Farmers should pounce on any weather-related mini-rallies in the spring wheat market this summer, says an analyst.
There isn’t much hope that the crop will experience a big rally, so any small blip should be considered a good chance to sell some new crop, said Bruce Burnett, director of markets and weather with Glacier MarketsFarm.
And there could be some of those opportunities because spring wheat crops are experiencing varying degrees of difficulty around the world.
Excess moisture in the Urals, Siberia and Kazakhstan caused a drop in seeded area, led to delayed planting and has made the crop susceptible to an early frost and the associated quality damage.
According to the U.S. Department of Agriculture’s Weekly Weather and Crop Bulletin, Siberia’s wheat plantings were 11 percent behind last year’s pace as of June 16.
“Wheat planted after mid-June would have a difficult time reaching maturity before the onset of the region’s cold autumn weather,” stated the bulletin.
The opposite problem is occurring in Germany, Poland and the Baltic states, where it has been hot and dry.
“It’s almost like there has been a ridge set up over that region,” said Burnett.
“They’d like to see some rain pretty soon.”
The USDA says 60-day rainfall totals have been half of normal in northern Germany, northwestern Poland, Scandinavia and the Baltic countries.
Burnett is forecasting an earlier-than-normal harvest in the European Union and thus no big quality concerns.
He said crops are generally in pretty good shape in North America. Much of the northern U.S. Plains and Canadian Prairies have received timely rain from scattered thunderstorms.
“Because we went in so dry there are still some areas that are suffering,” said Burnett.
Further rain was in the forecast as of June 25 when this story was written.
Temperatures have been well above normal in May and June, speeding up crop development. He estimated that North America’s spring wheat crop is one week to 10 days ahead, which means it should avoid frost damage.
However, the crop is not out of the woods yet because of poor subsoil moisture levels in many areas. Yields could start to evaporate if July is hot and dry.
The US$2 per bushel spread that existed between winter and spring wheat has narrowed because of the poor condition of the U.S. hard red winter wheat crop.
The spread between the September futures contract in Kansas and Minneapolis got as low as 35 to 40 cents a couple of weeks ago. It has since rebounded to around 64 cents.
Burnett doesn’t think it will budge much from that level unless conditions worsen in one of the key spring wheat growing regions, which is when growers should be prepared to price some of their 2018 crop.