Wheat market seen as choppy
Wheat traded generally within the range it has been in for the last few weeks. GMO issues were largely ignored last week in the broader wheat market, although the PNW producers are still holding their breath waiting for the all-clear signal from USDA.
Harvest is progressing in the South with little effect on the market. Yields don’t seem to be a surprise to anyone – terrible in the West and good in the East. Protein seems to be higher than expected with test weights from 58 to 62 at this point.
Spring wheat markets are beginning to take on some leadership of the complex this week after the progress report showed North Dakota only 64% planted, up a dismal 1% from the previous week and 25 points behind the five-year average.
Producers are seeing prevent plant dates move quickly by as they wait to get into the fields. It is becoming increasingly likely that up to 2 million acres of spring wheat won’t get planted in prime yielding areas. That’s what, about 70 to 80 million bushels of wheat? And that’s if it doesn’t get hot, which the long-range weather forecasts do project.
USDA will release their June supply/demand report on Wednesday, the 12th. They’ll make a stab at estimating wheat and corn, but at best only expect ballpark numbers, especially for corn. There is no way they can estimate what the corn acres number will be at this point, but obviously it will be less than their last estimate. Yields will also be lower but by how much is anyone’s guess as well.
Despite talk of more wheat competition coming from India and the Black Sea, U.S. export demand continues to show impressive improvement over the last few weeks. We see China become a consistent buyer when prices move lower; Brazil has also become a common presence for the higher quality wheat. In addition, with old-crop corn (quality) stocks unbelievably tight, wheat continues to be supported by the feed grain market. If spreads between wheat and corn narrow, the cattle feeders are there to buy the wheat.