You are here: / Market and Crop Analysis
thumbnail
, , , ,

Global Winter Wheat Condition a Mixed Bag

By Stephanie Bryant-Erdmann, USW Market Analyst

The end of March heralds not only the beginning of spring — a crucial time for both winter and spring wheat production — but also the first round of winter wheat condition reports.

Black Sea — Snow across Russia and Ukraine is providing much needed protection from the recent cold snap in the region, but is delaying spring planting, according to Ukrainian consultancy UkrAgroConsult and the Russian Meteorological Service. As of Feb. 26, the Russian Meteorological Service reported 95 percent of Russian winter grains were rated in fair to good condition, unchanged from the last crop condition report on Nov. 30, 2017. UkrAgroConsult rated 49 percent of Ukrainian winter wheat in good to excellent condition, compared to 40 percent the year prior. Stratégie Grains forecast 2018/19 Russian wheat production at 77.0 million metric tons (MMT), down sharply from 2017/18 due to an anticipated return to trendline yields and smaller planted area. Ukrainian 2018/19 wheat production is estimated at 26.5 MMT, compared to 26.1 MMT in 2017/18.

European Union (EU) — According to the March EU crop monitoring service (MARS) report, EU winter conditions were adequate for winter wheat development despite unusual temperature fluctuations. Temperatures in December, January and the first half of February were generally 1°C to 6°C warmer than normal across Europe before plunging the last half of February to as low as -15°C and -20°C across Poland, Denmark and Sweden. Precipitation in excess of 20 cm (8 inches) in France, the EU’s top wheat producing country, flooded some fields. On March 16, FranceAgriMer rated 80 percent of French common wheat as good to excellent, compared to 81 percent the week prior and 92 percent last year. Stratégie Grains expects 2018/19 EU wheat production to total 141 MMT, down an estimated 900,000 metric tons (MT) from 2017/18 due to expected increases in winterkill and smaller planted area in France and Germany.

India — Wheat harvest is currently underway in India, the world’s second largest wheat producing country behind China. While crop condition ratings there are not available, Stratégie Grains anticipates 2018/19 Indian wheat production will fall to 91.4 MMT, down 7 percent year over year due to a 5 percent reduction in planted area and unfavorable weather and disease pressure.

United States — On March 19, USDA released weekly crop progress reports for top hard red winter (HRW) producing states of Kansas, Oklahoma and Texas that showed continued deterioration of topsoil and subsoil moisture and winter wheat crop conditions in Kansas and Texas, but an improvement in Oklahoma. USDA rated 55 percent of Kansas, 66 percent of Oklahoma, and 60 percent of Texas winter wheat in poor or very poor condition, compared to ratings of 53 percent, 72 percent and 53 percent, respectively, the week prior. USDA will resume weekly U.S. crop progress reports on April 4.

Subsoil moisture in Kansas was rated 71 percent short or very short, 28 percent adequate and 1 percent surplus, while 68 percent of Oklahoma and 63 percent of Texas subsoil moisture was rated short or very short. USDA’s evaluation took place before this week’s rain event, so its effects will appear on next week’s report. However, additional precipitation will be needed to make up the shortfall. According U.S. National Oceanic and Atmospheric Administration (NOAA) data, accumulated precipitation across the majority of the HRW-growing area in Kansas, Oklahoma and Texas is 3 to 6 inches (8 to 15 cm) below normal.

We are months away from knowing what the 2018/19 world wheat crop will look like and, as always, the weather will have the final say on yields and production. Buyers can be sure the U.S. wheat store will continue to supply high-quality wheat, regardless of what happens in 2018/19.

/by
thumbnail
, , , , , ,

2018/19 U.S. Wheat Planted Area Expected to Increase Despite Dry Conditions

By Stephanie Bryant-Erdmann, USW Market Analyst

Total U.S. planted wheat area will rise 500,000 acres (202,000 hectares) in 2018/19 due to an expected increase in spring wheat area (including durum) according to Joanna Hitchner of the USDA World Agricultural Outlook Board. The USDA held its annual Agricultural Outlook Forum on Feb. 22 to 23, where Hitchner presented the 2018/19 Grain and Oilseeds Outlook.

