Poor soft wheat crops due to a drought present a challenge for US growers but demand from markets such as the Philippines continue to support prices, an industry group said.
US Wheat Associates (USWA), a Washington-based export market development organization, over the weekend said prices for wheat sourced by Philippine millers have remained stable amid a supply situation.
Joseph Sowers, USWA assistant regional vice president for South Asia, said that while large wheat harvests around the world had led to increased supplies and consequent price declines, the situation for wheat used to make cookies, crackers and cakes is different.
While bakeries prefer high protein wheat flour to make bread, cake manufacturers prefer low protein flour to make fluffy products, as do cracker manufacturers for crispy products.
Manufacturers of those products in the Philippines and many other Asian countries, such as Japan, Korea and Thailand, rely nearly exclusively on flour made from soft white wheat grown in the Pacific Northwest (PNW) region of the US.
PNW—comprised by Washington, Oregon and Idaho—have seen a harsh drought for the past two years, decreasing production and hurting the quality of the soft white wheat crop.
“The drought in the area has driven up protein levels in soft white wheat, exacerbating the already short supply situation,” Sowers said.
This, according to the executive, has forced Philippines millers to raise protein levels in their purchase contracts and as a consequence decreasing the amount of flour they can produce that meets customer demands.
“So while global wheat prices have fallen over the past year, wheat prices for the input to these Filipino foods have remained more stable,” he added.
USWA is a close trade partner of local flour millers and the baking industry. Despite lower prices from other origins, Washington is said to enjoy a 90-percent market share in the country.
For 2013-2014, Manila took almost 2.2 million metric tons of US wheat, of which nearly 40 percent or 814,000 metric tons was soft white.