Spring wheat planting is well behind average and that fact helped give a boost to prices, albeit briefly.
“Last week we did see a couple days of price gains,” said Erica Olson, marketing specialist with the North Dakota Wheat Commission on May 26. “That was due in large part to the planting delays for spring wheat, but that didn't last. Prices just seem to struggle to work their way higher.”
On the day of this report, the Minneapolis July futures were trading around $5.18, which is fairly consistent to where they were two weeks ago, indicating there’s not a lot of price movement there. Cash prices were bringing between $4.45 and $4.70.
Planting progress in North Dakota had been “shockingly slow for most of the month,” according to Olson. For example, for the week ending May 22, only 40 percent of planting was complete in North Dakota. That compares to 76 percent on average. Surrounding states were 70 percent complete or higher.
Over the third week of May, producers finally caught a break with better weather and drier fields.
Planting progress in N.D. jumped nearly 30 percentage points and now stands at 70 percent complete. While that number is still behind average, it’s a big improvement compared to where we were. Surrounding states are 86-97 percent complete, with the U.S. average at 81 percent complete. Emergence of the U.S. crop is now at 50 percent, behind the average of 65 percent.
In North Dakota, about a third of the crop has emerged.
Looking specifically at planting progress around North Dakota, in the western region spring wheat planting was nearly complete. And, as with durum, the conditions there are actually getting a bit dry. In the eastern third of the state, producers have been making fairly good progress, although there are a few scattered fields that have been difficult to get into.
“But it’s the central area of the state where the biggest problems are,” Olson said. “Some producers are just getting started with planting. It’s been very, very wet in some areas where they actually had remaining crops from last year.”
In Canada, producers have experienced some of the same issues as here in the Northern Plains with cold and wet weather. However, conditions were good the previous week, so in most areas, half of the spring wheat or more had been planted.
Looking at conditions around the world, Olson noted that for past few weeks there has been a lot of talk and concern about conditions in Europe and the Black Sea region.
“There has been a lot of beneficial rains in those areas, however, it may have come too late for some of the crop and some of those countries have been dropping their production estimates,” she said. “Production estimates have been lowered for both Ukraine and Russia. In Europe, some areas got rain and some didn’t, and now the temperatures are expected to be warmer than normal, so that continues to be something to watch in both of those areas.”
In the Southern Hemisphere, in Australia, which has had severe drought the last couple years, planting continues there where precipitation has been better this year. In fact, production there is forecast to be up by nearly 40 percent.
In the U.S. hard red winter wheat area, Olson pointed out there was a virtual wheat tour this year, which was mirrored after the Wheat Quality Council tour. The virtual tour was projecting lower yields this year. For Kansas, the tour projected a yield of 44.5 bushels per acre, which is 2.5 bushels lower than USDA’s estimate and quite a bit lower than last year’s average of 52 bushels per acre.
“The drop in the yield estimate was due to some freeze damage earlier in the year and then, up until recently, the area had been quite dry, and those two factors were impacting yields there,” she said.
Looking at domestic demand, the industry is still seeing strong sales of packaged flour and other wheat-based foods at the grocery store, although that has tapered off a bit recently. It definitely had an impact, however. For example, according to recent USDA data for the January through March quarter, flour production is 3.5 percent higher than last year.
“We also saw the impact of that in the May WASDE report (World Agricultural Supply and Demand Estimate) when USDA increased domestic use for wheat by 7 million bushels (MB) from the previous month,” Olson said.
On the export side, spring wheat sales stand at 289 MB, which is up 11 percent from last year. The U.S. has shipped 246 MB, thus far. USDA’s estimate for the current year, which ends May 31, is 275 MB, so the U.S. needs to continue to see shipments go out in the next couple weeks to meet that estimate.
“We have seen some sales to China specifically for spring wheat,” Olson said. “In fact, those sales now total 5.4 MB. That’s something we’ve kind of been waiting for. We’re hoping for higher numbers, but it’s a good indication we are starting to see them buying some spring wheat.”
In terms of all U.S. wheat, all classes combined, sales are 30 MB higher than last year in sales at 975 MB.
“In general, we are seeing fairly good demand for wheat, but we’re just not seeing that show through in price movement,” she concluded.