It’s All About Production Now
Grain markets pushed through the last day of June with some bearish reports from the USDA that said corn acres planted this year were not as small as the market was anticipating. Since the collection of information for the June acreage report was from before June 10th, intentions from that date and what’s happened since then are certainly two different things. In this case, there was some bearish pre-report buzz in the market that the numbers from the USDA wouldn’t reflect the actuality of what’s happened in the past 2 weeks and thus, the report should be taken with a grain of salt.
Winter wheat had some losses due to harvest progress in the U.S. and some technical selling. Further, there is some warmer, drier weather that’s in the forecast and some the markets traded the expectation that more supply will be coming into the supply chain. The USDA also increased its estimate of winter wheat area planted in the U.S. by 300,000 acre to 31.8M. Conversely, spring wheat prices made some gains as the acreage estimate in the U.S. dropped 3% to 12.4M acres. U.S. durum acres dropped by 20,000 acres to 1.4M. Worth mentioning is the recent rain in the U.S. Northern Plains has helped alleviate some of the drought there, but there’s no way spring wheat country is out of the woods yet.
Hard red spring wheat prices also gained ground because of smaller acres planted in Canada. As per Statistics Canada’s own acreage report on Wednesday, June 26th, spring wheat acres fell from the original March estimate.
Looking elsewhere in the world, the Black Sea winter wheat harvest is underway. Agritel is expecting Russian winter wheat yields to jump about 11% from last year to 60 bushels per acre. However, the drier start to the spring-planted wheat has led the agency to cut their estimate to 24.8 bushels per acre, slightly below last year’s yields. Next door in the Ukraine, it’s expected that this year’s total harvest of all grains be a new record, exceeding the previous record set last year of 70 MMT. Finally, the Buenos Aires Grain exchange recently, increased their expectations for wheat acres planted for the 2019/20 crop to 16.3M acres, citing higher domestic prices and good rains as the reason.
Ultimately, with these acreages set, it comes down to weather. Yes, the North American spring wheat crop didn’t have its best start to the growing season but wheat is a weed, and at this point, the market is starting to reflect what might turn out to be average yields.
President & CEO | FarmLead.com