All Eyes on 2019 Wheat Crop
Wheat markets pushed through to the second quarter of the calendar year on a bit of a weak note thanks to some bearish data released by the USDA on the last trading day of March. U.S. wheat stocks as of March 1st were pegged at 43.3 MMT (or 1.591 billion bushels). This would be 6% higher than the same report a year ago, the second-largest volume in more than 30 years and about 30 million bushels above what the market was expecting to see.
Further, total wheat acreage came out at 47.33 million, which is a little above the pre-report average guesstimate of 46.92 million acres. This would be 4% below what was planted in 2018 and the lowest in 100 years. Getting more specific, despite winter wheat acreage expecting to be the smallest it’s been in 110 years, new crop Chicago and Kansas City wheat prices dropped nearly 11% and 15% respectively since the start of the 2019 calendar year. As I’ve mentioned a few times in the past few weeks though, hard red spring wheat prices in Minneapolis have been performing better than their winter brethren.
Staying in the U.S., total crop-year-to-date commercial sales of all wheat have totaled 23.6 MMT, which would account of 90% of the USDA’s total expected export volume of 26.3 MMT. Through Week 42 of the 2018/19 crop year though, only 17.8 MMT of U.S. wheat (all types) has been shipped, which is down about 2% lower year-over-year.
Conversely, Canadian non-durum wheat exports through Week 34 are tracking 16% higher with 11.7 MMT moved out of country. The high note though for Week 34 was a crop-year high for durum exports of more than 179,000 MT shipped out! That brings total 2018/19 Canadian durum exports to 2.34 MMT, which is tracking about 9% below last year’s movement.
Looking forward, a lot of attention is starting to turn to Plant 2019 and therein, new crop pricing opportunities. You can tell above that the futures markets have dipped a little bit, but on the cash front, we’ve seen cash wheat prices in Western Canada have stayed fairly resilient. One could certainly expect to start to see the usual weather premiums start to get baked into these prices, especially given the water/flooding issues in the U.S. Northern Plains and Midwest. That said, it’s widely expected that hard red spring wheat seeding will be delayed this year in North Dakota as farmers will have to choose what to plant first in a smaller window of opportunity. Usually spring wheat is planted before corn or beans.
Some final datapoints to keep in point this week comes from the Black Sea: Russia’s Grain Union said last week that, if weather remains favourable, total production in 2019 could top 2017’s record output of 135.5 MMT. Today, official estimates for Russia’s Harvest 2019 range between 119 – 127 MMT. Next door in Ukraine, the Ag Ministry says that this year’s spring wheat acres planted there should top 425,000, about 50% of the area has already been drilled.
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