Spring wheat

Although spring wheat prices may be struggling to maintain price strength, demand for the commodity has been getting stronger of late.

“Lately the spring wheat market has struggled to maintain any price strength,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “March Minneapolis futures right now are trading around $5.30 per bushel, so that puts cash prices similar to two weeks ago when they were $4.75-$5.05.

In general, Olson noted that this time of year is actually pretty quiet and there’s not a lot going on to move the market.

“The things right now that are affecting the market are basically outside our control or outside the normal supply and demand concerns,” she said. “The big issue that startled the market has been the coronavirus. That’s caused uneasiness and it has depressed a lot of markets, including commodities.”

Olson also pointed out that there are rumblings of some other issues going on concerning wheat, including the fact there is some dryness over in Russia at this time. Interestingly enough, however, Russia actually raised their projection for production next year, despite the dryness. “So that’s a bit interesting,” she added.

Exports out of Russia are reported to be down about 30 percent compared to last year. Also, there has been some random talks about limiting exports from Russia.

“That probably says that there are some concerns going on there,” Olson said, adding that one thing that kind of makes up for that is that Ukraine’s wheat exports are performing the opposite and are up about 35 percent.

“So from that Black Sea region, in general, exports are relatively stable,” she said.

Also, Europe has seen very strong export demand recently. However, looking toward their new crop, Olson explained there were some wet conditions last fall at planting, which did reduce acreage. And now areas of Europe are dry as well, so they’re likely looking at lower production out of that area this year.

Looking at the U.S. hard red winter wheat region, acres are projected to be the second lowest in history. That region also has been a bit drier than normal.

“So there are a few things out there that could potentially have some market impact if they continue,” she said.

Recently, USDA released its February WASDE (World Agricultural Supply and Demand Estimate) report. For wheat, USDA increased its export estimate and decreased stocks.

“Price-wise, that’s where we want to go,” Olson said.

USDA is now projecting total wheat exports at 1 billion bushels, which is up 25 million bushels (MB) from the last estimate. Current sales for all wheat total just over 800 MB, which is a 22 percent increase. “We’re seeing very good demand,” she said. “And because of that, stocks declined 25 MB down to 940 MB, and that would be the lowest level in five years.

“Things are definitely moving in the right direction, but historically speaking, supplies are still considered fairly adequate, so that does continue to keep a lid on prices,” she added.

For hard red spring wheat, USDA raised exports by 15 MB, bringing the new estimate to 275 MB. Ending stocks dropped by the same amount – 15 MB – down to 249 MB.

“It’s the same for hard red spring wheat – we’ve been seeing pretty good export demand with some strong sales during the week (ending Feb. 14), she said, adding the big buyers included Vietnam, Philippines, Japan and Korea. As of mid-February, U.S. sales for the current year are about 30 MB higher than last year.

“When we pull up the chart of our top customers, year-on-year we have increased sales to the majority of them, so that’s good news,” she said. “The one customer where we still haven’t caught up to, of course, is in China. We’ve seen a few sales there, but nowhere near where we were 3-4 years ago.”

Olson noted that the next big unknown is going to be spring wheat planting, both here in the U.S. and in Canada.

“I think there’s a lot of uncertainty this year, just given the late harvest last year, the wet conditions that we had, and then some regions getting a lot of snow,” she said. “Of course, it depends on what the spring weather is going to bring.

“There are a lot of analysts out there already who are projecting a decline in spring wheat acres. So I think that’s something that the market will eventually start to get concerned about,” she concluded.

Demand for spring wheat improving

By MARK CONLON

For Farm & Ranch Guide

Although spring wheat prices may be struggling to maintain price strength, demand for the commodity has been getting stronger of late.

“Lately the spring wheat market has struggled to maintain any price strength,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “March Minneapolis futures right now are trading around $5.30 per bushel, so that puts cash prices similar to two weeks ago when they were $4.75-$5.05.

In general, Olson noted that this time of year is actually a pretty quiet and there’s not a lot going on to move the market.

“The things right now that are affecting the market are basically outside our control or outside the normal supply and demand concerns,” she said. “The big issue that startled the market has been the coronavirus. That’s caused uneasiness and it has depressed a lot of markets, including commodities.”

Olson also pointed out that there are rumblings of some other issues going on concerning wheat, including the fact there is some dryness over in Russia at this time. Interestingly enough, however, Russia actually raised their projection for production next year, despite the dryness. “So that’s a bit interesting,” she added.

Exports out of Russia are reported to be down about 30 percent compared to last year. Also, there has been some random talks about limiting exports from Russia.

“That probably says that there are some concerns going on there,” Olson said, adding that one thing that kind of makes up for that is that Ukraine’s wheat exports are performing the opposite and are up about 35 percent.

“So from that Black Sea region, in general, exports are relatively stable,” she said.

Also, Europe has seen very strong export demand recently. However, looking toward their new crop, Olson explained there were some wet conditions last fall at planting, which did reduce acreage. And now areas of Europe are dry as well, so they’re likely looking at lower production out of that area this year.

Looking at the U.S. hard red winter wheat region, acres are projected to be the second lowest in history. That region also has been a bit drier than normal.

“So there are a few things out there that could potentially have some market impact if they continue,” she said.

Recently, USDA released its February WASDE (World Agricultural Supply and Demand Estimate) report. For wheat, USDA increased its export estimate and decreased stocks.

“Price-wise, that’s where we want to go,” Olson said.

USDA is now projecting total wheat exports at 1 billion bushels, which is up 25 million bushels (MB) from the last estimate. Current sales for all wheat total just over 800 MB, which is a 22 percent increase. “We’re seeing very good demand,” she said. “And because of that, stocks declined 25 MB down to 940 MB, and that would be the lowest level in five years.

“Things are definitely moving in the right direction, but historically speaking, supplies are still considered fairly adequate, so that does continue to keep a lid on prices,” she added.

For hard red spring wheat, USDA raised exports by 15 MB, bringing the new estimate to 275 MB. Ending stocks dropped by the same amount – 15 MB – down to 249 MB.

“It’s the same for hard red spring wheat – we’ve been seeing pretty good export demand with some strong sales during the week (ending Feb. 14), she said, adding the big buyers included Vietnam, Philippines, Japan and Korea. As of mid-February, U.S. sales for the current year are about 30 MB higher than last year. 

“When we pull up the chart of our top customers, year-on-year we have increased sales to the majority of them, so that’s good news,” she said. “The one customer where we still haven’t caught up to, of course, is in China. We’ve seen a few sales there, but nowhere near where we were 3-4 years ago.”

Olson noted that the next big unknown is going to be spring wheat planting, both here in the U.S. and in Canada.

“I think there’s a lot of uncertainty this year, just given the late harvest last year, the wet conditions that we had, and then some regions getting a lot of snow,” she said. “Of course, it depends on what the spring weather is going to bring.

“There are a lot of analysts out there already who are projecting a decline in spring wheat acres. So I think that’s something that the market will eventually start to get concerned about,” she concluded.