USDA forecasts 2018/19 combined spring wheat and durum planted area at 13.9 million acres (5.63 million hectares). If realized, that would be up 2 percent from 2017/18 and the largest spring and durum planted area since 2015/16. Increased spring wheat and durum planted area is expected to more than offset the lowest U.S. winter wheat planted area since 1909. USDA currently estimates 2018/19 (June to May) wheat acreage at 46.5 million acres (18.8 million hectares), a one percent increase from last year, if realized.

Wheat buyers should note that factors affecting planting decisions can change before seed is sown. Long-term dry conditions in top hard red spring (HRS) and durum producing states of Montana, North Dakota and South Dakota may significantly alter farmers’ plans.

In January, USDA reported U.S. farmers planted 32.6 million acres (13.2 million hectares) of winter wheat last fall, down slightly from 2017/18, but 15 percent below the 5-year average. Increases for soft red winter (SRW) and white wheat offset a decrease in hard red winter (HRW). USDA assessed 2018/19 HRW planted area at 23.1 million acres (9.35 million hectares), down 2 percent from 2017/18 with planted acreage down year over year in nearly every HRW-producing state. However, 2018/19 total SRW planted area of 5.98 million acres (2.42 million hectares) increased 4 percent from last year, and white winter wheat planted area increased to an estimated 3.56 million acres (1.44 million hectares), up 1 percent from the prior year. Winter durum planting in the Southwestern United States was estimated at 74,000 acres (30,000 hectares), down 41 percent from 2017/18 and 51 percent below 2016/17.

Based on trend yields, USDA expects the national average yield to grow to 47.4 bushels per acre, up from 46.3 in 2017/18 due to expected increases in spring and durum wheat yields which were hard hit by last year’s drought. USDA projects the wheat harvested-to-planted ratio will increase to 0.83, up slightly from last year’s 0.82 due to a small decrease in expected abandonment rates. Total U.S. 2018/19 wheat production is forecast to rise by 6 percent year over year to 50.0 million metric tons (MMT).

In addition to lower planted area for winter wheat, crop conditions for many HRW-producing states are deteriorating due to sustained drought conditions. On Feb. 26, USDA rated 12 percent of Kansas winter wheat in good to excellent condition, down from 14 percent at the end of December. Winter wheat condition remained unchanged in Oklahoma with just 4 percent rated good to excellent, but declined in Colorado, Montana, Nebraska, North Dakota and South Dakota. SRW conditions improved in Illinois, where 45 percent of the winter wheat crop was rated in good to excellent condition compared to 38 percent last month. USDA will resume weekly U.S. crop progress reports in April.

A decrease in carryover stocks is expected to offset increased production, and the total U.S. wheat supply is expected to fall in 2018/19. USDA forecasts 2018/19 U.S. supplies at 77.5 MMT, down 2 percent from 2017/18, if realized, in part because USDA anticipates a slight increase in domestic use, from 30.4 to 30.7 MMT.

Price competition and large supplies in other wheat exporting countries will continue to pressure demand for U.S. wheat. USDA expects U.S. exports to fall to 25.2 MMT, down 3 percent from the forecasted 2017/18 U.S. wheat export level of 25.9 MMT.

To read more from the USDA Outlook Forum or to download presentations, please visit https://www.usda.gov/oce/forum/.

To see the latest Drought Monitor, please visit https://droughtmonitor.unl.edu/

/by
thumbnail
, ,

Early Estimates Expect 2018/19 Wheat Production to Fall in the Black Sea

By Stephanie Bryant-Erdmann, USW Market Analyst

USDA will issue its first 2018/19 U.S. wheat production estimate on Feb. 23 at its Annual Agricultural Outlook Forum, rounding out the estimates already available for Northern Hemisphere wheat exporting countries. Following is a by-country summary of current production estimates.

Canada.  Agriculture and Agri-Food Canada (AAFC) forecasts 2018/19 Canadian common wheat (excluding durum) production at 24.3 million metric tons (MMT), down 3 percent from 2017/18.  A return to average yields is expected that would more than offset a 4 percent increase in wheat planted area. 2018/19 Canadian wheat planted area is forecast at 9.51 million hectares (23.5 million acres). AAFC anticipates an increase in spring wheat planted area that would also offset an 11 percent decrease in winter wheat planted area. Canadian durum production is expected to reach 5.70 MMT, up 15 percent due to increased planted area and increased yields.

