Reports & Planted Acres Abound
As Plant 2020 starts to kick into high gear, we saw some closely watched government reports published lately that tend to have some impact on the markets. Last week, Statistics Canada shared both its asterisked estimates of Plant 2020 acres, as well as what Canadian grain stocks looked like at the end of March. When it comes to the latter, it’s clear that there’s still a lot of non-durum wheat held in the Prairies while durum inventories have dropped by a similar amount. In fact, non-durum wheat in just Western Canadian farmers’ bins at the end of March was 11 MMT. That’s about 16% higher year-over-year and 15% above the five-year average. Commercially though, there’s less wheat – both durum and non-durum being held by the elevators.
On the acreage front, Statistics Canada tabled their estimate of what Plant 2020 intentions should come in at, but they did asterisk this report, saying that the survey response rates were “lower than usual” than previous years. That said, in Western Canada, non-durum wheat acres are estimated to be basically flat compared to 2019, while durum acreage should increase by a bit. More noticeable, however, is the large increase in winter wheat acres in Eastern Canada. That bet – as it was seeded last fall – may turn out to be the right one as demand for flour has intuitively increased in this new COVID-19 world.
Speaking of winter wheat and COVID, while the Kansas winter wheat crop tour was cancelled because of this new coronavirus, Oklahoma’s tour pegged the state’s crop size at 12% lower year-over-year to just 96.5M bushels (or 2.63 MMT if converting bushels into metric tonnes). The decline is largely attributed to dryness and frost damage in April. That said, the USDA said in their May WASDE report that total U.S. wheat production in the 2020/21 crop year should come in at 1.866B bushels (or 50.8 MMT), which about 3% lower year-over-year. Aligned with the drop in production and the appreciation of the U.S. Dollar, U.S. wheat exports are expected to drop 2% to 950M bushels (or 25.9 MMT).
The USDA also pegged wheat production in Ukraine and Europe lower year-over-year with, with the latter estimated to see a 20% reduction in exports. That said, good rains fell last week in areas of France and Germany that really needed a shot of moisture. Similarly, some good rains are forecasted for parts of the Black Sea, but there are doubts if these rains will be of help to a soft winter wheat crop that’s a few weeks from being combined.
Looking at the southern hemisphere, the USDA thinks that Australian wheat farmers and exporters are going to be doing some big things in 2020/21, with their estimates for these line items expected to climb nearly 60% and 80% higher compared to 2019/20. Conversely, CONAB said that Brazil will need to import way more wheat than usual thanks to the increased demand for bread and other flour-based products. Argentina tends to be the largest supplier to Brazil, but 2019/20 ending stocks are a bit tight with just 1.45 MMT expected to carryover in a country that has a plethora of economic issues. That said, Argentine farmers will start planting their 2020/21 wheat crop next week and thanks to some good weather (including rain) in recent weeks, production is already estimated to hit a new record of 21 MMT.
CEO | FarmLead
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