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Drought persists in North Dakota

Last year, from the second week of June until early July, spring wheat prices in Minneapolis went literally off the charts.

Futures prices went from US $5.50 per bushel to nearly $8.00 per bu., in a span of about three weeks, because of a drought in North Dakota and Montana.

Twelve months later, a large percentage of North Dakota remains in a drought. But spring wheat futures tanked in early June, going from $6.40 per bu. to around $6.00

Jim Peterson, policy and marketing director with the North Dakota Wheat Commission, said spring wheat growers are confused by the weak market because there’s no guarantee of a large crop in 2018.

“Everybody is frustrated with prices. That we haven’t got more of a scare in the market,” Peterson said from his office in Mandan, N.D.

Futures prices in Minneapolis have dropped, possibly because of rains across North Dakota and Western Canada.

The June 5 U.S. Department of Agriculture crop progress report, for North Dakota, said the spring wheat growing region in the state received about 25 to 100 mm of rain during late May and early June.

The rain was desperately needed because western North Dakota has been in a drought since last June.

Many growers were worried going into the spring of 2018 because subsoil moisture was exceedingly dry.

“The (water) bank was drawn down last year,” Peterson said.

Snow in April and rain in June helped replenish subsoil moisture, but the western half of North Dakota is still dry.

The U.S. Drought Monitor map shows that a large chunk of the state is in a moderate drought. A small region, by the Canadian border, is in a severe drought.

“Subsoil moisture levels also showed improvement with 57 percent now rated as adequate to surplus. (However) still 43 percent rated short to very short,” said the recent USDA crop progress report.

Peterson added that conditions could change dramatically over the next month.

“Two weeks ago everyone was dead focused that it was going to be just like last year. It’s amazing how much rain will ease those concerns,” he said. “(But) if we go a couple of weeks with just a quarter inch rain and 88(F)-type temps… we’ll be back in the same boat.”

The key different from this year compared to June 2017 may be market perceptions. Spring wheat futures went through the roof last year because buyers feared a tiny spring wheat crop in North Dakota and Western Canada because of the drought. At harvest time, though, the crop was better than expected and yields were average to above average.

Peterson said spring wheat buyers are reluctant to make the same mistake twice.

“I think there were some international buyers that felt they bought in too early,” he said. “And some U.S. domestic millers felt they jumped in the market too soon and kind of pushed it up.”

In addition to a change in buyer psychology, another factor is acreage.

Last year U.S. farmers seeded about 11 million acres of spring wheat, with 5.35 million in North Dakota. This year the USDA forecast acreage at 12.6 million and 6.4 million in North Dakota.

Peterson doesn’t know if actual acreage reached those levels but there is definitely more spring wheat around in 2018.

Farmers in the North Dakota Wheat Commission have reported more spring wheat seedings and more sightings of the crop.

“I think the drop in spring wheat prices may have curtailed some of the acres,” Peterson said. “(But) across the region (Montana and the Dakotas) may not have changed a whole lot from that March (estimate).”

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