European Union. Strategie Grains estimates 2018/19 European Union (EU) common wheat production at 142 MMT, in line with 2017/18 production. A forecasted increase in average yield is expected to offset a slight decrease in planted area. 2018/19 EU wheat planted area is expected to fall slightly to 23.2 million hectares (57.3 million acres) due to lower prices. EU durum production is expected to increase slightly in 2018/19 to 9.20 MMT due to increased planted area in Italy.

Kazakhstan.  Stratégie Grains anticipates 2018/19 Kazakhstan wheat production will reach 13.7 MMT, down 2 percent year over year, if realized. Wheat planted area is expected to decrease slightly in 2018/19 to 11.7 million hectares (28.9 million acres) due to lower prices. Nearly all of Kazakhstan production is spring wheat.

Russia. The Russian Ministry of Agriculture expects 2018/19 Russian spring wheat planted area to decrease slightly to 12.9 million hectares (31.9 million acres), down 50,000 hectares (123,000 acres) year over year, if realized. 2018/19 winter wheat planted area remained stable year over year at 14.9 million hectares (36.8 million acres). Stratégie Grains predicts 2018/19 Russian wheat production will fall 9 percent from 2017/18 to 77.3 MMT on the expectation of lower average yields.

Ukraine. UkrAgroConsult forecasts 2018/19 Ukrainian wheat production to total 25.1 MMT, down 4 percent from 2017/18, if realized. An expected reduction in average yields will more than offset an estimated 2 percent increase in wheat planted area. 2018/19 Ukraine winter wheat planted area is estimated at 6.28 million hectares (15.5 million acres).

/by
thumbnail
, , , , ,

U.S. Crop Conditions Fall as Drought Conditions Worsen

By Stephanie Bryant-Erdmann, USW Market Analyst

Farmers will tell you that winter wheat is a hardy plant; but for the current U.S. winter wheat crop, one of its most important inputs, water, is increasingly in short supply. The Feb. 1 U.S. Drought Monitor showed that drought ranging from abnormally dry to extreme, affects most of the winter wheat production area across the country. Specifically, 81 percent of Oklahoma is in a severe to extreme drought, while 65 percent of Kansas is in a moderate to extreme drought. In South Dakota and Colorado, 64 percent and 59 percent of the topsoil moisture was rated as short to very short, respectively.

USDA noted the drought’s impact on winter wheat crop conditions in its monthly winter wheat crop condition report* on Jan. 29, which showed 29 percent of the area assessed by the survey is in good to excellent condition, down from 41 percent good to excellent at the end of December. USDA rated 35 percent in fair condition and 37 percent in poor or very poor condition, up from 22 percent last month. The assessment covered 69 percent of the estimated 32.6 million acres (13.2 million hectares) planted for 2018/19.

Deteriorating crop conditions could multiply the effect of low planted area to decrease 2018/19 U.S. winter wheat production. USDA noted the 2018/19 winter wheat planted area is 15 percent below the 5-year average in its Jan. 12 Winter Wheat and Canola Seedings report, which is the second lowest number of planted winter wheat acres on record.

Of the winter wheat classes, hard red winter (HRW) is the most severely affected by drought. USDA reported 23 percent of HRW assessed acres are in good to excellent condition, compared to 35 percent in December. Forty-two percent of HRW acres were rated in poor or very poor condition, up from 25 percent one month prior. The only major HRW state not assessed last week was Texas, where 5 million acres (2.02 million hectares) of winter wheat were planted for 2018/19. However, precipitation maps show it has not rained in 110 days in Northern Texas (accounting for about 60 percent of Texas wheat production). In response to these reports, the Kansas City Board of Trade (KCBT) March wheat contract rallied 20 cents last week to $4.63/bu ($170/MT), the highest point since July 2017.

