(Farm & Ranch Guide) – A bit of life crept back into the spring wheat market the second week of March after several weeks and months of sideways trading.
“We’ve actually seen the spring wheat market liven up a bit. Minneapolis futures were up about 15 cents on the week,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “While that doesn’t seem like much, especially considering some of the daily trading ranges we’ve seen in the past few years, it is very welcome to see that movement after months of sideways trading.”
Local cash prices for 14 protein hard red spring wheat were trading between $4.25 to $4.55 per bushel.
Some of the recent strength in the market is due to weather concerns in the winter wheat regions, Olson explained, adding that conditions in the hard red winter wheat areas have been quite dry while in the soft red winter wheat region it’s been too wet.
“Nobody is panicking yet however,” she said. “Obviously the crop has a long way to go. And nine out of 10 times the situation isn’t as bad as perceived, but we will be watching those areas closely.”
The U.S. Department of Agriculture came out with its World Agricultural Supply and Demand Estimate (WASDE) report March 9 and it was actually a case of no news is good news.
There were no changes to overall wheat supply and demand numbers in the WASDE report.
“That’s actually good news because pre-report estimates were projecting a further decline in export numbers and a 10-30 million bushel increase in the already plentiful stocks number,” Olson pointed out.
Unfortunately, however, USDA did make revisions to the hard red spring wheat export number again, lowering the projection by 10 million bushels down to 245 million.
“Hard red spring wheat is still expected to be the single largest class of U.S. wheat exported, but obviously we’re not selling as much as expected,” she said.
“That change will bring ending stocks to their highest level – 288 million bushels – in almost 30 years. It’s easy to see why buyers aren’t concerned with supply levels.”
Looking at sales, hard red spring wheat exports have been fairly strong during the past couple weeks. But even with slight uptick sales are still down 16 percent for the year. Total sales as of March 9 stood at 218 million bushels. That compares to 261 million a year ago at this time.
Looking ahead to the March Planting Intentions Report and the acreage outlook for the various crops, spring wheat acres are expected to be down in both the U.S. and Canada due mainly to lower prices as well as some crop competition.
Official numbers won’t be released until the end of the month, but USDA released its initial outlook the end of February and in that outlook USDA forecasted spring wheat acres – which included durum – at 14.4 million acres. That’s down 5 percent from 2015.
Total U.S. wheat acres were projected at 51 million acres in the February outlook which would be the lowest acreage since 1970. Overall yields are projected slightly higher but production is still expected to decline 3 percent to just under 2 billion bushels.
“Unfortunately, even with the smaller numbers for acreage and production, the ending stocks will remain high due to years of build up, and so this outlook for continued large supplies doesn’t bode well for prices,” Olson said. “However, considering this is only March, a lot can happen to change those numbers, but right now it’s looking like another year of plentiful supplies.”
