Global winter wheat outlook threatened


Poor prospects so far | World winter wheat crops struggling, but analysts say it’s too early to worry about final yields yet

Winter wheat crops are off to a bad start around the world, but there is plenty of time for them to recover, say analysts.

Crop establishment has been poor in parts of North America, Europe and Russia, where it is once again too dry to plant a crop in places.

Seeding conditions are terrible in the Volga region, which is a prime wheat producing and exporting area of Russia.

“We’ve been talking about this for three crazy years, but they’re still in it,” said Drew Lerner, president of World Weather Inc.

“The lower Volga basin probably has not planted much of anything because it has been that dry.”

Conditions are also less than ideal in the southern region, which is south and west of the Volga region.

There was enough moisture to plant the crop in the south and it has a root system, but the wheat is not as well established as it should be.

Planting is way behind schedule in the United Kingdom, where cold and saturated soils have kept farmers out of their fields.

“This is turning out to be the worst autumn for drilling and crop establishment in memory,” the U.K.’s CropMonitor said in a recent crop report.

Lerner said persistent dry conditions from northern Kansas and northeastern Colorado to Montana, the Dakotas and southern Saskatchewan has hurt winter wheat prospects in North America.

“We have a lot of real estate there that has been dry for a long time and the crops are not very well established,” he said.

“The production potential from those areas is probably going to be down unless we have an ideal spring season where we can really take advantage of it and the crops can swing around. We’ve seen that happen before so we shouldn’t be writing it off.”

The hard red winter wheat growing region of the southern U.S. Plains has been drying out under temperatures in the high 20s C and low 30s C. However, that crop is well established with a good root system in place.

“I’m not terribly concerned about it,” said Lerner.

According to the U.S. Department of Agriculture, 39 percent of the winter wheat crop was rated good to excellent as of Nov. 5, compared to 49 percent last year.

It is the worst rating since records began in 1985. Crops in Nebraska and South Dakota are in particularly bad condition.

Darin Newsom, senior analyst with DTN, said there is no correlation between initial crop condition ratings and final wheat yields next summer, so it is too early to become anxious about the U.S. winter wheat crop.

It’s not just the wheat going in the ground that’s in trouble. Two major wheat exporters in the southern hemisphere are having disappointing harvests.

A Reuters survey of 10 analysts produced an estimate of a 21.4 million tonne Australian wheat crop, which would be 27 percent below last year’s record of 29.5 million tonnes.

There are also mounting concerns that late rain could reduce the quality of Australia’s wheat crop.

The Rosario grains exchange, one of two grain exchanges in Argentina, is forecasting a 10 million tonne wheat crop in that country, which would be 35 percent smaller than last year’s crop and 13 percent below the latest USDA estimate.

Lerner said October was the third month of abundant rain in Argentina.

“We now have wet weather disease that is impacting a lot of the crop,” he said.

Erica Olson, a marketing specialist with the North Dakota Wheat Commission, said markets are anxious about wheat seeding and harvests.

“It does cause concern about production numbers for next year,” she said.

“We already know the southern hemisphere crops aren’t going to be as good as what some had probably hoped.”

Markets have already factored in poorer-than-expected crops from Australia and Argentina and are aware of the poor start to North America’s winter wheat crops.

However, not much has been said about Russia’s continuing struggles. Another poor wheat crop in that region of the world could be a big market mover because Russia is a significant wheat exporter.

Olson said the shaky start in so many important growing regions has wheat markets on pins and needles.

“Since there is that level of uncertainty, there is always potential for more market movement,” she said.

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