Soft red winter conditions are variable. USDA rated 58 percent of soft red winter (SRW) wheat assessed acres in good to excellent condition compared to 68 percent four weeks prior, and just 7 percent were rated in poor or very poor condition. However, SRW crop conditions were not uniformly positive. Better crop conditions in Ohio and Tennessee mask worsening moisture conditions in the Southeast and Mid-Atlantic regions. Ninety-five percent of Virginia, 61 percent of North Carolina and most of Maryland are abnormally dry or in moderate drought. Ratings were not available for several southern SRW states where drought conditions are more severe. Deteriorating crop conditions also helped push Chicago Board of Trade (CBOT) March wheat futures price to its highest point in five months at $4.47/bu ($164/MT).

Winter wheat crop conditions were not reported this month for Idaho, Oregon or Washington where exportable soft white wheat supplies are concentrated. However, the Feb. 1 Drought Monitor shows southern Idaho and nearly all of Oregon are abnormally dry. However, precipitation is expected in the next 5 to 10 days that should be beneficial for most of the estimated 3.56 million acres (1.44 million hectares) of white wheat.

Some rain this week pressured wheat prices, showing that the futures markets will likely be volatile until the spring green up tells the final story. It is a long way until harvest, but customers should closely watch weather conditions across the United States and be ready to take advantage of price moves in their favor.

If you have any questions about the current crop conditions or the U.S. marketing system, please contact your local USW representative.

To track U.S. wheat prices, drought conditions and more, subscribe to the USW Weekly Price Report, here.

*From December through March, USDA assesses winter wheat crop conditions in select states on a monthly basis. Weekly crop progress reporting will resume in April.

/by
thumbnail
, , , ,

Global Supplies of High Protein Wheat Keep Tightening

By Stephanie Bryant-Erdmann, USW Market Analyst

In the Nov. 2, 2017, issue of “Wheat Letter,” we analyzed the tight supply of high protein U.S. wheat (minimum of 13.0 percent protein at 12 percent moisture basis (mb)) and its effects on pricing. The latest production and quality analysis suggests that global high protein wheat production in marketing year 2017/18 is down as much as 39 percent from average. That strengthens the conclusion that price premiums will continue at least into the first quarter of marketing year 2018/19 (June to May).

Based on available data, U.S. Wheat Associates (USW) has estimated that the world’s wheat suppliers produce about 50 million metric tons (MMT) of high protein wheat in an “average” year. Of that total, USW estimated that about 27 MMT on average are available to export markets, including:

  • 0 MMT of hard red spring (HRS) from the United States;
  • 0 MMT of Canadian Western Red Spring (CWRS);
  • 0 MMT from Kazakhstan, Russia and Ukraine; and
  • 0 MMT of Australian Prime Hard (APH) and Australian Hard (AH).

Looking at 2017/18, high protein wheat production was well below average.

USDA data showed that total U.S. HRS production was down 26 percent year over year at 10.5 MMT, with about 9.0 MMT having at least 13.0 percent protein (12 percent mb). Roughly half of U.S. HRS is exported annually, putting U.S. high protein HRS exports at 4.5 MMT. Carry-in stocks from 2016/17 totaling 6.4 MMT push total HRS supply higher, and potentially also enlarge the supply of high protein HRS. In 2016/17, the average protein was 14.6 percent (12 percent mb), but the protein content of the remaining stocks carried into 2017/18 is unknown. Year to date, the Federal Grain Inspection Service has inspected 3.94 MMT of HRS, 98 percent of which had at least 13.0 percent protein (12 percent mb), and USDA reported an additional 1.26 MMT of HRS sales that have not yet shipped as of Jan. 25. To meet that demand, high protein HRS stocks will need to be pulled out of storage, indicating premiums for HRS are unlikely to shrink in 2017/18.

Of the 19.2 MMT of CWRS produced in 2017/18, about 78 percent, or 15.0 MMT, graded #1 CWRS according to Canadian International Grains Institute (CIGI) data. The average protein for #1 CWRS is 13 percent (12 percent mb), with roughly 75 percent of #1 CWRS samples averaging above 13.0 percent (12 percent mb). If production values match sampling ratios, then Canada produced roughly 11.0 MMT of high protein wheat in 2017/18. On average, Canada exports roughly 70 percent of total wheat production putting total high protein wheat exports at an estimated 8.0 MMT. Weber Commodities, a Canadian-based analyst firm, believes Canada carried in just 1.0 MMT of high protein stocks, putting the estimated total Canadian high protein wheat exportable supply at 9.0 MMT.

