Published on: 13:53PM Mar 19, 2009
Allendale Inc recognizes 2009 new crop spring wheat plantings may not be without major challenges. According to a Farm Service Agency official within the state of North Dakota, estimates as many as one million acres of farm land may not be planted because of weather related problems. March 10th as much as 10 inches of snow fell on already saturated soils.
The vast majority of the private weather forecasting agencies which Allendale Inc follows suggest if there is a specific region which may have cold, wet weather delay spring time fieldwork for 2009, it is the north’s North Dakota, South Dakota and Minnesota. More specifically it is North Dakota which has received 200% of normal precip in the most recent 90 days. The North Dakota average snow depth as of March 1, 2009 recorded at 16.9 inches compares to year earlier levels of 3.6 inches with 2002-2007 average March 1 amount of 5.38 inches. Add to its plight, North Dakota is forecasted to remain cooler and wetter than normal from March through June.
How important is North Dakota with regards to the wheat industry? In two words, extremely important! North Dakota typically supplies 44% of the nation’s spring wheat crop (excluding durum) and accounts for 64% of the nation’s annual durum wheat supply.
Interesting to note is the present end stock projection for US durum wheat of 21 million bushels is 32% less than the most recent ten year average, spring wheat end stocks are 4.2% fewer than the ten year ave and soft red winter wheat stocks are 60% larger than its most recent ten year average.
Allendale Inc advises a market play of spreading new crop September Minneapolis spring wheat futures vs Chicago Board of Trade, new crop July wheat futures. In an uptrend since late December 2008, Present resistance is 80 cents premium the Sept MGEX spring wheat futures, with trend line support of 70 cents. Our official recommendation is to enter the spread at 70 cents, risk to 58 cents and use an objective of 92 cents.
Allendale must add it would not recommend spreading the new crop MGEX spring wheat futures against the KCBT new crop futures as hard red winter wheat is experiencing its own weather related problems. Allendale would also like to add for the potential for old crop and new crop basis strength for spring/durum wheat crops.
Allendale Inc would appreciate your thoughts and ideas regarding the potential for a rally in the spring wheat futures given weather related projections and current stock situation. ….Joe Victor
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