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WMR-U.S. wheat prices strengthen during May

By: Jim Peterson
Posted: Jun 28 2019

The month of May finally brought a nice rally to the wheat market, with winter wheat classes rallying close to $.70 per bushel and hard red spring (HRS) about $.50 per bushel.  Some resurgence in U.S. export sales has provided support, but the largest impact has come from historic planting delays across major corn producing states.  Corn prices have rallied about $.80 per bushel since early May, representing nearly a 25 percent gain on early spring values.  

Other supportive factors for wheat prices have been delays in HRS wheat plantings, and expectations that final planted area will fall short of March intentions, and persistent rains across soft red and hard red winter wheat areas, raising quality concerns. In addition, there have been early season drought concerns across Canadian spring wheat areas.
Updated acre estimates will be released on June 28.  The March survey of producers indicated a three percent decline nationally for HRS to 12.8 million acres as compared to 13.2 million in 2018.  General expectations are that final 2019 HRS plantings in the U.S. may fall closer to 12.5 million.  Montana likely gained acres since the March survey, but not enough to offset losses across both North and South Dakota. In South Dakota, conditions have been the wettest, and crop insurance deadlines for  full coverage on wheat occur in early to mid-May.  In North Dakota, wet and delayed planting conditions impacted some areas, but the relative increase in corn prices in late April and early May, as compared to the more lack luster spring wheat market, likely pulled some acres back to corn.   

The quality concerns in winter wheat, if verified, due to rains and harvest delays will open up greater domestic demand opportunities for HRS wheat, as will expectations for below average protein in winter wheat. Export demand will be impacted by weather trends in Canada, as they have been very aggressive in capturing demand with their 2018 crop, and even with early 2019 harvest time sales.  Continued dryness in their wheat zone would likely shift more demand opportunities to the U.S., and at higher prices.

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