• IKAR in Mass Media

 

 → IKAR in Mass Media → #2603

IKAR in Mass Media

Rain arrives in time to lessen global wheat damage

29 мая 2020 года

Soil moisture conditions in key wheat growing regions around the world are improving.

Lack of rain and temperature extremes earlier in the spring shaved down production potential in the United States and across the Atlantic, but any momentum that gave to wheat prices was offset by worries about demand destruction from the economic disruption caused by the COVID-19 crisis.

Now it looks like even the production worries might moderate.

Canada never did figure in the production worry.

Most farmers in the western half of the Canadian Prairies welcomed rain May 20-21 and the moisture added insurance for a good start to the crop. For southern Alberta, it was the largest rain event in more than a year.

The early forecast from Agriculture Canada for Canadian all-wheat production is 33.9 million tonnes, up from 32.35 million last year and 32.2 million two years ago.

As this column was written on May 22, a large part of the U.S. hard red winter wheat region was forecast to get rain May 25-26.

American hard red winter wheat suffered from frost in April and a dry spring, particularly in western Kansas and Colorado.

Analysts touring the region last week reported wide ranges in yield potential.

The U.S. Department of Agriculture crop condition report for May 17 showed the national winter wheat picture at 52 percent good to excellent, down from 66 percent at the same point last year.

For Kansas, the biggest hard red winter wheat producing state, only 40 percent was good to excellent, down from 60 percent last year at the same time.

The Kansas tour last week estimated the state’s production at 7.74 million tonnes. That was 574,300 tonnes less than the USDA’s forecast of 8.32 million. The Oklahoma crop could also be a little smaller than the current USDA forecast.

Rain at this point would be welcome to halt the decline, but it is not certain that it will revive yield hopes.

The hard red winter crop accounts for about 43 percent of all U.S. wheat and durum production.

U.S. spring wheat planting was slow with only 60 percent in the ground as of May 17 compared to the five-year average of 80 percent. Cool soils, excess moisture and spring corn harvesting in North Dakota were the main reasons for the holdup.

The USDA expects the U.S. will have smaller overall wheat production in 2020, shrinking to 50.78 million tonnes, combined winter and spring crops, from 52.26 million last year and 51.31 million two years ago. Without the May 25 rain, the USDA might have been forced to trim even more but that might not be necessary now.

In the Black Sea region, recent rain has improved wheat conditions, which had been suffering, particularly in southern Russia.

Forecasters in the country last week trimmed their production outlooks and that modestly lifted wheat futures, but I fear that support will be short-lived.

Russia’s IKAR agriculture consultancy cut its wheat forecast to 76.2 million tonnes from 77.2 million tonnes. USDA’s Russia forecast in the May 12 report was for 77 million tonnes, up from 73.6 last year and 71.7 two years ago.

Andrey Sizov of SovEcon thinks these forecasts might be overly pessimistic as the recent rain and good production prospects in the north of the country’s prime wheat region could outweigh the damage in the south.

Recent rain has also moderated the effects from spring drought in parts of Ukraine. Local forecasters such as APK-Inform peg wheat production at 24.5 million tonnes, down by about 4.5 million tonnes from last year. The local forecast is more pessimistic than the USDA’s, which put the crop at 28 million tonnes, down from 29.2 million last year but up from 25.1 million two years ago.

We don’t often talk about Romania, but it is the second-largest wheat exporter in the European Union after France, and is a significant supplier to Egypt. Its wheat crop is expected to be down by 25 to 50 percent from last year because of drought, but the damage will be lessened by the rain that was expected May 23-26.

Speaking of France, it is one area where rain is not in the immediate forecast.

Hot, dry conditions in parts of European Union have already caused the bloc’s monitoring organization to trim its yield forecast. It now says soft wheat production will be significantly down from last year’s big harvest and will even be about one percent less than the five-year average.

Some weather forecasters see the hot, dry conditions in Europe continuing through June so there might be a potential for further trimming of production forecasts in coming weeks and we’ll have to keep an eye on that.

However, the price support from production trimming is being offset by expectations that the economic impact from fighting the coronavirus will eventually hurt global demand.

Many North Americans have been baking up a storm through during the isolation period, increasing that component of demand.

That is very welcome because wheat for domestic flour production was on a downward trend because of consumer perceptions about gluten.

However, a good domestic milling rate has only a modest impact in the big picture.

The USDA estimates that the amount of wheat processed into flour by American mills in the January to March period rose to 6.09 million tonnes, an increase of about 240,000 tonnes or four percent from the same period last year.

But the amount of wheat bought by ethanol plants is down because people were driving less.

And as I reported recently, the damage that weak ethanol demand is wreaking on corn prices is also an anchor on wheat prices. Also, weak corn prices mean it will crowd wheat out of feed rations.

https://producer.com/

Source: producer.com  |  #grain   |  Comments: 0   Views: 45

There are no comments yet. Be the first!

Only authorized users can comment.