February 23, 2004

China's US Spring Wheat Buys Largest In 12 Years
 
China's purchases of U.S. hard red spring wheat have reached nearly 11 million bushels in the 2003-04 marketing year, the largest since 1991-92 and a huge jump from 1.7 million bushels last year, said the North Dakota Wheat Commission in a press release Friday.
 
The organization issued the press release after the U.S. Department of Agriculture confirmed through its daily sales announcement Friday that 50,000 tons of HRS wheat had been sold to China for each of the 2003-04 and 2004-05 marketing years.
 
The deals are important business for North Dakota farmers, who lead the nation in the production of HRS wheat, said NDWC.
 
The majority of the U.S. HRS wheat sales have been to the China National Cereals, Oils and Foodstuffs Import & Export Corporation, known as Cofco. Nearly three million bushels of U.S. spring wheat have also been sold to independent buyers in China. Another 2.6 million bushels of hard red spring are already on contract to Cofco for export during the 2004-05 marketing year.
 
A Cofco delegation is on a whirlwind tour of the U.S. this week with stops in Washington, D.C, Chicago and Portland, Ore. The delegation has been meeting with representatives of U.S. Wheat Associates, state wheat commissions and the grain trade.
 
NDWC Administrator Neal Fisher, who was meeting with representatives of China's government grain-buying agency in Portland Friday, states: "In previous decades, when China purchased wheat from the United States, price was given far greater consideration than quality, so they tended to purchase large quantities of hard and soft red winter wheat."
 
Now, as China's economy is becoming more market-driven, he says there are more opportunities to sell spring wheat from North Dakota and Montana. Milling companies can blend U.S. spring wheat with the lower protein wheat grown in China to improve processing characteristics and end-product quality, said the release.
 
U.S. Wheat Commission staff credit China's interest in HRS wheat to the good quality of the 2003 crop and a 2001 Quality Sample Program used to promote U.S. spring wheat in the China market.
 
Many milling companies were previously not familiar with the quality of U.S. spring wheat exportable from the Pacific Northwest. In the 1980s and early 1990s, when China had high imports of wheat, U.S. spring wheat shipped from the Gulf of Mexico.
 
In order to improve mills' perceptions of U.S. quality, the U.S. Wheat Commission office in china provided samples of high protein Dark Northern Spring and Northern Spring wheat, the news release said. After the samples were milled, two promotional seminars helped introduce milling companies and decision-makers to these sub-classes of U.S. hard red spring wheat, the release said.
 
Last October, a delegation representing five leading flour mills in China visited western North Dakota to gather more first-hand information.
 
The quality samples and customer service paid off, said the NDWC. In autumn 2003, just before China's domestic wheat prices began rising to match international market values, a group of mills put together a shipload of DNS 14.5 protein. Companies expressed satisfaction with the quality. This was the second time a group of mills used their tariff-rate quota allocation to purchase U.S. spring wheat under China's accession agreement to the World Trade Organization.
 
The U.S. Wheat Commission recently learned from trade servicing visits with flour mills in China's southern Guangdong province that DNS wheat with 14.5 percent protein is commanding a premium of $0.65 per bushel over competitive Canadian western red spring wheat in local markets, said the release.
 
The U.S. Wheat Commission expects more sales to both private buyers and state trading enterprises, as they utilize information provided during trade servicing.