Black Sea high protein exports are expected to fall to 3.0 MMT — all from Kazakhstan — due to above average rainfall that significantly lowered protein levels in Russian and Ukrainian wheat.

Australian Prime Hard is only produced in Queensland and New South Wales where La Niña-related drought conditions have sharply cut yields. Generally dry conditions are also expected to hurt Australian Hard wheat yields. USW estimates that Aussie high protein exportable supplies will only reach about 1.5 MMT.

The shrinking supply of high protein wheat can be seen in the prices of the top suppliers. According to the International Grains Council (IGC), the average price for 13.5 percent protein (12 percent mb) HRS exported from the Pacific Northwest (PNW) is up 16 percent year over year. IGC uses the Canadian designation of CWRS as 13.5 percent protein (13.5 percent mb). It reports CWRS prices from both Vancouver and St. Lawrence show an increase of 24 percent year over year. Meanwhile, lower protein wheat producers, such as Argentina, have seen prices fall 4 percent year over year due to the large supply of lower protein wheat.

Here is a table summarizing USW’s estimate of the big cut in global high protein wheat supplies in 2017/18 compared to an average, or “typical” year.

                                    Average Export Supply            2017/18 Estimated Supply

U.S. HRS                        6.0 MMT                                   4.5 MMT

CWRS                          11.0 MMT                                    8.0 MMT

Black Sea                       7.0 MMT                                   3.0 MMT

APH/AH                          3.0 MMT                                   1.5 MMT

Total                            27.0 MMT                                  17.0 MMT

/by
thumbnail
, , , , , , , , ,

Sustained Demand for U.S. Wheat in a New Price Environment

By Stephanie Bryant-Erdmann, USW Market Analyst

Six months into marketing year 2017/18 (June to May), total U.S. export sales of 19.5 million metric tons (MMT) are 8 percent behind last year’s pace according to USDA Export Sales data through Jan. 4. However, the estimated total value of U.S. wheat export sales is 4 percent greater than last year on the same date at $4.72 billion, due to slightly higher export prices according to USDA Export Sales data and USW Price Report data.

A deeper analysis of USDA data shows total sales to six of the top 10 U.S. export markets in 2016/17 are ahead of last year’s pace, demonstrating strong demand for U.S. wheat. Sales of soft red winter (SRW) and soft white (SW) are both ahead of last year’s pace. USDA projects total 2017/18 exports will fall slightly to 26.5 MMT, which, if realized, would be 8 percent below 2016/17 but 1 percent above the 5-year average pace.

USDA reported hard red winter (HRW) year-to-date exports at 7.79 MMT, down 10 percent from the prior year. Still, 2017/18 export sales are 10 percent ahead of the 5-year average due to competitive prices for medium protein HRW and the good, overall quality of this year’s crop. The estimated value of year-to-date HRW export sales is 6 percent above 2016/17 due to a 14 percent increase in the average U.S. HRW free-on-board (FOB) price that is supported by the increased premiums for HRW with higher protein. Mexico is currently the number one HRW purchaser. As of Jan. 4, HRW sales to Mexico totaled 1.58 MMT, up 28 percent from last year’s pace. Sales to Indonesia are also up 28 percent year over year at 430,000 metric tons (MT). HRW purchases by Algeria total 456,000 MT, more than double last year’s sales on this date. To date, HRW sales to Venezuela totaling 120,000 MT are nearly four times great than the 2016/17 pace.

Both export sales volume and value of SRW for 2017/18 are up due to the excellent quality of this year’s crop and relatively competitive pricing. Export sales are up 7 percent year over year at 2.02 MMT, boosting estimated export sales value to $400 million, or 12 percent more so far this year. As of Jan. 4, total sales to 11 of the top 20 U.S. SRW export markets from 2016/17 are higher than last year. Sales to Colombia are 12 percent ahead of 2016/17 at 198,000 MT. Nigerian SRW purchases total 234,000 MT, up 12 percent from last year. Sales to other Central and South American countries, including Brazil, Peru, Panama, Venezuela and El Salvador, are also ahead of the 2016/17 pace.

