Wheat Outlook Neutral Despite Record Crop

January 9, 2014 03:40 AM
Wheat Outlook Neutral Despite Record Crop

Wheat producers and analysts will be watching Friday’s Winter Wheat Seedings report as well as the quarterly Grain Stocks report and the monthly World Agricultural Supply and Demand Estimates (WASDE) to get a clearer picture of domestic and world wheat supplies.

"Everyone is convinced there will be more wheat, more beans, and less corn this year," says Rich Nelson, chief strategist for Allendale, a brokerage firm based in McHenry, Ill.

Allendale expects USDA to increase winter wheat plantings by 1.5 million acres, with increases in both the hard and soft red varieties and white wheat plantings.

"Acres in the northern plains will move to hard red spring wheat at the expense of corn," says Mike Krueger, founder and president of the Money Farm, Fargo, North Dakota. Krueger also expects USDA to raise wheat exports, which have been running 40 percent above a year ago, and decrease U.S. ending stocks of wheat.

World Outlook Neutral

"Despite the enormous Canadian crop, the Canadians have huge logistical problems and can’t move as much of the crop as they had hoped," says Krueger. That has helped boost U.S. exports.

The average trade estimate for the U.S. wheat carryout calls for a drop of 18 million bushels to 557 million bushels from USDA’s most recent estimate due to higher exports and feed use.

World wheat consumption has been very strong, thus despite a record U.S. crop in 2013, U.S. ending stocks will not build, says Krueger, who calls the world outlook on wheat "neutral."

The average trade estimate for first-quarter U.S. stocks of wheat as of Dec. 1 is 1.4 billion bushels, compared with last year’s 1.671 billion bushels.

Wheat Damage Likely Minimal

This week’s freezing temperatures that extended into the wheat growing areas of southern Kansas and northern Oklahoma will likely result in minimal damage to the wheat crop due to adequate snow cover, says Nelson.

"We’re hearing that the soil moisture at the four-inch level in Oklahoma and southern Kansas was warm enough to prevent any damage," says Krueger.

Prior to recent heavy snowfalls, Nelson was a bit concerned about the soft red wheat crop in the eastern Corn Belt, but roughly 12" of snow covered central Illinois and Indiana, and parts of Ohio, providing a more-than-adequate blanket for the crop.



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