Introduction to Wheat

Sarimanok Feeds Company, Inc.

March 02, 2009
 Wheat Description

The unprocessed wheat kernel, commonly known as a wheat

berry, is made up of three major portions-bran, germ, and
endosperm
During milling, the bran is removed from the kernel. It is sold
separately and used to add flavor and fiber to baked goods
It has a nutty flavor and is very oily, which causes it to turn
rancid quickly. People use wheat germ which is sold in both
toasted and natural forms, to add nutrition to food. Wheat
germ oil, an extraction of the germ, is strongly flavored and
expensive. The wheat endosperm, which makes up the
majority of the kernel, is full of starch, protein, niacin, and
iron. It is the primary source of many wheat flours.
 CLASSES OF WHEAT
1. Hard Red Winter Wheat
2. Hard Red Spring Wheat
3. Soft Red Winter /Soft White Wheat
4. Durum Wheat
 Major Wheat Exporters

1. United States
2. Canada
3. Australia
4. Ukraine
5. Russia
6. Argentina

Wheat is traded at the following exchanges: Chicago Board of

Trade (Soft Red Winter/Soft White Wheat); Minneapolis Grain
Exchange (Hard Red Spring); and Kansas City Board of Trade
(Hard Red Winter).
 World Wheat Production, Consumption
and Stocks (in Thousand Metric Tons)
2008/09 2008/09
2004/05 2005/06 2006/07 2007/08 Jul Aug
Production
Argentina 16,000 14,500 15,200 16,000 14,500 13,500
Australia 21,905 25,173 10,822 13,039 25,000 25,000
Brazil 5,845 4,873 2,234 3,825 4,500 5,000
Canada 24,796 25,748 25,265 20,050 24,500 25,000
China, Peoples Republic of 91,950 97,450 108,470 109,860 114,000 114,000
Egypt 7,177 8,184 8,274 8,275 8,300 8,300
EU-27 146,886 132,356 124,839 119,251 141,700 143,170
India 72,150 68,640 69,350 75,810 76,780 78,400
Iran 14,568 14,308 14,500 15,000 10,000 10,000
Kazakhstan, Republic of 9,950 11,000 13,500 16,600 14,000 13,500
Pakistan 19,500 21,612 21,277 23,300 21,500 21,500
Russian Federation 45,400 47,700 44,900 49,400 54,000 57,000
Turkey 18,500 18,500 17,500 15,500 16,500 16,500
Ukraine 17,500 18,700 14,000 13,900 21,000 22,000
Uzbekistan, Republic of 5,250 5,800 5,850 6,200 6,000 6,000
Others 49,623 49,027 50,976 48,280 44,990 44,865
Subtotal 567,000 563,571 546,957 554,290 597,270 603,735
United States 58,738 57,280 49,316 56,247 66,969 67,016
World Total 625,738 620,851 596,273 610,537 664,239 670,751
Total Consumption
Algeria 7,300 7,500 7,650 8,050 8,050 8,150
Brazil 10,200 10,800 10,500 10,500 10,550 10,550
Canada 8,232 8,319 8,738 7,000 7,700 7,700
China, Peoples Republic of 102,000 101,500 102,000 104,000 107,000 107,000
Egypt 14,200 14,800 15,450 15,850 16,050 16,050
EU-27 123,220 127,525 125,500 118,465 129,000 131,000
India 72,838 69,971 73,358 75,850 78,100 77,600
Iran 14,550 14,800 15,300 15,500 15,600 15,600
Kazakhstan, Republic of 7,400 7,400 7,500 7,500 7,500 7,500
Morocco 6,600 6,800 7,150 7,300 7,400 7,400
Pakistan 19,600 20,900 21,900 22,400 22,900 22,600
Russian Federation 37,400 38,400 36,400 38,200 39,000 40,000
Turkey 16,800 16,100 16,650 16,800 16,600 16,900
Ukraine 11,700 12,500 11,700 12,900 13,200 13,200
Uzbekistan, Republic of 5,700 6,118 6,500 6,800 6,800 6,800
Others 116,380 123,407 121,368 122,887 123,312 123,812
Subtotal 575,114 593,003 585,858 593,065 611,061 614,586
United States 31,823 31,357 31,039 29,005 36,170 35,217
World Total 606,937 624,360 616,897 622,070 647,231 649,803
How wheat is harvested?
Wheat Storage
Wheat Shipment
 Wheat Imports of Philippines from the US, Pacific North West
(PNW)—Port where wheat are loaded and exported

PNW

Use of ocean freight via ship carrying 45,000 tons of wheat

 Philippine Wheat Market

-- Imports around 3 million tons of wheat (2 million tons milling

wheat and 1 million feed wheat)
-- Buys mostly Hard Red Spring (13.5% and 14% protein) and
Soft White Wheat (10.5% protein).
-- Buys most of their wheat requirements from the US.
Secondary sources are Canada and Australia.
-- There are two organizations for the flour mill industry:
Philippine Association of Flour Millers (PAFMIL) and
Chamber of Philippine Flour Millers (CHAMFLOUR).
 Wheat Pricing
*If we will buy soft white wheat, look at the futures price
in the Chicago Board of Trade. Go to www.cbot.com

Current futures price is at 897.25 cents per bushel. You add basis
Of 20 cents to this price and you get the cash price.
 Wheat Pricing

So, 897.25+20=917.25 per bushel. Multiply this by 0.367434

To convert unit of measure to Metric Tons.
Final price then is US$ 337.02 per ton.

*Futures is the price of the commodity (wheat)

*Basis is the cost of transporting wheat internally to elevators
and the willingness of farmers to sell their wheat.
*Cash Price is Futures plus Basis.
In the futures market for wheat, there are 5 trading months:
1) March 3)July 5) December
2) May 4) September
 Prices are different for each trading months.
If your boat leaves in January or February from PNW, your
Price should be pegged over March. If your shipment is Nov,
then this should be over Dec.

CHICAGO WHEAT
Close Change High Low Open Previous Trading Months
WU8 897 1/4 22 1/2 931 892 892 874 3/4 ov Sep 2008
WZ8 922 1/4 22 3/4 959 1/2 917 918 899 1/2 ov Dec 2008
WH9 946 3/4 22 1/2 981 943 949 924 1/4 ov Mar 2009
WK9 961 1/4 21 1/2 965 963 965 939 3/4 ov May 2008

MNPLS WHEAT
MWU8 968 23 1/2 993 951 1/2 951 1/2 944 1/2 ov Sep 2008
MWZ8 982 1/4 27 1/4 1007 960 965 955 ov Dec 2008
MWH9 997 3/4 31 3/4 1016 990 990 966 ov Mar 2009
MWK9 1001 3/4 23 3/4 1008 1/2 1001 1008 1/2 978 ov May 2008
MWN9 990 25 --- --- --- 965 ov July 2008

KANSAS WHEAT
KWU8 928 22 960 916 916 906 ov Sep 2008
KWZ8 950 3/4 23 1/2 982 940 940 927 1/4 ov Dec 2008
KWH9 975 29 998 975 980 946 ov Mar 2009
KWK9 985 29 989 985 989 956 ov May 2008
KWN9 977 1/2 17 1/2 1011 970 973 960 ov July 2008