U.S. wheat crop continues to struggle


The winter wheat crop is not off to a great start this spring. The U.S. Department of Agriculture has started reporting weekly conditions for the national crop, and ratings keep dropping. Just 30 percent of the crop is rated good to excellent and 35 percent is rated poor to very poor. All through the winter, the Plains were in need of some precipitation to build soil moisture reserves for the spring. That really did not ever happen in a significant way, so when the crop emerged from winter dormancy there just was not a good stand in place.

Weather forecasts really have not shown much hope for some needed rain until late in the week, but considerable drought conditions will require a good amount. We saw last year's spring wheat crop go through some major drought issues before late-season rains brought some relief and boosted yields. But until rains come, look for some support to continue.


As previously mentioned, the wheat market continues to be firm. A forecast late in the week showed hope for some rain in parts of Kansas and Oklahoma that have been excessively dry. This pushed the market down for the day, but until rains are realized and substantial, do not expect a significant market direction change.

The USDA monthly World Agriculture Supply and Demand Estimates report was released this week. It is the last report before the new crop numbers are released but still held important information for the 2017-18 crop year. For the U.S., ending stocks increased by 30 million bushels from the March report. Feed and residual usage was reduced. Additionally, the world supply glut swelled even more, adding 3 million metric tons to the March estimate. This puts total production to a record 759.8 million metric tons. Spring wheat planting is getting started in the U.S., with 2 percent complete compared to 6 percent for the five-year average pace


The durum market has stayed flat ahead of planting. The WASDE Report showed a 3 million bushel reduction in ending stocks for durum. But the market seems generally unconcerned with the tighter stock levels of durum.


Little has changed in the canola market. Prices were firm early in the week before finding some pressure. The WASDE report did not make any major changes for the canola outlook for the 2017-18 crop year. For the bulls, the U.S. trade spat with China has raised hopes for additional canola exports. Strong usage is being maintained through the spring as well. Planting is just around the corner (with Canadian planting intentions to be reported on April 27), and fields are generally too wet and cold for early planting. However, the bears will note that there are large supplies from last year's crop and record planted area is expected for 2018. Look for prices to continue to follow soybean oil for day-to-day direction but generally maintain its current range until planted area is known.


The WASDE report showed a slight build in barley stocks from the previous report. There was a 5 million bushel reduction in imports, but a 10 million bushel drop in feed and residual demand more than offset lower supplies. Stocks are still considerably tighter than a year ago, when stocks were over 100 million bushels. The weekly conditions report from the USDA showed planting was off to a slower start than normal. Just 4 percent of the crop is planted compared to 8 percent a year ago and 12 percent for the five-year average.


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