Wheat freeze assessment awaited
Despite widespread freezing conditions on southern plains winter wheat this week, wheat markets seemed to be more focused on the USDA’s supply/demand report which cast a bearish tone to the grain complex.
The report was slightly negative for wheat with higher end stocks here in the US and in the world. Corn had a bullish slant for US end stocks, but world stocks were higher there as well. Similarly, US soy end stocks were unchanged but world stocks were higher.
The trade was expecting higher supplies after the blistering stocks report from two weeks ago, but at least this report wasn’t that bearish.
It was interesting to note that they actually lowered feed usage in the report; just a bit hard to understand after a month of heavy movement of soft red into southwest feedyards. It seems that USDA’s numbers are missing the mark way more than usual. Wheat feeding down? Seriously? The constant flip-flopping of corn stocks over the last few years? The wide swings in stocks assessments aren’t helping anyone.
For wheat, the bulls are waiting to see just what the freeze damage was from this latest cold snap but the bears are factoring in the moisture that fell across much of the central plains. For now, it’s basically a push – the bears pressed early but couldn’t break the market. And so far, there isn’t enough proof of damage (supposedly) to warrant the bulls getting aggressive.
While traders are waiting for official evidence, anecdotal reports suggest that damage was not only widespread, but severe. Temps reached below 20 F into the southern TX panhandle, well below the damage threshold. In Oklahoma, it was even colder and in Kansas and Colorado colder yet where plenty of wheat was in the joint and likely saw damage as well.
Keep in mind, this comes after a dry fall and winter where crop conditions were the worst since USDA has been keeping track. It comes after a killing freeze over the Easter weekend. And more cold weather is forecast for next week as well. This spring has been anything but easy for the wheat crop. Wheat may have nine lives, but it’s not invincible.
Further to the north, spring wheat plantings are expected to be very slow this year, with significant snow across the far northern plains into the Canadian prairies keeping producers out of the field and increasing fears of flooding. Minneapolis futures took over leadership late in the week on the prospect of reduced plantings.
Exports were a little disappointing at only 339 TMT. With only 7 weeks left in the marketing year, we almost even with USDA’s projection at 92% (93% average). If sales stay this week, we run the risk of USDA lowering export expectations yet again.