US wheat ratings falls further, but rains raise hopes for revival

(Agrimoney) – Forecasts for rain for the drought-troubled US Plains, and a flying start for spring wheat sowings, trumped data showing a decline in the condition of winter wheat to put further pressure on prices.

The US Department of Agriculture rated 42% of the US winter wheat crop in “good” or “excellent” condition as of Sunday, down 2 points week on week, reflecting a deterioration of crop in the central and southern Plains, hard red winter wheat area.

In Kansas, the top wheat-growing state, of which two thirds of farms were short of sub-soil moisture, the proportion of wheat rated good or excellent fell by 5 points to 28%.

In Texas, where USDA scouts said that “some producers reported issues with rust”, the rating dropped 2 points to 52%, and in South Dakota, where “dry conditions were experienced throughout the week”, by 3 points to 26%, although the Oklahoma crop deteriorated furthest, by 7 points to 36%.

“Although some rainfall was received last week, drought conditions continued to worsen across the state,” USDA scouts said.

‘Higher than trade estimates’

However, wheat futures extended losses in early deals on Tuesday nonetheless, extending heavy losses of the last session, with hard red winter wheat itself for July down 0.4% at $5.31 a bushel, and Chicago soft red winter wheat, the world benchmark, easing 0.3% to $5.00 a bushel.

Pressure came in part from the spur to spring wheat sowings in their northern Plains heartland as dry conditions encouraged fieldwork, with plantings 17% complete as of Sunday – well ahead of the average of 6% by then.

“This figure seems a bit higher than trade estimates, but it shouldn’t surprise us given the drier weather in the northern Plains and upper Midwest,” said Mike Zuzolo, president at Global Commodity Analytics.

In South Dakota, farmers had planted 44% of their crop, more than twice the typical 21%.

‘Notable improvements expected’

Furthermore, the winter wheat condition ratings were seen as having been made too soon to take account of the improvement thanks to rains over the weekend – let alone the further moisture in the forecast.

Weather service MDA said that “abundant showers across Oklahoma and northern Texas early and late this week should significantly improve moisture for wheat early growth, and some notable improvements are also expected in southern and western Kansas and east central Colorado later this week as well.

“Wheat conditions should improve due to the upturn in rains.”

For the southern Plains, forecasts show “rainfall amounts for the next seven days would generally equate to about one-third, in some cases more than one-half, of the rainfall deficits accumulated over the past six months, which would obviously lead to significant improvements for the wheat crop”.

At Texas A&M University, Mark Welch said: “Moisture prospects for the next week look much better.”

Brian Henry at broker Benson Quinn Commodities said: “While the current forecasts are drier than previously advertised, the trade looks for much of this [southern Plains] region to see average to above average precipitation through the next week.”

‘Yellow and thin’

However, there are limits as to the yield improvement that moisture will achieve, depending on the developmental stage of the crop.

Oklahoma State University plant pathologist Bob Hunger noted after a crop tour of Oklahoma last week that, in some northern areas, “it is not too late for rain to save a partial wheat crop in these areas, but the ‘full yield potential’ ship sailed long ago.

“Wheat sown behind summer crops is the hardest hit, and wheat in these fields could best be described as yellow and thin.

“If the weather turned and we received rain in the next week, I would predict that yield potential in these fields would still only be around the 15 bushels-per acre mark. Without rain, subtract around 15 bushels.

Drier Midwest

Meanwhile, MDA said that the forecasts showed “more limited rains” ahead for the Midwest, soft red winter wheat country, where too much precipitation ,rather than too little, has become an issue.

In Ohio, the top soft red winter wheat state, the proportion of crop rated good or excellent dropped by 2 points to 57%.

“Producers noted flooding in low lying fields,” USDA scouts said, flagging a need for areas to “dry out”, although adding that winterkill to crops “appears to be minimal”.

In Illinois, another major soft red winter wheat state, where rains last week averaged nearly 50% above average, the proportion of winter wheat rated good or excellent fell by 2 points to 54%.