After months of mostly negative news and falling prices, the wheat futures market is starting to show some life.
The market is becoming concerned about dryness in the wheat-growing areas of the United States and Canada.
It is still early. The U.S. winter wheat crop is still dormant, but soils over large areas of the region are dry, there is little snow and concerns about winterkill are rising.
“Most wheat is holding its own so far, but significant amounts of moisture will be needed soon to permit proper root development and the potential for a decent harvest,” said the Kansas Department of Agriculture.
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It is also dry in the U.S. spring wheat area and in large parts of the Canadian Prairies. Analysts are forecasting that U.S. spring wheat acreage could be down this year.
Sparks Cos., a private analytical firm, last month estimated 2003 U.S. spring wheat area at 14.772 million acres, down nearly one million acres from the 15.714 million seeded in 2002.
Kent McKay, a North Dakota State University agronomist in Minot, N.D., told Reuters that returns from crops such as malting barley and soybeans so far look better than wheat to growers in his state.
Wheat prices fell during the autumn and early winter because big supplies from Russia and Ukraine filled the gap.
But this year, Ukraine has had a difficult winter. Last month, there were concerns that a deep freeze might have killed some of the winter-seeded crop. Now, Reuters reports that a big part of Ukraine’s winter crop
is covered in ice and might be damaged.
Ivan Kyrylenko, Ukraine’s deputy prime minister for agriculture, said as much as half the winter-seeded area might have to be reseeded to spring crops.
Wheat’s problems around the world are in stark contrast to soybeans. The weather in Brazil and Argentina continues to be mostly ideal for soybean pod filling.
The prospect for a good South American bean crop has weighed on the Canadian canola market, but the price has fallen to a level where it is now attractive to foreign buyers. Pakistan bought two cargoes of canola last week and was rumoured this week to be in the market for a third.
This unexpected export business and also a pickup in the domestic crush pace helped offset the Jan. 31 Statistics Canada report that found more canola stocks than expected.
