Tuesday, June 6, 2017

Ag Commodities: Weather Taking a Toll on Spring Wheat Sayeth Yesterday's Crop Progress Reports

According to the North Dakota Wheat Commission:
About Hard Red Spring Wheat

Hard red spring wheat -- grown mostly in North Dakota, Montana, South Dakota and Minnesota -- stands out as the aristocrat of wheat for baking bread. Hard red spring has the highest protein content of all U.S. wheats (usually 13 to 16 percent) which, in turn, corresponds with greater gluten content. For this reason, flour mills in the United States and in many export markets blend hard red spring wheat with lower protein wheats to increase the gluten content in the resulting batch of flour. The addition of hard red spring improves dough handling and mixing characteristics, and water absorption....MORE
Two from Agrimoney:

09:54 GMT, Tuesday, 6th Jun 2017
AM markets: spring wheat futures hit fresh high on US woes
Having baulked twice at breaking above a January high of $5.90 a bushel, Minneapolis spring wheat futures at the third attempt rose above it to their highest level in nearly two years, after official data showed the US crop suffering from dry conditions far more than had been thought.

The US Department of Agriculture overnight rated at 55% "good" or "excellent" the US spring wheat crop – a 7-point decline week on week, compared with the 1-point drop that investors had expected.
It also represented the joint-lowest reading (with 2002) for US spring wheat for early June on data going back to 1995, and the largest weekly decline in condition since 2008, on Agrimoney.com calculations.
'Gone from too wet to too dry'
The deterioration follows dry and warm weather for the northern Plains spring wheat belt, including over the weekend when "90+ degree Fahrenheit temperatures were prevalent across Iowa, Minnesota, and the Dakotas," Joe Lardy at CHS Hedging said.
"The area around Minneapolis has gone from too wet to too dry and there has been some pivot [ie irrigation] already fired up."
And in Canada, farm officials in Manitoba reminded that rains would be welcome in parts of the province too.
In south west Manitoba, for instance, "most farmers are hoping for a decent rain to soften packed seeds and provide adequate moisture for germinating canola and later-seeded crops", officials said.
'Where the action is'
At Commonwealth Bank of Australia Tobin Gorey said: "Spring wheat regions either side of the US Canada border are drying rapidly to the detriment of young crops.
"Weather forecasters are not offering much by way of comfort.
"A possible weekend storm offers the best chance of rain in the region – but that is far from a certainty," with high temperatures most likely that "will only worsen the issue".
The result is that spring wheat futures continue to be "where the action is"....

As noted in the intro to a 2007 post:
...Besides as they say around here, "Climateer, he's a man who goes where the action is".
(okay, I'm the only one who says it, and I've noticed a huge drop off in party invitations since the self-referential Tourette's [without the coprolalia] kicked in)
Still hasn't caught on.
The second Agrimoney post:

10:18 UK, 6th Jun 2017
US faces more of the warm, dry weather hurting spring wheat crop

The US is poised for more of the warm and dry weather which has got the country's spring wheat harvest off to one of its worst starts on record – although fostering a recovery in corn crop condition.
Weather models for this week "show most of the Plains and the Midwest areas to be either dry or completely dry", said weather service WxRisk.com overnight, with "the only significant rains" seen in southern states such as Alabama and Tennessee.
And for the six-to-10 day outlook, while rains are expected for parts of the central plains, including Oklahoma, into eastern Corn Belt states such as Iowa, "weather models also agree that most of this rain is going to miss… all of South Dakota, North Dakota whey really need the rain".
MDA said that "above-normal temperatures in the northern Plains over the next week will only worsen dryness" in the region, which has seen drought spread to more than 20% of the Dakotas.
At Commonwealth Bank of Australia, Tobin Gorey said that "a possible weekend storm offers the best chance of rain in the region – but that is far from a certainty.
"Should the weekend's potential rain event disappear from future weather model projections the [spring wheat] market is likely to rally some more."
Poor start
The comments came as spring wheat futures extended gains, touching $5.96 ½ a bushel for July delivery in early deals in Minneapolis, the highest for a spot contract in nearly two years, after US Department of Agriculture data overnight highlighted the damage to the US crop already done by dry weather.
The USDA rated at 55% the proportion of the US spring wheat crop rated as "good" or "excellent" – a drop of 7 points week on week, far more severe than the 1-point drop that investors had expected.
The fall was also the biggest week-on-week decline for a spring wheat crop since July 2008, and left the crop with its joint worst-early-June rating on data going back to 1995, matching the 55% figure recorded in 2002....

Here are yesterday's USDA Crop Progress Reports. And yesterday morning's post "Ag Futures: 'When Should We Start Paying Attention to Crop Condition Ratings for Corn and Soybeans?'".

Chicago prices are getting some spillover boost this morning:

Last Chg
Corn 373-2+0-2
Soybeans 925-0+3-0
Wheat 433-4+4-0