USDA’s Prospective Planting report, released March 31, showed that U.S. spring wheat acres this year could be down one percent to 12.6 million acres. What impact, if any, that will have on prices is yet to be determined.
“(The numbers for spring wheat) weren’t too surprising. That’s kind of along the lines of what everyone was thinking,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission.
All wheat acreage is estimated at 44.7 million acres, 1 percent below last year’s levels and the lowest since record keeping began in 1919, according to the report. Winter wheat area, at 30.8 million acres, is down from last year but even with pre-report expectations. Of that total, 21.7 million acres will be planted to hard red winter, 5.69 million to soft red winter, and 3.42 million to white winter. Spring wheat acreage is expected to decline 1 percent from last year to 12.6 million acres.
For spring wheat specifically, shifts in acreage amongst states was notable. North Dakota though saw a bit bigger drop with acres projected to fall from 6.7 million acres to 6.1 million.
“In North Dakota, soybeans picked up the most acres and are projected to be a million higher, while corn acres are projected to be 300,000 lower in the state,” she said. “The other shifts in commodities were much smaller.”
Looking at nearby states, Minnesota producers are expecting to see a small decline of about 10,000 acres to approximately 1.35 million acres. In Montana, spring wheat acres are projected to increase from 2.9 million to 3.3 million, while in South Dakota acres are expected to increase from 640,000 to 850,000.
The increases for Montana and South Dakota are largely due to the fact they had a drop in their winter wheat acres, so some of those were going into spring wheat acres, according to Olson.
Olson also noted there’s been some uptrend in the futures prices, though not substantial. The Minneapolis May futures were up about up 25 cents in the previous two weeks.
That was due to a couple things.
“One is we are seeing fairly good demand still and we also saw some increased activity with some fund buying coming back into the commodity markets with everything that’s happening with the coronavirus and the financial complex,” she said, adding that the Minneapolis May futures closed March 31 at $5.39. That puts cash prices between $4.75 and $5.05.
USDA also released its stocks report which indicated that all wheat stocks in the U.S. were down 11 percent as of March 1 at 1.4 billion bushels. The three-month disappearance rate was 428 million bushels (MB), which is about 3 percent higher than a year ago.
“USDA’s ending stocks estimate for this year is 940 MB,” she said. “If we want to get to that level we will need to see a small uptick in demand for the next quarter, otherwise that ending stocks number could end up higher.”
On the demand side, exports sales the last week in March for spring wheat totaled 6.2 MB. Big buyers included Japan, Korea, China, Panama and Italy.
Total export sales for the year stand at 267 MB, which is about 11 percent higher than last year.
“USDA’s estimate for the whole year is 275 MB, so we’re getting pretty close to that,” she said.
Looking at total U.S. sales of all classes, there were new sales of 27 MB the last full week of March. At present the U.S. is at 908 MB sold, which is about 5 percent higher than a year ago.
“We are starting to hear of some countries contemplating restricting commodity exports, specifically in the Black Sea region,” Olson said. “That hasn’t had much of a market impact at this time, but it is something to keep an eye on.”
There are also some areas with production concerns, she pointed out. In Europe, some countries are dealing with conditions that are too wet, while in North Africa dry conditions are having an impact.
“That’s projecting that we could see higher import demand from those two areas,” she said.
“Domestically, we’re seeing the same thing as what we’re seeing for durum,” she continued. “Obviously, just with more people being at home, restaurants and schools being closed down, and in the grocery stores bread and flour are in short supply, so millers have been ramping up production to meet that demand.
“That’s brought some short term positive impact for prices, but in the long-run we’re just seeing that demand shift from restaurants and food service to home use,” she added. “Really it’s probably going to end up being a wash and total demand stable to slightly higher.”
Other than that, there are some producers in the region who are getting close to planting, so that will be closely watched and the corresponding weather that goes along with that.
“And, of course, just all the uncertainty in the markets right now due to the coronavirus situation,” she concluded.