Drought-hit US winter wheat to extend dismal start
Investors braced for a further decline in US winter wheat condition, even after data showed seedlings extending their worst start on record, hampered by the remains of the worst drought since 1956.
The proportion of US winter wheat seedlings rated in "good" or "excellent" condition eased 1 point to 39% in the week to Sunday, the lowest figure on records going back to 1985, US Department of Agriculture data showed.
While crops in many soft red winter wheat states, which have received rain, managed improvements, these were more than outweighed by the continuing decline in the health of crops in the Plains areas growing hard red winter wheat, which have yet to recover from the summer drought.
US farmers grow roughly twice as much hard red winter wheat, the most popular type, as soft red winter wheat, the variety traded in Chicago.
‘Likely decline further’
And forecasts show the likelihood of continued dryness in the Plains, of which 98.2% is still suffering some degree of drought, and the balance rated extremely dry, according to official data.
The Plains, and Midwest, are in for a "rather dry and tranquil pattern this week", in contrast with major storms due on the east coast, WxRisk.com said.
At broker Country Futures, Darrell Holaday said: "The rainfall for hard red winter wheat country does not look good.
"Moisture continues to be pushed to the eastern edge of the hard red winter wheat production areas."
At RJ O Brien, Richard Feltes said that "the US winter wheat rating will likely decline further into mid-November", when USDA suspends its weekly crop condition ratings before resuming next spring.
Something of a trend?
While winter wheat still has a long way to go until harvest, crop ratings even this early in the growing season have some correlation to the final result, research by Societe Generale shows.
Although last season’s crop recovered well from a poor start, most produce below-trend yields, while those bedding in well
And the US setback is only one of a number for winter wheat crops, with seedlings in some parts of Russia and Ukraine also being tested by dry soils.
In the European Union, French planting has lagged, with 64% of soft winter wheat planted as of the end of last month, compared with 88% at the end of October 2011, and 28% emerged – half the rate of a year before.
In the UK, the wet weather which cut yields to a 20-year low has stuck around to hamper seedings too, although there are as yet no official data on the extent of delays.
‘Signs of stress’
In the US, the South Dakota crop is in particularly poor condition, with 4% rated in "good" or "excellent" condition as of Sunday and only 33% of seedlings emerged – down from a usual figure of 93%.
In Oklahoma, the proportion seen as good or excellent dropped by six points over the week to 21%, hurt by a mixture of volatile temperatures as well as dryness.
"The combination of warm and dry weather was taking a toll on grasses as well as the small grains planted early for winter pasture," USDA officials in the state said, adding that "it has been as many as 52 days since parts of the state have seen a quarter of an inch of rain in one day".
In Texas, where the good or excellent figure dropped 4 points to 34%, "winter wheat and oats were in need of rainfall to sustain growth," and "beginning to show signs of stress" in non-irrigated areas.
While the condition of the crop in Kansas, the top wheat producing state, held steady, "moisture is still needed throughout the state to establish the 2013 wheat crop and replenish ponds for livestock", USDA scouts said.
Statistics: Posted by yoda — Tue Nov 06, 2012 10:07 am
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Wheat prices extend rally as crop fears ratchet up
Wheat prices extended their rally on both sides of the Atlantic, closing in London at their highest in nearly three months, as reports on crops from Argentina to Russia chipped away at production hopes.
Wheat for July stood 2.0% higher in late deals in Chicago, taking gains this week above 10%, while in London the best-traded November lot ended up 1.0% at £161.25 a tonne, the highest finish since late March.
The gains came amid a fresh round of downbeat reports on world crops, including the tumbling condition of spring grains in the major Canadian producing province of Saskatchewan, where some parts received four inches of rain in a week.
In Argentina, where farmers are being deterred from the grain by export restrictions, the government overnight forecast wheat sowings at 3.82m hectares, the lowest area for decades.
The country, even on a harvested basis, has not seen a lower area since 1970-71, when farmers reaped 3.70m hectares, according to US Department of Agriculture data.
Meanwhile, a string of reports from the former Soviet Union reported disappointing yields from early harvest of winter grains.
In Russia’s drought-hit Rostov region, local farm officials reported grain yields of 1-1.3 tonnes per hectare in eastern areas, although on southern farms, where heat has had less of an impact, results were coming in at 3.2-3.4 tonnes per hectare.
In Ukraine, initial harvest had shown "low yields" of about 2 tonnes per hectare, Agritel said, adding that the national crop looked like coming "lower than 8m tonnes, close to 7.7m tonnes" compared with 9m tonnes last year.
A European commodities house with significant Black Sea agricultural interests noted an unnamed Ukrainian company reporting a yield of "1.6 tonnes per hectare rather than the 4.3 tonnes of last year".
"Quality is also disappointing with low specific weights and talk of disease and insect damaged grains."
The European Union offered some better production news, with grain trader Toepfer International raising to 22.71m tonnes, from 21.49m tonnes, its forecast for the German crop.
That put a small rise in production from last year’s 22.70m-tonne crop on the cards, besides topping a 22.5m-tonne estimate from Strategie Grains last week, and a 21.3m-tonne forecast from farmers.
In France, FranceAgriMer kept at 73% its estimate of the domestic soft wheat crop, the EU’s biggest, rated in "good" or "excellent" condition, up from 27% a year ago, when the country suffered an unusually dry spring.
"That’s not going to tip the needle much against everything else going on," a UK grain trader told Agrimoney.com.
"There’s not a panic on. But buyers are being made to work that bit harder."
Statistics: Posted by yoda — Fri Jun 22, 2012 1:31 pm
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