It hasn’t been a great start for spring wheat producers or spring wheat prices, but there is hope that things will turn around, hopefully sooner rather than later.
“Prices continue to take a beating. We now have Minneapolis May futures below the $5 mark,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “The most recent close was $4.90. I think we were all hoping that we wouldn’t go below that $5 level, but we’ve fallen 40 cents again in the last two weeks. That puts cash prices between $4.25 and $4.55.”
Olson noted that really not a lot has changed in the last two weeks, it’s just that everything remains bearish, even though with a slow start to planting one might consider that a bullish factor.
“When you look at the spring wheat planting pace you might think that would be bullish, but right now U.S. spring wheat is 13 percent planted,” she said, adding that compares to 33 percent on average.
“In North Dakota we had just gotten started and, unfortunately, over the weekend (April 27-28) we had rain and snow so obviously that’s stalled any field work that had been taking place and many hadn’t even started yet,” she reported.
North Dakota’s planting progress is at 5 percent complete. That is actually ahead of last year which had a slow start to planting, but the crop turned out to be very good. The concern is that the forecast doesn’t look to improve anytime soon.
“Still, that doesn’t seem to have shaken the market any at all,” she said. “Part of that is we have good winter wheat conditions and we still have large stocks.
“It’s frustrating that the market hasn’t responded to the planting delays, but the large stocks seem to mitigate some of that concern.” Olson continued.
“Our stock levels continue to increase. For example, spring wheat stocks are estimated to be 305 million bushels on June 1 and that would be the highest in about 30 years,” she said. “That’s the stuff that keeps the market concerns at bay. We really need to whittle down those stock levels.”
Overall, U.S. wheat stocks are higher than normal levels the last few years. One thing that would help that, Olson noted, is increased export sales. Looking at hard red spring wheat sales, as of April 30 spring wheat was at 255 million bushels sold. USDA’s estimate is 260 million, which we should easily reach.
“Really, if you look at the last 10 years of export sales, we would be ahead of average,” she said. “Our exports aren’t bad. We were just hoping for better exports to help with those stock levels.”
Another report that came out in late April was the Canadian projected plantings which was a bit bearish because it did show spring wheat acres could possibly be up 12 percent on the year, which equates to 2 million acres to reach a total of 19.4 million acres. Stats Canada is expecting that spring wheat will take some acres from durum and canola.
“That’s pretty much what the market expected, but then when you actually see those numbers in the report it does put some further pressure on prices,” she said.
Looking at other developments around the world the expectation for the next crop year is for higher production. That is based on the fact that, right now, weather conditions for the most part are favorable for both planting and the growing season, Olson noted. It is still dry in areas of Europe and also still in Australia, but for the most part it’s favorable everywhere else. But that could change quickly.
Spring planting is just beginning here in the Northern Plains and in the Black Sea region, she pointed out, adding that with the planting pace being behind there’s the risk that all of the acres won’t get planted or could be put into a different crop so that’s one thing to keep watching.
One more factor is the condition of the U.S. hard red winter wheat crop continues to be favorable with 64 percent rated good/excellent.
“That’s 2 percentage points higher than last year and significantly better than last year when only 33 percent was rated in that category,” she said. “Also, the Wheat Quality Council is doing its tour in the winter wheat area so that might give us an idea of what yield potential is.
“Other than that we’re just waiting and watching the planting of the spring wheat crop and hoping for some news that will help the market out,” she concluded.