of the wheat-producing areas of the world are anticipating good crops, and stocks, as you know, are up worldwide. A large HRW harvest, while not competing directly for the same customers, is bearish for our SWW price too."
Anderson, whose farm is 20 miles north of Lewiston, Idaho, told me that "90% of the soft white wheat class in the Northern tier of Idaho is shipped down the Columbia River system, and exported, mainly to the Pacific Rim but also elsewhere in the world.
"Farmer selling is light to nonexistent at these prices, as we are busy harvesting, added Anderson "and we are still in shock at prices we haven't seen in years."
It is likely that bins will fill to the brim for now until farmers run out of storage and have to find a home for their bountiful harvest.
The latest news on foreign buyers is both good and bad. On Aug. 5, Dow Jones reported that South Korea had ended its brief suspension of new purchases of U.S.-grown wheat and will continue testing grain for GMO content as it has done for three years. Japan, on the other hand, has not lifted its ban, and sources in the PNW told me they have stopped buying spring wheat as well, possibly for one month. So, the GMO saga continues to linger out west, once again creating uncertainty for growers.
Mary Kennedy can be reached at [email protected]
Follow Mary Kennedy on Twitter @MaryCKenn
(AG/CZ)
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