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U.S. Wheat eyes China market

Published on November 12, 2010 3:01AM

Last changed on December 10, 2010 6:22AM

Reps make monthly trips to advise millers and processors


Capital Press

Like many other producers around the world, U.S. wheat farmers are looking to China as a growth market.

China's demand for agricultural commodities is increasing, with soybeans and corn leading the pack.

Eventually, U.S. farmers hope their high-quality wheat will be used to supplement China's lower-quality domestic production.

As China's market opens, the value of those commodities should rise, said Matt Weimar, U.S. Wheat Associates regional vice president, based in Hong Kong.

Weimar said U.S. Wheat has the opportunity to work with Chinese government and private importers. Some of the types of wheat discussed are:

* U.S. northern spring and dark northern spring wheat with 13-14 percent protein.

* Soft white wheat in the medium protein range, 9.5-10.5 percent, to blend with domestic Chinese wheats, which tend to be medium protein and moderate gluten strength.

* Soft red winter wheat, which China's millers find suited to some traditional products and for the cracker and snack industry.

Weimar said the key to selling into China is communicating the international supply-and-demand picture. That knowledge will help Chinese buyers, when they have quota available, to take advantage of pricing opportunities.

As China steps into the market to purchase more wheat, that will boost prices, said Mike Krueger, owner of the Money Farm grain marketing advisory service in Casselton, N.D.

"Any time there's a market out there, we certainly want to capture it," he said. "Especially when it has the potential to become a rapidly increasing market."

U.S. Wheat representatives visit China each month to provide information and technical advice to millers and food processors.

"I think the next step is up to China," Krueger said. "We'll wait and see whether their demand is bigger than people anticipate it was going to be. It's already happened in soybeans, probably will happen in corn, (and is) likely to happen in wheat."

China will import 60 million metric tons of soybeans this year, with 22 million metric tons coming from the U.S. and the remainder from Brazil and Argentina, Krueger said.

While soybeans will be the dominant crop China imports, corn and wheat imports will also increase, with corn getting the second biggest dynamic effect, he said.

Weimar said China and other Asian markets desire white bran wheats of all protein levels for their traditional foods.

He said U.S. producers and U.S. Wheat need to work to determine which blends of U.S. and Chinese wheats work best.

Weimar said market development for commodities like wheat is a long-term, progressive activity, working with all participants in the market as personnel changes and quality demands change.


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