Planting delays support wheat prices
Yet another test of support and the market holds again. Weather continues to be a driver of price action; this time it's the re-emergence of too much moisture in the northern Plains, particularly North Dakota and Minnesota where planting delays are becoming serious.
We're also seeing planting delays in the same region up into Canada. Interestingly, it looks like Russian spring wheat areas, which lie on about the same latitude as North Dakota is also experiencing too much moisture and planting delays. It's rare that spring wheat takes over leadership of the wheat complex, but at least for now it looks like that is what's happening.
Crop conditions improved for Kansas but plummeted for Oklahoma and Texas. Early yield estimates suggest the potential for good yields from Kansas on north could offset the losses in OK and TX, but it will take tremendous yields as the losses in the far south seem to get bigger by the week. There are still some reports filtering in of frost damage to Kansas areas, but the good weather since then has kept the market from trading on that news.
The seasonal tendency often sees wheat trending higher into early May, and that could pan out this year. But in the bigger picture, we're still looking at big carryover stocks and the prospect of another big crop this year and the longer term trend still looks down. Therefore, we're looking to sell this rally either when it gets to our resistance levels and stalls, or if it's into the second week of May, whichever comes first. Keep in mind that in bear markets, seasonal rallies usually don't last as long or rally as strong as the averages would suggest. The resistance levels that are likely to hold this rally are 6.12 and then 6.27 for Kansas City July futures; 6.37 and then 6.50 for Kansas City December; and 5.65 and 5.84 for Chicago July.
STATS Canada released their prospective plantings report on Friday, showing that producers plan to plant 25.161 million total wheat acres, .6% more than last year. Winter what plantings are down 19.6% at 2.1 million acres, spring wheat up 5.9% at 17.328 million and durum down 5.0% at 5.730 million acres. Canola is expected to be down 7.2% at 14.99 million with soybeans up 10.5% at 3.284 million. Canada is experiencing some planting delays as well, so those numbers are certainly subject to change.
Taking a look around the globe, we see very few weather problems in key wheat areas. China has received very good rains across most of their winter wheat region; what didn't get soaking rains recently is mostly irrigated anyway. Their spring wheat region has some dry pockets that will be monitored closely. There are dry pockets increasing across Ukraine and into western Russia, but at this point not enough to create yield losses. The European continent is looking very good so far with no trouble spots on the radar.
India and Pakistan are quickly moving through their harvest, both looking at bumper crops and talking about restarting exports. The Pakistani government more than doubled wheat support prices, and farmers increased plantings and had great growing weather. They are about 50% done with harvest and yields are much better than expected; so far reports suggest about 4.0 MMT/hectare, compared with the average of 2.5 MMT/hectare. So, after a couple of tight years for them and having to import, it looks like they will be back on the export roster. India was already struggling with storage space as last year's carryover was huge, and now is harvesting their second largest crop on record - following last year's record production. They, too, have long talked of exports but will have to heavily subsidize to do so.