Delays in spring seeding in the United States could become a big talking point in wheat markets.
Thirteen percent of the U.S. spring wheat crop was in the ground last year by mid-April, and that was behind the previous five year average of 21 percent.
Given the cold weather that gripped the Dakotas and the Canadian Prairies in the first half of April, U.S. seeding progress this year won’t be anywhere near close to the historical averages.
As this column was written April 13, a major snowstorm was forecast for large parts of the Dakotas and Minnesota on April 13-14. The moisture is welcome but rain would be preferred. The snow will be tough on newborn calves.
I don’t mean to ignore the impact of a late spring in Canada, but because field work in the northern U.S. Plains is usually a couple of weeks ahead of the Canadian Prairies, the real worries will appear there first.
In the market reports I read, after discussion of the latest trade frictions between U.S. President Donald Trump and Chinese leaders, a question is popping up about the potential for northern plains farmers to switch spring wheat acres over to soybeans.
At this point I’d say that a big shift is unlikely, but here are the considerations.
Every week’s delay means that short season soybeans could be the better bet agronomically speaking.
Also, even with the threat from China about a potential tariff on American soybeans, the futures price of new crop November soybeans on April 12 was the strongest it had been in the past 12 months.
The price had dipped a bit at the height of the trade tension in early April but then rallied again as the two countries started to scale back the rhetoric. Also, I think few in the U.S. soybean industry believe China could do without American beans. Its livestock industry would take a devastating hit if it lost access to U.S. supply.
Also supporting soybeans was the April 10 monthly supply and demand update from the U.S. Department of Agriculture. It lowered its forecast for year-end domestic soybean stocks to 14.97 million tonnes from 15.10 million the previous month. It lowered the forecast for global year-end supply to 90.80 million tonnes from 94.4 million the previous month, largely due to the crippling drought in Argentina.
Meanwhile, the USDA raised its forecast for U.S. domestic year-end wheat stocks to 28.96 million tonnes from 28.15 million in March and it raised its global stocks forecast to 271.22 million from 268.89 million.
Nevertheless, after a price decline in the second half of March, wheat futures jumped back up to the range common this winter on concerns about the U.S. hard red winter wheat crop.
Reuters analyst Karen Braun noted that the weekly crop condition report April 8 showed the second worse rating for U.S. winter wheat in records that started in 1986. The good to excellent rating was only 30 percent compared to 53 percent the same time last year. The worst rating was back in 1996 at 27 percent good to excellent. Braun noted that national wheat yields fell 10 percent below the trend that year.
The crop has been experiencing huge temperature extremes. In Dodge City, Kansas, the high on April 12 was 35 C with strong drying wind, but a rapid cooling was expected by the weekend, with lows of -4 C April 13 and -7 April 14, cold enough to cause damage in plants at the sensitive growth stages.
However, the crop is behind its usual development and so the frost will likely have much less impact than if it hit in, say, early May.
Light rain was forecast for April 20 in western Kansas, but it likely won’t break the drought in the south.
There is a lot of weather uncertainty, but in the end, I doubt that U.S. farmers will deviate a lot from their original seeding plans.
Still, all the talk about weather problems could spook traders and spark crop price gains.
Here in Western Canada the seeding season could be compressed and stressful, so it would be wise to talk to your marketing adviser before the real stress arrives about ways to automatically lock in price protection if markets rally when you are too busy in the field to act.