While the wheat market might not be respecting the situation, the latest U.S. Drought Monitor shows 53% of the winter wheat crop is in some level of drought, down just 2 points from the previous week. In addition, Monday’s state crop ratings for winter wheat show very little improvement.
Oklahoma’s crop is rated only 29% good to excellent and 43% of the crop poor to very poor. Colorado dropped to 36% good, none of the crop is rated excellent. In Texas, 22% of the crop has headed, and while the crop rating improved six points to 23% good to excellent, 44% is considered poor to very poor. In the top wheat-producing state of Kansas, the good to excellent rating improve two points to 19%, but half the crop is in poor to very poor condition.
However, market analysts say it’s too early for the market to respect these poor ratings. Kent Beadle with Paradigm Futures says: “When you’re dealing with essentially 75% of the crop in fair to poor conditions it’s not really being traded, but the thing we all know is that traders in wheat understand if you get rainfall in the spring the conditions rating can be thrown out.”
Traders don’t typically add weather premium to the market until mid-April or May.
“Then we’ll have weather forecasts that are a little closer,” Beadle says. “Right now, we have a lot of equal chances for the 30 day and the 90-day forecasts about moisture in a good part of the country, so we’re just going to have to wait and see how that weather patterm ultimately comes at us.”
Rain this spring when the crop hits the reproductive stage can change the yield potential of the crop in a big hurry. While drought still has control of the High Plains region, Beadle says with the weather pattern shifting from La Nina to El Nino traders also sense there are better chances for rain in wheat country this season.