Hard red spring (HRS) sales of 5.15 MMT are down 25 percent year over year and 7 percent below the 5-year average. Higher prices due to smaller 2017/18 production have slowed HRS exports thus far in 2017/18, but global demand for HRS is strong. Year-to-date in 2017/18, the average FOB price of HRS is $293 per metric ton ($7.97 per bushel), compared to $241 per metric ton ($6.55/bu) in 2016/17, according to USW Price Report data. As of Jan. 4, buyers in Japan purchased 878,000 MT, up 20 percent from 2016/17. Sales to Taiwan of 518,000 MT are up 17 percent from last year’s sales on the same date. The Philippines continues to import the largest volume of HRS, though at a 6 percent slower pace so far.

As of Jan. 4, exports of soft white (SW) wheat are up 22 percent year over year at 4.30 MMT. That is 28 percent greater than the 5-year average. Sales to the top 10 SW customers are ahead of last year’s pace, supporting an estimated export value of $896 million, up 25 percent from the prior year. Philippine millers purchased 946,000 MT, up 16 percent compared to last year’s sales on the same date. South Korean sales are up 43 percent at 674,000 MT. U.S. SW sales to China, Thailand and Indonesia are also up. Year-to-date, Indonesia has purchased 515,000 MT, compared to total 2016/17 purchases of 270,000 MT. Thailand sales are up 18 percent year over year at 217,000 MT. Chinese purchases of 306,000 MT are already greater than 2016/17 total SW sales.

Year to date durum exports total 272,000 MT, down 32 percent from the same time last year, and below the 5-year average, with tighter supplies and resulting higher prices. The average export price for U.S. durum is up 5 percent over last year at this time according to USW Price Report data. To date, Nigeria, the European Union (EU), Algeria and Guatemala are the top durum buyers. A significant portion of the first quarter 2017/18 sales is designated as “sales to unknown designations.

/by
thumbnail
, , ,

Cold Temperatures in HRW Country Gets Attention; Dry Conditions Could Be Worse

Last week in the United States, the potential effects of severe cold over most of the U.S. hard red winter (HRW) and soft red winter (SRW) crops got the lion’s share of attention in media covering wheat production and markets.

To be sure, bitterly cold temperatures across the United States may have hurt some wheat in parts of the Plains, southern Midwest and Southeast without snow cover. A senior agricultural meteorologist was quoted saying “damage occurred in about a quarter of the hard red winter wheat belt in the Central Plains, with about 5 percent of the soft red wheat belt in the Midwest seeing impacts.”

Agronomists with Kansas State University confirmed that winter kill may be an issue in north central Kansas, where soil temperatures were sustained at potentially damaging levels for the longest time.

“It is difficult to truly assess the extent of the damage at this point,” they reported. “Provided that the crown is not damaged, the wheat will recover from this foliar damage in the spring with possibly little yield loss.”

Winter kill potential and the logistical problems with such cold did spark a brief uptick in KCBT and CBOT futures prices last week. Yet of all the threats to wheat, winter kill is not making the top of the list for farmers. What is keeping more of them up at night now is the lack of moisture.

“I think if we lose wheat, it will be from dry conditions rather than winter kill,” said Don Schieber, a Ponca City wheat farmer and a past chairman of U.S. Wheat Associates (USW). “Some of the wheat that was planted early is big, but some is hurting and turning blue. It is so dry that some farmers have stopped grazing their fields because the cattle are pulling whole wheat plants out of the ground.”

The National Agricultural Statistics Service indicates that drought conditions in Oklahoma, the Texas Panhandle and much of southwestern and central Kansas are very dry, noting that for the month of December 2017, topsoil moisture in Kansas was rated 28 percent very short, 49 short, 23 adequate, with no surplus in the state. In northeastern Colorado, dry conditions increased concerns that cold snaps without the benefit of snow cover may have hurt fall-seeded HRW wheat.

Wheat is a hearty crop and Kansas State agronomists made the point that we will only be able to assess the true extent of any damage at spring green-up. But this continues to be a challenging season for HRW in the Plains.

