Milling & Baking News - May 9, 2006 - 6

E D I T O R I A L

Startling change occurs in global wheat picture

he first 2006 winter wheat crop estimate from the
U.S. Department of Agriculture being issued this
week is the object of intense interest from grainbased foods, not just in the United States but around
the world. Even though this initial assessment is always
important, its value as a guide to prices and supplydemand considerations in the season about to begin is
heightened by the way the new season is unfolding. In
light of the unfavorable growing conditions that have
ruled from planting time last autumn in important regions of the hard winter belt, the certain expectation is
for a reduced outturn of hard red winter wheat, the principal type produced in the United States. When combined with the early intentions of spring wheat growers
to reduce their plantings - a decision that may be modified by the winter wheat prospect - concerns about the
crop are greater this year than in a long while.
While this week's crop report will provide data for
assessing U.S. wheat supply-demand, the effect will be
magnified by an equally concerning global outlook. In
recent years when U.S. production fell short due to unfavorable weather, offsets were often provided by larger
outturns in areas that were fairly new players. Most
notable have been the large crops grown in Russia and
the Ukraine. Both countries this year are experiencing
shortfalls that strikingly resemble the difficulties of the
southern Great Plains.
Even before this week's report affirms the smaller
winter wheat crop, early forecasts, most notably from
the International Grains Council in London, told of a
global wheat supply-demand situation that could be interpreted as alarming. The I.G.C. tentatively projects the
2006-07 world wheat crop at 598 million tonnes, down
from 619 million last year and the record of 628 million
in 2004-05. For the sixth time in the last seven years, the
Council projects that the world crop will be smaller than
global disappearance, meaning a decrease in ending

stocks. These figures hint that demand for wheat is losing its flexibility in adjusting to production decreases.
This is the longest run of use outstripping crops, a situation that obviously cannot continue much longer.
If the I.G.C. projections are accurate, and there's little
possibility that this week's winter wheat figures will effect a positive change, then the world wheat carryover
at the close of 2006-07 will fall to the smallest in 25 years,
or since the end of 1981-82. The Council's forecast of
the ending carryover for the new season is 119 million
tonnes, contrasted with 135 million at the crop year's
start and the record of 209 million at the end of 1999-00.
An ending world wheat stock within sight of 100 million
tonnes, as is now projected for 2007, is made all the more
amazing by how the global carryovers in the four years
beginning in 1998-99 exceeded 200 million tonnes.
At this past spring's annual American Bakers Association meeting, John A. Schnittker, a well regarded agricultural economist, reminded bakers of the importance
of assessing the wheat outlook in terms of the relation of
ending carryover to total disappearance. Even after recalling the warning that Mr. Schnittker presented about
the downward trend in global production and stocks, it
is still shocking to realize just how pronounced is the
change that has occurred. On the basis of the latest I.G.C.
projections, ending global wheat stocks for 2006-07 will
drop to 19.4 per cent of the season's projected use, the
lowest this ratio has been since prior to World War II.
Only a year earlier, the ratio of carryover to use was 23
per cent and during those years when the carryover exceeded 200 million tonnes, the ending stock was more
than a third of crop year disappearance.
Just how these numbers play out in terms of price
moves, which already have been extreme, is yet to unfold. Much depends on how the United States as well
as many other countries respond to a radically different
supply-demand picture for wheat.

A.I.B. keeps up by leading fast-changing education

hen in the late 1970s the American Institute of Baking (now known as A.I.B. International) planned
its move from Chicago and had selected Manhattan, Kansas, for its new headquarters, one of the reasons
the latter was chosen was availability of dormitories for
students in the A.I.B.'s School of Baking. The 20-week basic
course in baking and science along with plans for expanding the array of resident courses comprised the strategy of
nearly three decades ago. In 2006, as the Institute's annual
report in this magazine emphasized, plans are under way
for the once all-important resident courses to take exciting
new directions that should fire the enthusiasm of modernday baking executives. Increasing attention, under the innovative leadership of Jim Munyon, president, and Kirk
O'Donnell, the thoughtful vice-president of education, is
being given to new ways of providing essential instruction
by making use of new media resources.
These innovations are being undertaken in response
to industry demands for "more efficient, relevant training." In this context, "efficiency" is translated into reducing the time away from the regular job that is required
of people taking any one of the Institute's courses that
themselves are designed to be of great relevance. "What
we're looking at is taking what we do and putting it into
smaller pieces," Mr. O'Donnell explained. "We're look-

bakingbusiness.com / world-grain.com

ing at delivering it over the Internet, through things like
iPods and mobile phones. The idea is to get that information as fast as we can to as many people as we can
and make sure it's good information."
That's a tall order, and it's one the A.I.B. is executing in a
thoughtful manner. A test is under way on a special course
directed at teaching ways of controlling pH in the baking
process. The test is being sponsored by a vendor and a major baking company that has 50 from its staff enrolled. At
the close in a few weeks' time, tests will be administered to
see how students who studied via e-learning fared in comparison to those who previously took the resident course.
Not only will the test results be analyzed, but the cost of
instructing via the Internet will be determined.
While no one wants to assume the outcome of such
a test, it is obvious that if e-learning works as well as
might be hoped and even expected that major changes
are going to have to be made in how the A.I.B. operates
the School of Baking. In turn, enthusiastic support, as
well as financial backing, is going to be necessary to
effect such radical change. The A.I.B. long has been an
education pioneer and powerhouse by keeping abreast
of the fast-changing baking industry. These innovations
in education are essential to continued progress for the
A.I.B. and for baking itself. MBN
Milling & Baking News, May 9, 2006 / 7

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Milling & Baking News - May 9, 2006

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