Record-low U.S. winter wheat health adds unease to tight market -Braun

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NAPERVILLE — U.S. winter wheat yields are not necessarily destined for disaster when fall conditions are poor, but the 2023 crop is already in a league of its own with widespread drought leading to record-low pre-winter health ratings.

Although U.S. wheat continues to lose share on the global export market, the crop’s poor start may add to wheat’s bullish narrative after the Ukraine grain export deal suffered a major setback this weekend, sending global wheat prices surging on Monday.

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The U.S. Department of Agriculture said 28% of the country’s winter wheat crop was in good or excellent shape as of Sunday, easily the lowest for the date and the worst-ever fall conditions. Analysts were expecting 41% on average with a low of 30%.

Drought currently covers about three-fourths of U.S. winter wheat areas compared with 43% a year ago, and more than half the crop areas are suffering from severe drought or worse.

The previous lowest winter wheat conditions for this date were 40% good-to-excellent in 2012, and 2020 was next at 42%. Last year was also among the week’s worst at 45%. Data goes back to 1986.

Conditions are well below average in the Southern Plains, where drought ravaged 2022 summer crops. Winter wheat in top grower Kansas is just 24% good or excellent, some 26 percentage points below the five-year average. Oklahoma and Texas are in even worse shape at 11% and 4%, respectively.

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Nationally, some 35% of winter wheat is considered poor or very poor, replacing last year’s 21% as the most ever for the date, and last year had replaced 2020’s high of 19%.

This marks the first time ever in the fall where more of the U.S. winter wheat crop was poor or very poor versus good or excellent. That has happened a handful of times in the spring during tough years, most recently last year.

Prior to this year, the worst fall winter wheat conditions were observed in late November 2012 at 33% good-to-excellent and 26% poor-to-very poor. This is an interesting case because the 2013 yield on the whole was near average levels, far from the catastrophe that pre-winter health may have suggested.

That was based on ample spring rainfall in many wheat- growing areas, often the make-or-break factor. If the La Nina pattern holds through U.S. spring, this could limit rain especially in the wheat-heavy Southern Plains, but it is too early to nail down that forecast.

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This year’s winter wheat conditions are so bad that there are no true analogs with which to compare, but some of the lowest-rated crops at this time of year still went on to produce OK yields, most recently the 2021 harvest after terrible fall conditions. Again, spring rains were key.

In general, U.S. winter wheat yields correlate better with conditions just after spring emergence than ones from the prior fall, so the harvest concerns are unlikely to fade for at least a few months.

U.S. government forecasters on Monday said November precipitation may be near average or possibly even above for some of the parched Plains. That is a refreshing change from the persistently dry bias of late, though it will not provide much immediate relief from the deep-set drought. Karen Braun is a market analyst with Reuters. Views expressed above are her own.

(Writing by Karen Braun Editing by Matthew Lewis)

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