While we don’t wish bad weather on anyone, the good news for wheat prices is that the long-term forecast for the U.S. winter wheat region continues to call for a dry, hot spring.
The bad news, as you probably know by now, is that lots of rain and wet snow fell in the region last weekend, snuffing out for now the drought fire that had wheat prices boiling.
Texas, Oklahoma, Kansas and Nebraska all got good moisture from the storm that lingered into this week. Farther north, corn and soybean areas also saw rain recently, setting up a good seeding season. And another storm brought moisture to north-central Alberta, which had experienced a dry winter.
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The storm in the United States caused wheat futures to fall more than 20 cents US per bushel, back to where they were in early February.
One rain does not break a drought. Some crops in Texas were damaged beyond revival. But the big prize is Kansas and the future of wheat prices depends on whether the drought returns there. As already stated, spring is forecast to be warmer and drier than normal.
Let’s hope it is correct and that the heat down south encourages lots of barbecues. As we have reported in our weekly livestock reports on page 16, oversupply has hit the protein markets. Already beef carcass weights are much heavier than last year at this time, indicating market-ready supply is backing up as feedlots try to pressure packers to offer higher prices.
Also, there is a record supply of cattle on feed in the U.S. and prices will be pressured lower when those cattle come to market later this year.
Add the rising supply of chicken as U.S. poultry exports are hurt by avian flu worries and you have a meat sector in trouble.
So hope for good barbecue weather down south and for a rekindled interest in high-protein low-carbohydrate diets to spark increased meat demand.
