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Club wheat glut feared

Published on December 3, 2010 3:01AM

Last changed on December 31, 2010 9:42AM

Premium shrinks in face of lower overseas demand


Capital Press

After several years in which wheat industry officials worried there might not be enough club wheat to meet market demand, now comes concerns that there may be too much.

Club wheat is a single-gene wheat with a shorter, clubbed head. Primarily grown in Washington state, it is popular among customers in Japan, Thailand and Taiwan, who use it in blends of soft white wheat, typically referred to as Western White.

The Washington Grain Commission is forecasting a supply of 15 million bushels, with actual use at about 6 million bushels.

"That leaves a lot of extra club," said commission vice president Glen Squires.

The demand for club wheat is about the same or a little less than it was last year, but many farmers planted the crop because of the high premium, Squires said. Last year, club wheat garnered a premium of about $2 a bushel over soft white wheat. This year club has been getting little or no premium.

Nov. 24 bids for soft white wheat at Portland were mostly $6.35 for December delivery. Premiums for white club wheat were zero to 50 cents, mainly 17 cents a bushel.

Club wheat acres increased from 175,000 to 292,000, Squires said.

Vince Peterson, U.S. Wheat Associates vice president of overseas operations, also recently voiced concerns about club wheat during a presentation at the Washington Association of Wheat Growers annual convention.

The export market was largely unwilling to pay high club wheat premiums, or continue to do business in the same manner, Peterson said.

Due to concerns about lack of club wheat supplies and the high premiums, Japan last year reduced the amount of club wheat used in its Western White blend from 20 percent to 10 percent. Taiwan and the Philippines switched to soft white wheat instead of club wheat blends.

Japan recently returned to using a 20 percent blend again for January through March, which will provide a little more draw, Squires said.

"Japan sends a message that club wheat is important, Western White is important," he said. "That's a good message for growers."

Extra stocks of club wheat could possibly go out in smaller-percentage blends or be classified as soft white wheat, Squires said.

Commission industry representative Ty Jessup said growers are holding onto club wheat in hopes of a higher premium.

Jessup said the market would eventually straighten itself out, given roughly a year, with smaller premiums and less volatility.

"I think the exporters are able to get what they need to meet buyers' needs, but it's a fairly unique situation," Squires said. "Normally if there's a large supply, price goes down."

By January, Squires said, the commission will probably know seed sales for future club wheat plantings. Another large crop is likely, he said, which will add to the large supply.

Peterson said U.S. Wheat and the grain commission are talking about developing a club wheat trade team to visit the countries as soon as possible to restore interest.

"Those buyers found in some cases they got along pretty well with soft white wheat by itself," he said.

Soft white wheat proteins were also a little lower this year, so those customers don't necessarily have to move back to club wheat so quickly, Peterson said.

"We're going to work as hard as we can to restore these markets," he said.


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