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Lower wheat tour yield estimates buoy wheat trade

Agriculture.com Staff 05/07/2009 @ 9:58am

The hard red winter wheat crop may be a little smaller than earlier thought, and that's sending the wheat markets higher.

The lowered wheat output forecast is based on this week's Wheat Quality Council (WQC) tour in the Plains, which revealed an average yield of 40.6 bushels per acre compared to an earlier estimate of 43.3 bushels. The 40.6-bushel figure is based on a survey of 427 fields. The crop's condition is widely varied, however; in parts of Oklahoma and southern Kansas, a late frost and lack of moisture have trimmed yield projections.

"There are two areas for concern: North-central Kansas, where the rainfall anomaly maps above still reveal drought conditions and far southern Kansas where an early April freeze hit when the crop was more mature than wheat to the north," says Daniel Greenstein, meteorologist with business weather firm StormX.

But, in other areas of Kansas, the crop's looking better. "According to Kansas State University Extension wheat specialist, Jim Shroyer, early indications are that the wheat looks 'quite good,' with yields anticipated to be around 42 bushels per acre or more," Greenstein says. "He attributes his positive preliminary assessment to the copious rainfall over the past month. Early in April, he believes the crop would have looked much poorer. This is reflected in the USDA’s latest crop condition report, which reveals 53% of the wheat in good to excellent condition, compared to less than 40% at the start of April."

This outlook, along with Informa Economics' projection of a 1.535-billion-bushel winter wheat crop (333 million bushels lower than the '08 crop) fired up the wheat trade Wednesday, and that's expected to continue with more projections coming, according to a Dow Jones Newswires report.

"Everyone wants to wait for that new crop to become available, and then they become a little more aggressive about buying that newly harvested wheat," Brian Hoops of Midwest Market Solutions tells Dow Jones Newswires about the reasoning behind a rally in the wheat complex.

The hard red winter wheat crop may be a little smaller than earlier thought, and that's sending the wheat markets higher.

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