On Jan. 9, Kansas Wheat Marketing Director Aaron Harries shared photos of a field of stunted wheat in south-central Kansas on Twitter that, he suggested, was “one of the better-looking fields in the area.” It was 65° F when he took the photo and wrote that “48 hours from now: 50 mph north wind and single digit temps with no snow cover – #sad, #drought, #prayforrain, @KansasWheat.

/by
thumbnail
, ,

World Wheat Conditions Roundup

By Stephanie Bryant-Erdmann, USW Market Analyst

With the Northern Hemisphere 2017/18 wheat crop now safely in the bin, all eyes are now watching Southern Hemisphere harvest progress and the condition of the Northern Hemisphere’s winter wheat. Here are brief summaries of current harvest progress and winter wheat crop conditions around the world.

Southern Hemisphere Harvest.

Argentina. On Dec. 7, Bolsa de Cereales, the Buenos Aires Grain Exchange, reported Argentine wheat harvest is 45 percent complete, up from 31 percent complete last week and significantly ahead of last year’s pace. To date, Argentinian farmers have harvested 6.10 MMT with an average yield of 2.56 metric tons (MT) per hectare (38.1 bu/acre). Bolsa forecasts total Argentine wheat production at 17.0 MMT. If realized, that would be 8 percent below 2016/17, but 34 percent above the 5-year average.

Australia. According to Grain Central, an Australian farm publication, harvest has resumed after heavy rains fell last week on mature wheat, damaging yield potential and quality. The Australia Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecast 2017/18 Australian wheat production to fall 20.3 MMT. If realized, that would be 20 percent below the 5-year average.

Northern Hemisphere Winter Wheat Planted Area and Conditions.

European Union. Strategie Grains forecast 2018/19 European Union (EU) planted winter wheat area at 23.3 million hectares (57.5 million acres), down slightly from 2017/18 due to reduced planted area in the Baltic States. Dry conditions in Spain, which hindered wheat emergence this fall were also noted. On Dec. 13, FranceAgriMer rated 95 percent of French winter wheat in good to excellent condition in its last crop condition report for 2017.

Russia. Russian farmers planted winter grains on 17.1 million hectares (42.2 million acres) for 2018/19, down 1 percent from the prior year according to the Russian Ministry of Agriculture. In recent years, winter wheat accounted for an estimated 87 percent of winter grain planted area. Reuters reports that additional snow is needed to protect the crops and replenish soil moisture after a dry autumn.

Ukraine. UkrAgroConsult reported winter wheat planted area for 2018/19 at 5.9 million hectares (14.6 million acres), down 3 percent from 2017/18 due to unfavorable planting conditions. Forty-seven percent of winter grains were rated in good condition, up from 38 percent in 2016. The share of winter grains rated as satisfactory is 36 percent, compared to 45 percent last year.

/by
thumbnail
, , , ,

Wheat Futures Tumble, While Protein Premiums Soar

By Stephanie Bryant-Erdmann, USW Market Analyst

As the Dec. 12 World Agricultural Supply and Demand Estimate (WASDE) confirms, global wheat supplies are at a record high this year. USDA increased its estimate for 2017/18 global wheat production to 755 million metric tons (MMT), up slightly from 2016/17 and a new record high. If realized, it would be the fifth consecutive year of increased global wheat production.

The record large global wheat production has pressured U.S. wheat futures to six and twelve-month lows. Since the beginning of the 2017/18 marketing year, the Chicago Board of Trade (CBOT) soft red winter (SRW) wheat futures and the Kansas City Board of Trade (KCBT) hard red winter (HRW) wheat futures have fallen 37 cents and 32 cents, respectively to levels not seen since last December. The Minneapolis Grain Exchange (MGEX) hard red spring (HRS) wheat futures climbed in July, supported by concerns over severe drought in the U.S. Northern Plains, but has since fallen to within 14 cents of the June 2 price. This decline in wheat futures prices represents a significant opportunity for customers to lock in low futures values to hedge the risk of growing protein premiums due to the tight global supply of high protein wheat.

