Winter wheat crop alert for markets
Grain markets waited for weeks for the slew of statistics that were finally released on Friday, and we saw plenty of price action once the numbers were out. Frankly, I’m just glad to get the numbers behind us so we can stop wringing our hands and get on with it.
Let’s start with winter wheat plantings which carried a few surprises. Total winter wheat plantings at 41.82 million acres were up 500,000 over last year, but still down 765,000 from the average estimate. The biggest surprise was hard red acres at 29.1 million, actually down 800,000 from last year while the trade had expected an increase of 400,000. Soft red had a surge in plantings of 1.3 million at 9.4 million acres, 500,000 more than estimated and largely due to the early harvest of row crops in the Midwest, good moisture and high prices. Soft white plantings were down 30,000 acres at 3.27 million, 200,000 less than anticipated.
Added to the positive slant to the hard red market, USDA this week declared hundreds of counties, many in the central plains, disaster areas. The prolonged dryness across the wheat belt and the disappointing rains in the central plains this week are bringing more attention to this area – and it’s only January. NOAA made it official this week as they announced that 2012 was the warmest year on record, beating the old record by a whole degree. Considering that a big chunk of the hard red acres, and some white wheat as well, were significantly stressed going into dormancy, the lower acreage makes timely spring rains all the more important.
The stocks report also held some surprises – in corn, which I guess shouldn’t be a surprise. Corn stocks on Dec 1 were only 8.03 billion bushels, down 17% from last year and 189 million lower than estimates. On-farm stocks down 26% while commercial stocks were only down 1% also raised some eyebrows. Wheat stocks were largely unchanged from last year at 1.66 billion. Soybean stocks at 1.97 billion bushels were also down 17% from last year on record disappearance for the Sep/Oct/Nov time period. On-farm stocks were down 20% while commercials inventories were down 14%.
The supply/demand report also had its share of adjustments. US wheat feeding was increased 35 million bushels and ending stocks were set at 716 million, down 38 million and much further than the 14 they were expecting. World wheat production was down .8 MMT on a drop in Argentine production of .5 MMT and other minor adjustments. It was curious that USDA did not lower Australian production again, leaving it at 22.0 MMT, much higher than other estimates. They must know something I don’t – no surprise there, either. Argentine production at 11.0 MMT seems to be a little on the high end as well. Wheat prices quickly responded higher, reversing off of the new lows they had posted just minutes before the report’s release. They pulled back off from their surge but still settled moderately higher for the day, putting in a large outside day higher.