Tour confirms what markets had expected - a solid wheat crop
Each year, scouts across the agricultural industry tour the state of Kansas for a look at their hard red winter wheat crop. The Wheat Quality Council has been conducting this crop tour for decades and interest continues to grow.
More than 75 scouts, ranging from farmers, traders, reporters and more, took to the fields to take samples and get a feel for the 2019-20 winter crop. And what a good looking crop it was!
All the stops and samples allow for the Wheat Quality Council to produce an estimate for the Kansas crop. This year, yields should average 47.2 bushels per acre. This is a big bump from last year's 37 bushel per acre estimate (which ended up at 38 bushels per acre, according to the U.S. Department of Agriculture) when drought had devastated fields.
The market was not shocked by this news, as prices have been falling for weeks on expectations of a good winter wheat crop in the U.S. The weekly USDA report on crop conditions have shown that the winter crop is in excellent shape with all of the beneficial rains across the Plains. Nevertheless, this tour confirms good production for the U.S. in the new crop year.
Wheat prices are hitting new lows, with good supplies, winter crop conditions in the U.S. and expected production recoveries abroad. Even with fewer acres in 2019, output should be good as yields are set to recover.
The aforementioned Wheat Quality Council crop tour of Kansas' winter crop confirmed good production, with harvest six to eight weeks out. The USDA showed improved crop ratings, with the winter wheat crop at 64% good-excellent from 62% in the previous week. The spring wheat crop planting push has been slow, with just 13% done versus 33% for the five-year average pace.
The durum market, as impossible as it sounds, managed to find some pressure this week. The Minneapolis durum market is down a dime from a week ago. With planting off to a slow start and expected lower area from a year ago, there is opportunity for some price support into the fall. However, all the wheat price weakness is limiting any upside for durum in the near term.
The canola market is again making new lows. The acreage intentions data from Statistics Canada confirmed lower planted area expectations for 2019, but ongoing diplomatic issues with China means virtually no trade with a top buyer. As a result, prices are getting hammered. In the months ahead, a resolution will need to occur to get any spark in the canola price.
Field peas and lentils are going to be about two big drivers. On the supply side, how will acreage impact total supply? Lentil area in Canada is expected to drop while field peas should be up slightly. On the demand side, what will India do with import restrictions on pulses? Will more protective policies reduce export demand further for lentils? Or even peas? These issues will be playing out in the coming months.
The U.S. barley crop is still behind the normal pace, but seems to be catching up in some areas. Overall, 28% of the crop has been planted compared to 17% a week ago. The five-year average pace is 4%, however. Look for some drying in the western Corn Belt to provide a boost to planting efforts in North Dakota and perhaps Minnesota, where planting is well behind normal.
Yet again, mustard seed markets have been quiet. Offers for both spot and new crop supplies have been steady. Planting efforts and weather will be monitored in the coming weeks, which could give some direction.