Wheat Markets Await Crop Tour Results, Amid Debate Over Cold Damage

(Agrimoney) –  The US is poised for a thaw, after the weekend storms some estimate have cost more than 2.5m tonnes in wheat production – and which is placing extra stress on results of a high-profile crop tour.

Weather service MDA said that in the central US “temperatures will moderate over the course of this week”, after weekend storms which brought rains of up to 6 inches to parts of the Corn Belt, and snows reported at 20 inches in parts of the central Plains.

The warm-up will “limit additional damage” to crops hurt by the weekend tempests, which also brought high winds which MDA said “led to some lodging of the wheat crop” – ie, the snapping of wheat stalks.

The improved conditions and snow melt – albeit likely to be accompanied by fresh rains in many areas – will also allow a better assessment of the extent of crop damage, in particular in the Plains hard red winter wheat belt, but with some losses expected in Midwest soft red winter wheat too.

Crop loss estimates

According to MDA, the “cold temperatures, particularly in Kansas, caused damage to about a third of the crop, especially in areas where snow cover was minimal, with about 10% of the crop potentially facing irreversible damage”.

In volume terms, Richard Feltes at Chicago broker RJ O’Brien flagged “early estimates of large hard red winter wheat loss” of some 100m bushels, equivalent to 2.7m tonnes, although he added that figures on this scale were “likely to be scaled back in coming weeks”.

In many areas, crops will be benefiting from the extra moisture, he said, cautioning investors “against underestimating the beneficial impact of above-normal Kansas rains on 2017 row crop yield potential”.

Commerzbank flagged that “some observers already estimate that wheat yields will be down by 10%” thanks to the poor weather, while at Commonwealth Bank of Australia, Tobin Gorey said that “the market’s first guesstimates on crops losses are north of 1.3m tonnes.

“The hard red winter wheat crop is likely to see the bulk of the losses given the storm hit Kansas, Colorado, Oklahoma and Nebraska,” major growing regions for the variety.

‘Up to 25% production losses’

At broker Futures International, Terry Reilly slashed his estimate for US winter wheat output by 73m bushels (2.0m tonnes) to 1.246bn bushels (33.9m tonnes).

The downgrade reflected a cut of 1.4m acres to the estimate for harvested winter wheat area, besides cuts of 1.2m bushels per acre in winter wheat yield expectations, by variety, putting the average at 49.5 bushels per acre.

While the US Department of Agriculture data overnight kept at 54% the proportion of US winter wheat rated in “good” or “excellent” condition as of Sunday, the data were seen as including only limited damage to the weekend storms.

“Crop conditions likely do not reflect the recent flooding, snow events,” Mr Reilly said, adding that “big crop losses to US hard red winter wheat could be realised.

“Some areas could see up to 25% production losses, according to some Twitter comments.”

Timely tour

In fact, the USDA data raised some alarm in showing a relatively advanced crop, implying enhanced vulnerability to cold, with 78% of winter wheat headed as of Sunday, 13 points ahead of the average.

The question mark over crop losses placed extra emphasis on the Wheat Quality Council’s hiugh profile annual three-day tour of winter wheat in Kansas, the top growing state, which starts on Tuesday.

“The wheat tour results will be watched closely,” said Benson Quinn Commodities.

However, the Minneapolis-based broker, noting that the cold had put “heading and flowering hard red winter wheat crop at risk”, added that “total damage won’t be known until harvest”.

Some freeze effects, such as earless wheat that can otherwise look lush, are only evident towards maturity.