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HRW wheat on the ropes
HRW wheat crops are on the ropes as weather continues to hammer the crop in HRW wheat country. First the Ice Age hit, when temps were frigid for the past two months in winter wheat country, giving them continuous freezes in many locations that damaged winter wheat. It was so cold, development is well behind normal (only 20% headed vs. 39% normally nationally) to the point where the HRW wheat tour couldn't make any accurate counts of crops that were not even headed yet!
Pro Ag yield models have nosedived in the past three weeks, dropping a total of 1 bushel per acre to now be only at 44.87 bushels per acre for the national winter wheat crop, well below 'trend' yields of 47.27 bushels an acre. Considering that SRW wheat crops are in excellent shape, that gives you an idea of just how dire the condition is in HRW wheat country. This pathetic crop is accelerating its decline, this week dropping 0.4 bushels per acre in the winter wheat yield. It's likely to get even worse as the heat hits in HRW wheat country now that temps are forecast to warm up. It's also likely that heat will finish off this crop, as it will be trying to form heads right during the critical heat periods in June since it is developing so late.
Not only is HRW wheat suffering this fate at a critical time in its development, but also little rain is forecast to fall over the coming two weeks that will likely further deteriorate the crop as its moisture needs will spike with temperature spikes. For these and many other reasons, the most bullish grain in the complex right now is HRW wheat in KC. It's likely that this crop will gain relative to nearly all other grains in the coming few weeks.
Planting progress is also woeful in most of the U.S., with corn planting progress falling further behind normal at only 12% planted vs. 47% normal, and much less than the 20% expected by many analysts. Soybean planting was only 2% planted vs. 12% normally, and most are still focused on planting corn - which has barely started across the U.S. Other crops are also woefully behind normal, with HRS wheat planting only 23% complete vs. 50% normally, barley only 44% planted vs. 49% normally (and most of it in the Northwest), and oats only 57% planted vs. 76% normally. Basically, the weather this spring (bitterly cold temps vs. normal) kept planters at bay. The soils are so cold yet that virtually very little crop is emerged at this time.
This also will put some upward pressure on grains this week, as the slow planting progress is unlikely to be made up by one week of good planting weather. The problem is that most planters are not going, as only a few are currently running across the Corn Belt. It takes time to dry soils out, and it's likely now that many crops will need to get "mudded in" in order to push planting progress forward. That will leave the crops more susceptible to late-season heat, especially in southernmost areas of the U.S. Pro Ag has already lopped off 3 bushels per acre from our corn yield estimate, and we also have subtracted 2 million acres from corn planted acreage estimates, and added it to the soybean expected acreage. It's just too much corn acreage to try to get planted in such a small window (essentially half a normal planting season). We also could lose a bit of soybean acreage that typically gets double-cropped with wheat due to the late winter wheat development due to our Ice Age spring.
Bottom line: KC wheat is probably the most bullish commodity in the world right now, with terrible conditions in HRW wheat country likely to lead to a woeful crop there. The key question now is, how will the remaining half of the planting season go? Can we get all the crops planted in half a season? If not, how many acres will be lost to PP, and how many will switch from HRS wheat/corn to soybeans? And how many acres of double crop soybeans are lost due to the late planting? Given the forecast, it currently looks like an improving forecast from the disastrous weather we've had the first half of the planting season. But can it straighten out in time to rescue 2013 crops?
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