What’s Ahead

The Black Sea remains wheat’s price setter with recent better Siberia wheat yield reports circulating. However, tight N. American supplies because of this year’s drought make the impact of this fall’s building La Nina weather on Argentina’s crops quite important to wheat prices. Given the potential for an October US ending stocks of 590 million, lowest since 2013/14, hold sales at 25%.

Market Analysis

In the past, the USDA’s Small Grains report at the end of September has been a non-event. Very limited changes in US barley, oats, and total wheat crops have been the rule over many years. This will likely be the case within the various varieties of the 2021 winter wheat crop on the upcoming Septem- ber 30 report. However, very significant adjustments in this year’s harvested spring and durum wheat areas are expected to impact both their outputs because of this year’s extreme drought that occurred in the N. Plains this year.

Despite last month’s 45.5 million bu decrease in the US winter wheat output because of various state yield changes, the northern and northwest growing areas seem vulnerable for the reduced harvested area because of drought. This potential slippage of 200-300,000 acres could reduce the HRW output by 5 million and the WW crop by 4 million bu decreasing the US to 1.31 billion bu. No change in the US soft red wheat output is expected next week.

This year’s heat and dryness in the N. Plains were historic with comparisons to the 2002 crop year when only 87% of the crop was harvested. With numerous reports of producers turning their crops into forage for their animals, we are expecting a similar harvesting relationship. This would mean a 1.12 million lower spring and 160,000 smaller durum harvested acres resulting in 33 million smaller spring and 3 million bu lower durum crops for 2021. This year’s spring varieties out- put could total just 342 million bu., down 313 million from last year or just 52% of 2020’s output. Overall, this year’s US wheat crop is projected at 1.652 billion bu., down 45 million from August and 174 million bu smaller than 2020.

Despite a firmer Dollar, production concerns in Russia and Canada prompted wheat’s overseas shipments to be 239 million bu., just 12% below last year, Because of strong early summer feeding at SW cattle feedlots and stable food demand, 2021’s summer quarterly wheat demand will be similar to last year. The combination of this year’s smaller carryover, crop size, and stable food demand results in a 1.793 billion bu. September 1 level, the lowest fall US stocks in 14 years.