Is it possible that the 2003-04 wheat market will turn out like 1995-96, when prices rose all year?
Many thought last year’s production shortfalls in the United States, Australia, Argentina and Canada would cause prices to soar. They did initially, but the highs were set in the fall and markets steadily deflated all winter as surprise surplus production from the Black Sea region filled the gap.
This year, what started off like a big wheat production has turned sour.
The winter wheat crop in the U.S. is large, but the spring wheat crop there, like the wheat crop in Canada, is steadily deteriorating.
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
The official United States Department of Agriculture estimate of the American wheat crop was to be released Aug. 12, after this column was written.
But pre-report estimates pegged this year’s U.S. total wheat crop at 2.299 billion bushels, below USDA’s forecast in July for 2.311 billion but roughly 40 percent above last year’s drought-hit crop of only 1.616 billion.
Analysts pegged the spring wheat crop at 478 million bu., compared to July’s outlook for 502 million and last year’s 394 million bu.
USDA was also expected to cut its estimate of world wheat production, reflecting heat in Canada and the European Union and continued pockets of drought in Australia.
There are also reports of production problems in Argentina.
The difference between this year and last is that there will be no Black Sea wheat exports from Russia and Ukraine.
So the U.S. will be the dominant exporter and traders will closely watch the U.S. export pace. If strong, wheat futures will rise as the U.S. ending stocks estimate falls.
That will push up the price for all exporters, including Canada.
While it is early to be talking about prospects for 2004 crops, it’s worth noting that the U.S. drought monitoring service ratesthe winter wheat region of Kansas and Nebraska as suffering moderate to severe drought.
Analysts also expected the Aug. 12 USDA report to forecast record American corn and soybean crops.
Soybean and corn prices have reflected this, falling all through July. But some market watchers now believe the price low has been set and average yields by harvest won’t be quite as high as expected a few weeks ago.
