The spring wheat market, much like the U.S. government, has been pretty quiet of late.
“The Minneapolis futures have been trading in a sideways pattern the last few weeks. It’s not surprising, however,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “First off, we’re in the middle of winter in the spring wheat region so there’s no new production news to rely on. But, obviously, the big factor is the lack of USDA reports due to the partial government shutdown and we have no idea when those will resume.”
One of the big reports that USDA releases in January concerns winter wheat plantings and last year winter wheat acreage dropped to about 33 million acres and was the second lowest level since records started.
“Last fall winter wheat producers had some issues getting the crop planted due to wet conditions, so people were waiting for that report to see what the acreage was going to look like,” she said. “A lot of early estimates indicate that acreage could be even lower this year, but, of course, there’s no way to confirm that yet.”
Some of the private estimates out there are saying acreage will be fairly equal to last year and then there are others who feel it could be as much as a million acres lower.
“Obviously lower acreage would be a positive price-wise for the market,” she said.
Without those key reports Olson said the market has been mainly relying on tidbits of trade news out there and at this time a big piece of news recently was about Russia. Olson pointed out there is some talk that Russia’s wheat supplies are getting tighter and that their prices have come up a little bit recently.
“There has even been talk about possible restrictions on wheat exports,” she said. “However, we seem to hear this at least every couple years and it doesn’t always come to fruition so it’s tough to say how accurate those reports are.
“But what we do know is that their production is down, about 18 percent this year, and their exports have actually been fairly strong so far, so definitely their supplies are tightening,” she continued. “In terms of if they will actually cut sales, we don’t know that yet. If they do, that would be promising because obviously that would push demand to other sources.”
The other news in the market is in regard to China. Trade talks and tariffs have dominated the market so any time that there’s news that the two governments are meeting or discussing trade issues the market reacts to that, However, it’s tough to say what progress, if any, is being made, according to Olson.
“This does affect U.S. wheat. China hasn’t purchased U.S. wheat since March of last year,” Olson said. “This is an issue for spring wheat because they have actually been a top-five market for the U.S. in recent years, buying anywhere from 10 to 40 million bushels. There was a rumor recently that China bought U.S. wheat, but there has been no confirmation on that.”
The other issue is that USDA is not providing export sales reports, but they still do have to report export inspections – wheat that is being loaded for export. Recently that report showed that about 20 million bushels was inspected which was quite a bit higher than expected. U.S. year to date export inspections were just under 500 million bushels for all U.S. wheat which is down 11 percent on the year.
The last U.S. export sales report was in December which showed the spring wheat export sales were 4 percent higher than a year ago and was actually the leading class being exported.
“So we’re already missing a month of data, but as of that report spring wheat sales have reached 190 million bushels and USDA is projecting 300 million bushels in exports for the year,” Olson said. “That would represent an increase of more than 30 percent which would certainly be price positive if we do start to see those exports sales.”
World production news has been fairly quiet lately. The market already knows that Australia’s wheat crop is smaller due to drought. The only other thing the market is watching over, Olson noted, is that it’s still dry in parts of Europe and the Black Sea region. However, right now, with crops being dormant, it’s not a huge market concern.
Coming up, a big thing to watch is spring wheat plantings.
“The general thought is that spring wheat acres will increase primarily at the expense of soybeans,” Olson said. “However, we saw spring wheat acres increase over 2 million last year so it’s tough to say how much more we can see them increase.
“We’re a good 10 weeks out from planting so I think a lot is going to depend on what, if anything, these prices do,” she continued. “So far we are hearing from seed dealers that seed sales have been very good for wheat so we know that is an indication of a stronger interest in planting spring wheat.
Spring wheat cash prices are ranging around $4.95-$5.15.
“Hopefully if we get some more export sale news that will help, and if we get the winter wheat planting report that, too, will hopefully help get some price movement going,” she concluded.