Winter Wheat Prices are Looking to Pop

November 16, 2018 11:57 AM

Winter wheat planting has been slow this fall. The last report from USDA puts planting progress at 89% complete which is 5 percentage points behind the five-year average. Major producing states like Texas, Oklahoma, Kansas and Arkansas are all behind normal. Slow planting has also led to slow emergence. 

"I mean the ship has nearly sailed in a lot of areas," says Angie Setzer with Citizens Grain during an interview on AgDay TV with host Clinton Griffiths. "Parts of the Oklahoma panhandle and Kansas areas were able to finally get in a week ago 10 days ago." 

Michigan based Setzer says places to the north are now past their typical drop dead dates. 

"I was under the assumption that we were going to see a five to 15 percent increase in planted acres in our trade territory," says Setzer. "The reality is Mother Nature did not cooperate."

She says that's led to a snapback in futures prices in recent weeks.

"We went from thinking that we had this exceptional amount of wheat that was going to get planted meaning we would have a huge crop coming at us in July," says Setzer.

A shorter crop coupled with vomitoxin issues in corn have suddenly changed many market fundamentals. 

"The vomitoxin issue really encouraged a lot of traders, especially in Ontario, to increase their wheat feedings," says Setzer. "Now we're starting to see the Canadian market really firm up domestically because of that demand. "

Setzer says basis is starting to firm and futures are strengthening and that's added a curve to the market.

"We've got to watch what's taking place in Russia and there are some dryness concerns," says Setzer. "Obviously,  we'll know in January with the USDA believes when it comes to actual planting numbers."

Together, Setzer says it's been less than idea this planting season for wheat and that could mean a more dynamic market as we head into a new year.

"You could see some really interesting pops happen," says Setzer.

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