The USDA report also noted that lower year over year wheat production for 2017/18 was reported in Canada, Kazakhstan, Ukraine and the United States, and is also expected in Australia. This is important for customers needing high protein wheat, because nearly all the world’s high protein wheat exports (13 percent protein on a 12 percent moisture basis (mb) or higher) originate from those five countries plus Russia.

While Russian wheat yields exceeded expectations and boosted total production, high protein wheat supplies are very limited according to the Federal Centre of Grain Quality and Safety Assurance for Grain and Grain Products (Centre) preliminary data for winter wheat. According to Centre data, 25 percent of samples graded as Russian 3rd class wheat (10.5 to 11.9 percent protein on a 12 percent mb); 44 percent of the samples graded as Russian 4th class wheat (8.8 to 10.5 percent protein on a 12 percent mb); and 31 percent as 5th class wheat (feed wheat). Less than 1 percent of samples graded as Russian 2nd class wheat (11.9 to 12.8 percent protein on a 12 percent mb).

With global high protein wheat supplies shrinking for the second consecutive year and demand continuing to be strong, the premium between MGEX and KCBT wheat futures has continued to widen. In 2016/17, the inter-market spread between MGEX and KCBT averaged $1.05 compared to just 40 cents the prior marketing year. Year to date in 2017/18, the MGEX to KCBT spread averages $2.09.

The demand for higher protein wheat also supports HRW protein export basis spreads, which have widened significantly this year at both Gulf and Pacific Northwest (PNW) ports. Over the past 15 years, the average premium for 12 percent protein (12 percent mb) at the Gulf has been 14 cents per bushel. This year that premium is $1.96 per bushel. The 15-year average premium for 12 percent protein HRW at the PNW is $1.09 per bushel. Since the beginning of the 2016/17 marketing year on June 1, that average premium is $1.94 per bushel.

Despite the increased premiums for high protein HRW and HRS, a review of USDA Federal Grain Inspection Service (FGIS) data reveals an increased percentage of high protein exports. Seventy-seven percent of 2017/18 HRS exports have at least 14 percent protein (12 percent mb), compared to the 5-year average of 70 percent. The percentage of HRW exports of 13 percent protein and above (12 percent mb) is double the 5-year average.

With six months left in the marketing year, many customers are securing their high protein wheat demands for the year. While premiums for high protein continue to grow, U.S. wheat futures markets have fallen for four straight weeks, which offers a good opportunity for customers to lock in the lowest HRS futures prices seen since June and the lowest SRW and HRW futures prices since last December.

Please call your local U.S. Wheat Associates (USW) representative if you have any questions about the U.S. wheat marketing system or U.S. wheat supply.

/by
thumbnail
, , ,

Annual Crop Quality Seminars Help Customers Make Purchasing and Milling Decisions

By Amanda J. Spoo, USW Assistant Director of Communications

Each year, after thousands of wheat crop samples are analyzed and the results are published in the USW Crop Quality Report, USW invites its overseas customers, including buyers, millers and processors, to seminars led by USW staff, U.S. wheat farmers, state wheat commission staff and educational partner organizations. The seminars dive into grade factors, protein levels, flour extraction rates, dough stability, baking loaf volume, noodle color and texture and more for all six U.S. wheat classes, and are tailored to focus on the needs and trends in each regional market.

In 2017, USW hosted 33 seminars in 25 countries, and many reported seeing record participation. Customers share that they use the report throughout the year as a reference manual and to guide them through purchases and future planning. The seminars provide a first look at the overall crop and a deep dive into the data and how to use it.

“The crop quality booklet is very useful for us as millers for reference and information on wheat quality available for production,” said one participant from Indonesia.

“If we encounter quality issues in our products, we use the wheat quality data to help us make necessary adjustments,” said participants from the Philippines.

Customers will often use the seminars and report as educational training for new employees.

The reports and seminars have been a traditional part of USW’s strategy since 1959, growing to become its single largest marketing activity.

/by

Think Farm Export Programs Don’t Matter? Think Again.

GET THE REST OF THE STORY

DTN Wheat Detail
DTN Corn Detail

2008-2013 U.S. Wheat Associates. All Rights Reserved
Privacy Policy | Non-Discrimination Statement