Pre-May US/World Wheat Update - US Exports Are Lagging, But Black Sea Crop Determines Prices

Market Analysis

For the 2nd year in a row, no Kansas wheat crop tour occurred before the USDA’s May 12 winter wheat crop report. Last year’s event was canceled because of the coronavirus pandemic. A virtual event with Kansas State’s main agronomist & district observers did provide field assessments from across the state. The Wheat Associates will stage its annual Kansas wheat tour beginning on May 17 with their tour results being available in 10-12 days. This year’s dryness & crop development will be closely observed by the crop scouts (WEAT).

2021’s 1.8 million increase in hard red acres and 2.66 million jump in total US winter wheat plantings will likely up this year’s wheat output even with some fields being hurt by drought. The SW’s 1.55 million increase in seedings with both Kansas & TX both upping plantings 700,000 acres this year will boost this variety’s output even with TX ratings being low. Nationally, the USDA’s G/E winter wheat G/E ratings have slipped from 53% to 48% in the last couple of weeks. SRW and PNW wheat areas have slipped while TX (24%) & CO (32%) G/E top ratings are very low. Given these conditions, 2021’s initial US hard red crop is likely to be 709 million bu, while May’s soft and PNW white crops could be 327 and 232 million bu each. Overall, a 1.268 billion US WW crop is being expected, up from 2020’s 1.171 billion bu output.

The USDA will also issue their 1st 2021/22 world wheat balance sheet this month. Currently, prospects appear mixed with Europe, the US, Argentina and Ukraine up while Russia, Canada & Australia likely to be down. Overall, a slightly higher 21/22 world crop of 781 mmt is possible but elevated feedgrain prices will keep wheat feeding high resulting in wheat’s ending stocks dropping to 287mmt.

Even with a 35 million bu. Census adjustment in US exports, this demand maybe 10-15 million bu too high. This could raise old-crop stocks to 862 million. Even with a modestly higher US crop, 2021’s 166 million smaller carryover could drop in 2021/22’s US ending stocks to 783 million bu.

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Disclaimer – The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of any futures brokerage firm or its ...

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