US August Wheat Crop Update
Market Analysis
Last week’s Wheat Quality Council tour across N. Dakota and parts of neighboring states didn’t have a favorable outlook for the US spring wheat crop. Their final average yield across the nation’s leading high protein wheat state was just 38.1 bu. per acre. This compares to last year’s 45.7 bu. yield and 2015’s record tour level of 49.9 bu. This year’s crop appears similar to the past two drought ravaged crops of 2006 and 2002. The dryness that began in the spring has now built into W.SD and Montana spring wheat areas making the upcoming harvest a closely watched affair that began this week at 9%. The big unknown that tour scouts didn’t answer was the number of harvested acres that would combined since neither Montana nor SD were cover extensively. Given the heat and land quality in these states, a sharp 1 million acre drop might have occurred dropping 2017’s harvested percentage to 87% near 2002’s recent record level of 85.5%. Utilizing these factors, the USDA’s August 10 spring wheat forecast could drop 85 million bu. to 350 vs. July’s 435 million level. The tour’s ND durum average yield was 39.7 bu. vs. last year’s 45.4 level suggesting this variety’s output may drop 5 million bu. to 52 million this month. Note: Harvested area might not be addressed until Sept 30 Small Grains report, the next time US wheat production is revised by the USDA
The USDA will also be updating their winter wheat crop outlook next week. With this week’s WW harvest winding down (12% of the US still in the fields primarily in MT and PNW), the US crop normally doesn’t change much. However, MT dryness could slip hard red supplies while recent Washington rains boost the white wheat in that state. Overall, this month’s WW output will remain unchanged at 1.28 billion bu. while total US output is determined by this month’s spring crop. This food grain’s ending stocks could slip to 885 million bu. or less this month.
What’s Ahead:
With the US and FSU’s wheat harvest winding down, the market’s focus will be switching to other world producing areas. Excessive German rainfall has reduced the EU’s output and quality while Canada’s & Australia's prospects have been dropping because of dryness. With producers storing much of their remaining output, Dec KC wheat could still have a post-harvest recovery to $5.40-$5.50 before expiration.
Disclaimer – The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of The PRICE Futures Group, any of ...
more