It is getting dry in the southern part of the U.S. winter wheat belt and in China’s winter wheat zone.
The crops are in winter dormancy now so the lack of rain is not critical yet, and there are lots of opportunities to get moisture in time for spring growth. However, with a La Nina weather event established in the Pacific Ocean, the possibility for dry weather in these two zones is heightened.
Seventy-one percent of Texas is now in some stage of drought, up from 58.3 percent two weeks ago, according to the U.S. Drought Monitor map released Jan. 13.
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Texas is down the list of wheat producing states, but the dryness extends into Oklahoma. Kansas, the dominant winter wheat state, is not yet affected.
A look at China’s Drought and Flood Monitor at ncc.cma.gov.cn shows much of the North China Plain is in drought.
The situation is on the periphery of market mindset now but could move forward if it is still dry in March.
Front and centre now is the slowness of American wheat exports and the forecast for increased carryout into 2009-10.
The U.S. Department of Agriculture forecasts wheat exports will be down 21 percent from last year’s booming pace.
However, the experience so far is worse than expected with exports down 27 percent year to date and several analysts not hopeful of a strong performance in the second half of the marketing year.
They note the livestock feeding sector is not profitable and the global economic slowdown is already weakening meat demand, meaning livestock producers could struggle through this year. That reduces demand for feed wheat.
Another drag on the export side is the strong American dollar.
In its Jan. 12 supply and demand report, the USDA increased its forecast of U.S. wheat ending stocks to 17.84 million tonnes from 16.97 million.
Globally, it increased ending stocks to 148.36 million tonnes from 147.35, despite a decrease in its production estimate, due to a reduction in overall use.
While the United States has had trouble exporting, Canadian wheat is moving at almost the same pace as last year, despite a slow start to the marketing year.
Strong movement to Thunder Bay before the closure of the St. Lawrence Seaway helped the Canadian Wheat Board catch up, and as we reported last week, the board now thinks it will be able to export more grain than last year.
