The turmoil in Washington over how to reduce the United States federal government’s deficit pressured almost all markets lower last week.
However, crop markets would likely have been weaker anyway with the return of mild weather to North America.
The Midwest received rain, helping to lessen crop damage caused by the previous week’s punishing heat.
Wheat was also under pressure because of increasing competition from Black Sea exports.
The announcement that Russia would re-enter the market after being out for the past year due to the drought last summer started pressuring wheat prices in late spring.
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Minneapolis nearby futures fell from a peak of $10.55 US per bushel May 26 to about $8.32 as of July 29.
The July Pool Return Outlook, which is on page 26, reflects this decline.
In the past month, Russia has shown it plans to be aggressive.
Egypt, one of the world’s biggest wheat buyers has turned to Russia’s cheaper grain exclusively, buying 480,000 tonnes since July 1.
Russia’s crop is unlikely to match pre-drought bumper production levels but it could export 13 million tonnes of wheat, up from less than four million in 2010-11.
A leading agricultural official in Ukraine last week said the country would likely harvest 51 million tonnes of wheat, barley and other grain, up from a previous forecast of 46 million.
He also speculated it could export 23 million tonnes, up from a previous forecast of 20 million.
Europe’s crop has also fared better in recent weeks after a hot dry spring supported prices early in the season.
These improvements prompted the International Grains Council to forecast the global wheat crop at 674 million tonnes this year, up from a previous forecast of 666 million tonnes and well above the 651 million produced in 2010-11.
However, it also increased its forecast for consumption to 676 million tonnes from 670, so stocks should still shrink slightly by the end of the year, although by less than was expected a month ago.
Closer to home, an industry tour of North Dakota wheat last week showed spring wheat and durum yield potential is less than what was expected.
The tour pegged the average yield of the hard spring wheat crop at 41.5 bushels per acre, below a Reuters poll estimate of 42.2 bu. and the 46.1 bu. crop a year ago.
For durum, the tour put the average yield at 31.8 bu. per acre, below an estimate of 38.2 bu. and well off last year’s 42.4 bu.
That should provide good support to durum prices but the spring wheat situation has less impact because of the big Black Sea supply.
Like in Canada, the North Dakota crop is behind normal development by a couple weeks and so August and September weather will be critical to final quality. But the region can’t catch a break.
The U.S. Weather Service Climate Prediction Centre’s August to October forecast is for above average pre-
cipitation in the Dakotas, southern Manitoba and southeastern Saskatchewan.
The weather service also predicted average temperatures for those areas.
It sees warmer than normal weather in the southern part of the Midwest in August.
The key yield setting stage for corn is winding up, but if August turns out to be very hot, it could shave yields, further tightening an already tight supply-demand outlook.
If so, that could lift corn prices, which would support wheat values by offsetting the downward pressure from Black Sea exports.
