Wheat Supplies Limit Upside Potential Despite Weather Concerns

May 17, 2013 03:18 AM
Wheat Supplies Limit Upside Potential Despite Weather Concerns

Weather-based planting delays have plagued producers of spring wheat for weeks, but analysts say with temperatures now creeping into the 80s, wheat producers could make rapid headway.

See the current spring wheat planting progress:

spring wheat map 5 17 13 

"There’s good activity in southern North Dakota, but they are barely getting started in the northern part of the state," says Mike Krueger, with the Money Farm, Fargo, N.D. A wheat crop that’s planted late could potentially be vulnerable during the hottest part of summer as the plants begins heading and filling.

As of May 12, only 43 percent of the nation’s spring wheat crop had been seeded, compared with a five-year average of 63%. Not surprisingly planting was most delayed in states that had very late winters. For example, in Minnesota only 19 percent was seeded and in North Dakota only 26%.

Lost potential

"If wheat is not planted by the first or second week in May, yields start falling off," says Krueger. "I suspect we are already at that point." With favorable weather, though, he estimates that producers can plant or seed 600 or more acres per day of wheat, corn, or soybeans

USDA’s recent World Agricultural Supply and Demand Estimates released May 10 showed that hard red winter wheat production fell sharply due to persistent drought, particularly in western Kansas. USDA’s survey-based forecast for winter wheat fell 10 percent due to abandonment in the southern and central plains caused by persistent drought and April freezes.

"The reduced hard red winter wheat crop was expected," says Chris Steinhoff, market analyst with CHS Hedging, Inver Grove Heights, Minnesota.

Carryout stocks of wheat are also falling. USDA now projects a 2012-13 carryout of 731 million bushels, compared with last year’s 743 million bushels. New-crop carryout is expected to drop to 670 million bushels.

USDA projects total wheat production this year will reach 2.06 billion bushels, down 9 percent from 2012-13 production. The decline is due primarily to reduced production forecasts for hard red winter wheat. USDA cut its yield forecast 2.2 bushels per acre to 44.1 bushels.

Total U.S. wheat use for 2013-14 is projected to drop 7 percent below the previous year. USDA cut projected feed and residual use for wheat by 70 million bushels, noting that larger supplies and lower prices for feed grains in 2013-14 will likely limit wheat feeding by late summer.

USDA also lowered its projected 2013-14 all-wheat price to $6.15 to $7.45 per bushel, down from 2012-13’s record $7.80 per bushel.

World Outlook

Despite lower U.S. wheat stocks, WASDE shows that 2013-14 world supplies are expected to increase to 186.4 million metric tons, up from this year’s projected 180.2 million metric tons. World supplies of wheat are ample, up 6 million metric tons from last year but still 13 million tons below 2011-12 levels.

"World wheat stocks are not tight, not burdensome, just comfortable," says Steinhoff.

China holds a large share of the world’s wheat inventories with nearly 56 million metric tons, close to a third of the world’s 180 million metric tons.

"If you took China out of the equation, world ending supplies would be much tighter," says Krueger. China also holds large supplies of corn, soybeans, and cotton.

"Wheat prices will be volatile," says Krueger. "If big yields hold true, prices will be lower this fall."

For More Information
See AgWeb's Spring Wheat Planting Map.

Read more wheat news.


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