December hard red winter wheat futures rose four percent last week on concerns about damage to the U.S. crop.
General support also came from worries about the slow pace of seeding in the United States and Canada.
The hard red winter wheat crop has done better than I expected, despite all the challenges it has faced, from drought at the time of seeding to repeated freezing temperatures after the crop came out of dormancy. It appears that the crop in the eastern part of the Plains is doing fairly well, but conditions are much worse in western regions.
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Of course it has many weeks yet before it is harvested, but a tour of analysts and agricultural specialists who toured Kansas last week estimated the crop in that state, which is the largest producer of that type of wheat, at 313.1 million bushels, down 18 percent from last year.
It estimated the average yield at 41.1 bu. per acres, down from 42 bu. last year. The main reason for the overall production decline was the tour’s estimate that farmers would abandon 18 percent of acreage, about double the normal rate.
A different group of crop consultants toured Oklahoma, the second largest hard red winter wheat producer, and forecast production there at 85.583 million bu., down 45 percent from 154.8 million a year ago.
The U.S. Department of Agriculture will produce its first production estimate of the hard red winter wheat May 10.
A Reuters poll of analysts put the range of forecasts for all winter wheat at 1.359 to 1.604 billion bu., with an average of 1.497 billion. That is down 6.6 percent from the five-year average of 1.603 billion.
Of that, the range for hard red winter was 676 to 875 million for an average of 776 million, down 23 percent from last year’s 1.004 billion.
It will be hard for wheat prices to rally further unless there is another threat elsewhere. On May 6, as I write this, December wheat lost most of the gains it made the previous week.
Forecasts for the U.S. Midwest and northern Plains turned drier over the weekend, and if they hold true, there should be rapid seeding progress, which will pressure all crop prices.
The spring wheat cropping area of the Canadian Prairies and the U.S. northern Plains will for the most part have excellent moisture to start the crop.
Global supply of wheat is not particularly tight, with the USDA pegging global stocks at the end of 2012-13 at 182.26 million tonnes. That is down from the previous year but is still a stocks-to-use ratio of 27 percent compared to 18 percent for global oilseeds and 14.5 percent for global corn.
The wire services report that the southern part of Russia’s wheat growing region, where a lot of its exports originate, is getting a bit dry and rainfall was expected to be inadequate in the first two weeks of May.
However, it still appears farmers there expect much better crops than last year, when severe dry conditions sapped yields.
It is also dry in southeastern Australia, threatening the start to seeding in that country. States affected include New South Wales, which produces about a quarter of the country’s wheat crop, and Victoria, which produces about 16 percent.
