U.S. livestock producers are once again feeding corn at the expense of the wheat market.
"Exports and feed demand for wheat aren’t as aggressive as what was anticipated," says Randy Martinson, executive vice president with Progressive Ag, Fargo, N.D. "But fewer acres planted to wheat should help to support the market."
USDA’s Prospective Plantings and quarterly Grain Stocks reports, released March 31, were mixed for wheat.
USDA’s estimated planted acreage for all wheat in 2014 was 55.8 million acres, down 1% from 2013 and nearly 1% less than the average trade estimate. Winter wheat acres for 2014 fell 42 million acres, a drop of 3% from 2013. Of this total, about 30.2 million acres are hard red winter wheat, 8.43 million acres are soft red, and 3.35 million acres are white winter.
Producers are expected to have 12 million acres planted to spring wheat, which is 4% more than last year. Most of this, 11.3 million acres will be in hard red spring wheat. Acres planted to Durham this year are estimated at 1.8 million acres, up 22% from 2013.
Wheat acres in northern Minnesota and northern North Dakota shifted into specialty crops such as canola and sunflowers at the expense of wheat. Canola acreage in North Dakota alone was 38% higher than a year ago.
A late spring and extreme drought in Oklahoma and far western Kansas will also reduce this year’s wheat crop.
"We have less wheat in this country than a year ago," says Mike Krueger, president of the Money Farm, Fargo, N.D. "Some people, and I was among them, thought we would see a lower wheat stocks number. We didn’t see that."
According to USDA’s quarterly Grain Stocks report, an estimated 1.06 billion bushels of wheat was stored in all positions on March 1, 2014. That’s a decline of 27.5% from the previous quarter and 15% smaller than a year ago. Estimated quarterly stocks, however, were about 2% larger than the average trade estimate of 1.042 billion bushels.
On-farm stocks estimated at 238 million bushels were slightly higher than a year ago, while off-farm stocks, at 818 million bushels, were down 18% from a year ago. The indicated disappearance for wheat in the second-quarter of the marketing year slipped 4% below a year ago to 419 million bushels.
Canada’s record-large wheat crop is now steadily moving out of the country, which might be cutting into U.S. exports, notes Martinson. Moreover, the unrest in Ukraine has subsided temporarily, which has also pressured wheat prices lately.
With Russia still hinting that it could try to take over more of eastern Ukraine, however, geopolitical tensions will remain high, creating volatility in commodity markets.
While wheat prices have typically peaked by this time of year, Martinson expects to see yet another bounce in September wheat futures, Minneapolis, to between $7.65 and $7.85.
"It will be tough for September wheat to move above that," he adds.