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NEWS RELEASE 01-149; December 21, 2001
December 21, 2001
News Release 01-149
Inv. No. 332-429
ITC RELEASES REPORT ON CONDITIONS OF COMPETITION BETWEEN
U.S. AND CANADIAN WHEAT INDUSTRIES
The U.S. International Trade Commission (ITC) today released Wheat Trading Practices:
Competitive Conditions between U.S. and Canadian Wheat, a survey of U.S. and Canadian
Durum and Hard Red Spring (HRS) wheat sold in the United States and key third-country
markets during 1996-2001.
The ITC, an independent, nonpartisan, factfinding federal agency, conducted the investigation for
the United States Trade Representative (USTR), who asked the ITC to provide a survey of U.S.
purchasers of U.S. HRS and Durum wheat purchasers; a separate survey of U.S. exporters to key
foreign markets; and a summary of conditions of wheat trade between the United States and
Canada. Representatives of U.S. wheat growers filed a petition with USTR in October 2000
under section 301 of the Trade Act of 1974 alleging certain trade distorting practices of the
Canadian Wheat Board (CWB) and the Government of Canada. Highlights of the ITC report
- The United States was the leading and Canada the second-leading world wheat exporter
during the period covered by the investigation (marketing years 1996/97 to 2000/01);
however, Canada was the leading Durum wheat exporter with nearly 60 percent of world
exports (compared to the U.S. 20 percent share). U.S. wheat exports to eight key markets
(Algeria, Brazil, Colombia, Guatemala, Peru, the Philippines, South Africa, and
Venezuela) fell during the period covered by 48 percent to $435 million. The eight
countries bought one-fifth of world wheat imports during the five years.
- The United States imported Durum and HRS wheat almost entirely from Canada; Canada
itself imported almost no wheat. In marketing year 2000/01, U.S. imports of Durum and
HRS wheat totaled $212 million ($51 million and $161 million, respectively) and
accounted for 29 percent and 18 percent of U.S. consumption of Durum and HRS wheat,
- Respondents to the Commission purchasers' questionnaire accounted for nearly all U.S.
imports of Durum and HRS wheat in marketing year 2000/01, and respondents to a
separate exporters' questionnaire accounted for nearly all U.S. Durum and HRS wheat
exports to the eight foreign markets and for nearly two-thirds of Canadian HRS wheat
- The market structure for Durum wheat (used in pasta) is quite different from that for HRS
wheat (used in bread and baked goods), the former being thinly traded and more
dependent on Canadian wheat. The CWB is a state trading enterprise controlling
Canadian Durum and HRS wheat exports and has major competitive advantages to
contract sales of Durum wheat for future delivery, since no viable futures contract for
Durum wheat is available on U.S. grain exchanges.
- Respondents said pricing of Canadian wheat sold in the United States was based on U.S.
cash (spot) or the futures price (for HRS wheat) on the Minneapolis Exchange. Reported
contracted prices at Minneapolis for No. 1 grade Canadian Durum wheat were above all
comparable U.S. No. 1 Durum prices, except for a single month during the five years.
Monthly prices of Canadian No.1 grade HRS wheat were mixed, varying above and
below comparable U.S. prices.
- Terms of sale of U.S. and Canadian wheat sold in the United States were close, though
Canadian wheat was more often contracted for future (forward) delivery than domestic
wheat. Delivered U.S. and Canadian wheat tended to exceed the minimum contracted
protein level, with 65 percent of the U.S. shipments of HRS and Durum wheat and
54 percent of the Canadian shipments having higher protein levels than required. CWB
wheat was delivered at lower dockage rates than contracted for, requiring less cleaning at
- Canadian exports to the eight foreign markets overtook U.S. exports by marketing year
2000/01, and six reporting U.S. exporters lost sales of U.S. wheat to Canadian wheat.
Over-delivery of protein levels tended to be higher in Canadian than U.S. HRS wheat
- Canadian wheat sold in third-country markets benefited from lower rail rates for shipping
from Canadian country elevators to export terminals on the Great Lakes or to Pacific
ports. Canadian law places a ceiling or "cap" on the charges railroads collect on
transported CWB wheat; moreover, the CWB and the Canadian government provided
thousands of railcars without charge to Canadian railroads. Meanwhile, Canadian trade
policies and programs particularly the varietal registration program and end-use
certificates adversely affected potential U.S. wheat exports to Canada, according to U.S.
Wheat Trading Practices: Competitive Conditions between U.S. and Canadian Wheat
(Investigation No. 332-429, USITC Publication 3465, December 2001) will be posted in the
Publications section of the ITC's Internet site at www.usitc.gov. A printed copy may be
requested by calling 202-205-1809 or by writing the Office of the Secretary, U.S. International
Trade Commission, 500 E Street SW, Washington, D.C. 20436. Requests may be faxed to 202-205-2104.
ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade
and are generally conducted at the request of the U.S. Trade Representative, the Senate
Committee on Finance, or the House Committee on Ways and Means. The resulting reports
convey the Commission's objective findings and independent analyses on the subjects
investigated. The Commission makes no recommendations on policy or other matters in its
general factfinding reports. Upon completion of each investigation, the ITC submits its findings
and analyses to the requestor. General factfinding investigation reports are subsequently released
to the public, unless they are classified by the requestor for national security reasons.
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