As spring wheat harvest was just getting underway, the market seemed to be waiting for harvest reports before moving one direction or another.
Prices hadn’t done much in the last couple of weeks, according to Erica Olson, marketing specialist for the North Dakota Wheat Commission, adding that as of Aug. 6, the September Minneapolis futures were at $5.22.
Local cash prices are basically the same as two weeks ago at $4.25-$4.60.
“One thing we have seen over the last few weeks is that the spring wheat price spreads continue to widen over the Kansas City hard red winter wheat futures,” Olson said. “Right now, that spread is about $1. That’s because we’re in the flux of winter wheat harvest and producers are seeing good yields and so that market (Kansas City) has been a bit weaker.”
Chicago futures are a bit stronger than Kansas City due to adverse growing and harvest conditions in the soft red winter wheat crop and support from corn.
Olson pointed out that hard red spring wheat harvest has officially started. In North Dakota harvest was just 1 percent harvested going into the first week of August, so there really aren’t any kind of harvest reports as of yet for the market to consume.
“Normally at this time, about 10 percent is harvested, so we are a bit behind. But that’s not surprising given our late planting and crop development pace,” she said, adding that the U.S. spring wheat harvest was listed at 2 percent complete, well behind the average of 14 percent complete.
“A lot of producers are still waiting for their fields to finish ripening and to dry out a bit,” she said.
The Wheat Quality Council (WQC) tour conducted in late July indicated a spring wheat average yield of 43 bushels per acre. That compares to USDA’s yield last year of 48 bushels per acre, so overall the market is seeing some lower yield potential this year.
On the WQC tour, participants noted some of the crop was stressed by those early dry conditions in some regions, and in other areas by wet conditions. They also noted there was some disease pressure, specifically some scab. There was also some bacterial leaf streak, but we don’t really know the effects those will have, if any, until harvest.
“Hopefully disease won’t be a big issue,” she said.
The hard red winter wheat crop is about 82 percent harvested which is about 10 percent behind average. Olson noted that most of what’s left is the northern states including Nebraska, Colorado, South Dakota and Montana. So far, producers are seeing good yields, but protein levels are about a point lower than last year at 11.2 percent on average.
“The soft red winter wheat crop, not surprisingly with the wet growing and harvest season, is seeing some elevated DON levels and lower falling numbers. Thus far it’s nothing too major, but still the effects of a wet growing season,” she said.
Looking at other areas of the world, Olson noted there has been a lot of talk in Europe regarding really hot conditions and very dry periods at times, but as they’ve gotten further into harvest the yields are coming in larger than expected. As of early August, USDA has European production estimated at 5.5 billion bushels. That compares to 5 billion last year.
“Some estimates out of France indicate that it could be the second largest crop on record,” she said. “We continue to hear some concerns about the Russian crop and harvest, but their exports continue to be fairly aggressive, so right now there’s really nothing big enough out of there to impact the market, especially with the larger European crop.”
There were a couple other factors playing into the market lately, including the recent announcement that the U.S. would implement a 10 percent tariff on an additional $300 billion of Chinese goods starting Sept. 1.
“The market didn’t aggressively react to that news but, obviously, it has already reacted to a lot of trade news and additional news that isn’t helpful in terms of agricultural trade,” Olson said.
“Another point that’s against the U.S. a bit is that the dollar continues to get stronger. So far this hasn’t significantly impacted our exports, but obviously a strong dollar doesn’t help,” she added.
On the demand side, as of Aug. 5, total U.S. wheat exports were up 24 percent versus last year with the hard red winter wheat class leading the pack.
“We’ve sold about 130 million bushels so far compared to just 65 million a year ago, so basically double,” she said. “Hard red spring wheat sales are at 82 million bushels compared to 85 million a year ago. That’s very comparable, but we could use some increased spring wheat demand to help out supplies and prices.
Other than that the market has been fairly quiet. The main thing now is watching harvest for both yield reports and quality in the U.S. and Canada.