A Northwest grain handler predicts overseas demand for flour made from the region's flagship wheat variety could decline, but others in the industry say the market appears to be stable in the face of uncertainty caused by the COVID-19 virus.
Most overseas buyers purchase wheat three to six months in advance, but have halted buying for June, said Jordan Van Zante, board member of the Oregon Wheat Commission and a Portland grain handler.
According to wheat customers, flour demand in the Philippines is down roughly 50%, Van Zante said, while Japan's Ministry of Agriculture, Forestry and Fisheries considers the confectionary cookies made from western white wheat to be "nonessential" items.
That could potentially mean less demand for western white wheat, Van Zante said. But Japan buys its wheat supplies fairly far out in advance, he said, so the impact may not be felt right away.
"In general we're seeing demand down, and it's just a big question of, When does it come back up?" Van Zante said. "And what will the appetite be once they do come back up?"
Western white wheat is a blend of soft white wheat and club wheat, a subclass of soft white wheat named for its "clubbed" appearance. Both are grown in the Pacific Northwest.
However, other factors may also come into play, he said.
China could purchase more wheat under its new trade deal with the U.S., which may offset some "slowness" elsewhere in the marketplace, but "that's a big unknown," Van Zante said.
"It's really hard to define the slowness," he said. "It may be OK at the end of the day, people still have got to eat. It's not like you're just going to lose it and it's going to disappear. I think it could ramp back up on the back end."
Also a concern is the currency exchange rate.
For example, the Indonesian rupee is down 20% against the U.S. dollar. That means buyers in Indonesia now need 20% more cash to buy U.S. wheat.
In addition, the Philippine peso is down 9% against the U.S. dollar and the Thai baht is down 4.5%.
"Those are pretty big moves in currencies that you don't see every day and can cause some cash liquidity tightness," Van Zante said.
Overall, though, demand for U.S. wheat seems stable, said Steve Mercer, vice president of communications for U.S. Wheat Associates, the overseas marketing arm for the industry.
Japan's soft white wheat imports are down about 17.6% compared to last year, 151,000 tons less, said Glen Squires, CEO of the Washington Grain Commission.
Indonesia's purchases are also down, as the nation buys more wheat from the competing Black Sea region, he said.
But "everyone else is up," Squires said, pointing to the Philippines, Sri Lanka, Thailand and Vietnam, which are up about 10%.
Overall, however, exports are down 5%, mostly due to Indonesia purchasing wheat elsewhere, Squires said.
In December, before the trade deal, China bought about 131,000 tons of western white wheat, Squires said.
"We're hoping wheat and flour demand remains on this growth pattern," Squires said. "It has been growing."
China could "easily" offset lower demand elsewhere, he said.
"The whole COVID thing, it's created a lot of uncertainty everywhere, even U.S. domestic," Squires said.
"It's not like it's rocketing up, but it seems to be putting upward pressure on price, or at least holding it," he said.
In the meantime, trade visits scheduled for April and May have been postponed. Squires said a trade team visit from the Philippines in the summer is still expected.