US Cash Grain Outlook: Weather Impacting Wheat MarketDry weather dominated the U.S. grain belt again Wednesday, aside from a few light rain showers associated with an area of low pressure situated over the northern Plains.
"The winter wheat crop in the Plains is starting to break dormancy, and crop condition ratings this week show that the crop is not in very good shape," said Freese-Notis Weather. "The worst ratings are in Texas, where the crop this week was rated at 60% poor to very poor. While it was a very wet winter in much of the Midwest, it was very dry in Texas ... their 11th-driest winter in 113 years." Dry weather last fall also led to poor establishment of the HRW wheat crop in Kansas and Oklahoma, where more than 20% of all acreage was also rated in poor to very poor condition this week.
http://www.fxstreet.com/futures/news/article.aspx?StoryId=0ffe3502-2a66-4ffa-926f-da8e80075f51Wheat Market OutlookProspects of
a large world wheat crop and generally favorable crop development conditions continue to weigh on the wheat market. Prices in April for the July 2008 contract traded at a high of $10.50 on April 4 and recorded the lowest close for the month on the 30th at $8.42. The price of this contract fell by about 20% for the month.
http://agecoext.tamu.edu/resources/market-outlook/wheat.htmlRecord world wheat production forecastWheat is a key driver of global food inflation. The prospect of a large increase in global wheat production this year could help to prevent further food tensions in several regions of the world, which have been severely hit by sharp rises in the cost of staple foods such as rice and bread.
Several factors have triggered the current food crisis: unfavourable weather conditions leading to poor harvests in major producing countries, steady international demand, the increased use of crops for biofuels, etc.
As a result, wheat prices reached a record high above $13 per bushel on the Chicago Board of Trade in late February. According to the first edition of the Rabobank's Soft Commodities Monthly Report (April 2008), world wheat prices have now fallen by more than 40 per cent at $8.01 a bushel in early trade on 25 April, their lowest level since November.
Rabobank reports that world wheat crops appear to be in good condition at this stage of the season, particularly in the EU-27, Black Sea and soft red winter wheat areas of the US.
http://www.foodnavigator-usa.com/news/ng.asp?n=84950-wheat-prices-harvestWheat Outlook: Winter Crop ConditionsWinter wheat conditions are rate less favorable this year than a year ago at this time. National Agricultural Statistics Service (NASS) in its Crop Progress for April 7 rate 21 percent of the crop poor to very poor and 45 percent good to excellent. A year ago 10 percent was rated poor to very poor and 64 percent good to excellent. Generally, the soft red winter wheat producing States have better ratings than the hard red winter States.
However, crop ratings have improved on the Southern Plains since February, but not on the Central Plains. In February, 61 percent of the Texas crop was rated poor to very poor. By April, the share of the crop rated poor to very poor had dropped to 47 percent. Similarly for Oklahoma, the share of the crop rated poor to very poor dropped from 29 percent in February to 19 percent in April.
In February, 25 percent of the Kansas crop was rated poor to very poor. By April, the share of the crop rated poor to very poor was 22 percent. Conditions are much better in Nebraska, however, as the share of the crop rated poor to very poor rose from 7 percent in February to 9 percent in April. Crop conditions have continued to decline for Colorado, with 33 percent of the crop rated poor to very poor in April compared with 30 percent last month at this time.
Source: USDA
http://www.cattlenetwork.com/Wheat_Content.asp?ContentID=212729WHEAT: Trend: Short Term Down - Long Term DownAfter falling to new lows for the move three days in a row, the wheat market bounced back on Friday and the July KW was actually up 9 - cents for the week. This could be the sign of a turnaround, but I think I will need to see some significant follow through before I am convinced. A move above $9.00 is probably a selling opportunity.
Crop condition ratings were back up to 45% Good to Excellent in Kansas, which is average. We typically see a seasonal decline in the condition ratings, so I would look for steady to lower in Monday's report. With all the heat and wind that we had in western Kansas, I can't imagine having an improvement in this part of the world. I think the trade is still focus on the idea that harvest is coming soon and that supplies will be replenished. We just haven't seen much buying interest.
There shouldn't be too much downside potential in the wheat because it is in jeopardy of becoming a feed grain. That is especially true for the soft wheat, which is suffering from both soft futures and poor basis levels.
Wheat: Market Outlook from the USDAProjections for U.S. Wheat Supply and Use
The long-term projections for U.S. wheat for 2008-17 were heavily influenced by wheat's slow yield gains, declining competitiveness relative to the production of other domestic crops, and increased global competition.
Wheat yields continue slowly rising. Wheat yield is projected at 42.5 bushels per acre for 2008, based on national-level and State-level trend analyses over the past two decades. This is below the 2003 record yield of 44.2 bushels per acre, but above the yields for 2005-07.
Yield growth projected for 2008-17 for wheat, corn, and soybeans reflects differing genetic gains mentioned earlier. Wheat yields are projected to rise by 0.3 bushels per year over the 10-year period. In contrast, corn and soybean yields are projected to rise 2.0 bushels and 0.45 bushels per year, respectively.
Wheat plantings expected to fall with decline in competitiveness. Wheat plantings are projected to rise to 65.0 million acres in 2008 because of a sharp increase in expected net returns (revenue minus variable costs) from 2007, reflecting an increase in the farm price (prices received by producers). Planting incentives reflect expected net returns from the marketplace (expected farm price times projected yield minus variable costs). The projected farm price is above the loan rate for the entire projection period, so loan benefits do not enter into net returns or influence plantings.
http://www.ers.usda.gov/Briefing/Wheat/2008baseline.htm