(Farm & Ranch Guide) – Spring wheat prices have been stabilizing somewhat after markets dropped following the USDA prospective planting and quarterly stocks reports, according to Erica Olson, North Dakota Wheat Commission marketing specialist.
Cash prices around the region have been slightly higher, from $7.35 to $7.60, Olson said.
“The main reason we saw pressure in the wheat market was because stock numbers for wheat and corn were higher than expected,” she said.
One big supportive factor for the markets is that Hard Red Winter Wheat (HRWW) conditions is lower than average. Currently, only 36 percent of the winter wheat crop is rated in good to excellent condition, lower than average and well below last year when 60 percent was good to excellent, Olson said.
Nationwide, there are reports of damage to the HRWW crop from recent freezing temperatures over Texas, Oklahoma and Kansas.
“It will take awhile before we see if the crop can pull out from the freezing temperature damage, but it looks like we lost at least some production,” she said.
Meanwhile, there was news that China had purchased 40 million bushels of U.S. wheat, and USDA recently confirmed a sale to China of 13 million bushels.
“USDA didn’t confirm the whole rumored amount, but this represents a significant demand for U.S. wheat from China,” Olson said.
The USDA supply and demand report this week for spring wheat lowered domestic use by 10 million bushels, down to 282 million bushels, she said.
“The total domestic use is down to 14 million bushels due to a lower feed use for Hard Red Spring Wheat (HRSW) and HRWW, while domestic use was raised for Soft Red Winter Wheat (SRWW) and white wheat,” Olson said.
Olson said it was the second month in a row that the ending stocks are higher than expected – up 15 million bushels to 731 million bushels for the year.
Regarding the worldwide wheat use, feed use is decreased because of the world wheat situation.
“China reduced its demand for feed,” Olson said.
The end result is stocks are 150 million higher in the world, to 6.7 billion bushels, which is still 9 percent lower than last year.
Looking at U.S. export demand, total exports for all classes of wheat are 940 million bushels, which is 3 percent lower than a year ago, she said.
Olson said there is higher demand for SRWW, but much lower demand for Soft White Winter Wheat (SWWW). Demand for the other classes of wheat is close to being on par with last year.
Compared to a year ago, exports of HRSW is 217 million bushels, down from 239 million bushels in 2012, Olson said.
The Canada prospective planting survey will be out later this month and there could be an increase in spring wheat acres in Canada, she said.
There are some concerns about later planting due to moist conditions, and that could affect acreage, she added. The weather situation in both the U.S. and Canada will bear watching as continued cold, wet conditions will delay planting into May, Olson added.
