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MGEX is pleased to provide this article from Brian Henry, Market Analyst for Archer Financial Services (Brian’s Bio). A new article is posted each Wednesday. Readers are encouraged to email Brian with questions.

Delays in Spring Wheat Plantings Trigger Rally

Producers in many key Spring Wheat growing areas continue to struggle with extremely wet conditions. Little progress has been made in the Northern Plains. Producers in Washington and Idaho have made some progress, but remain behind schedule.

Typically, by this point, 20 to 25% of the Spring Wheat crop has been planted. As of April 19th, 6% of the Spring Wheat crop has been planted. Estimates put Washington and Idaho at 44% and 40% completed, respectively. Further progress in these areas is expected as warmer temperatures and limited precipitation are forecast for this region. Progress may remain behind schedule, but many producers will be able to see the light at the end of tunnel by early next week.

Wheat market participants have focused much of their attention on the lack of progress in the Northern Plains. Plantings in Minnesota, Montana and South Dakota are well behind schedule and are likely to remain that way even though progress will be made.

Localized flooding and extremely wet conditions over large areas in North Dakota present the biggest problems. North Dakota produces a very large percentage of the total Hard Red Spring wheat crop. As of April 19th, little if any progress had been made. Typically, spring wheat plantings in North Dakota would be 10 to 15% complete. The fact that they are behind schedule early in the planting period is only part of the problem. Progress is going to be limited as more time and warm temperatures are required to speed up the drying out process. Drying is expected over the next 2 days, but rain and possibly snow is expected late this week into early next week. In addition to the problems created by more moisture, soil temperatures will remain cool.

The overall condition of the winter crop gained slightly over the course of last week. However, chattering regarding the condition of the Hard Red Winter wheat crop in the Southern Plains is increasing. The hard freeze may have caused more damage than previously expected in Oklahoma and portions of northern Texas. Additionally, cool temperatures are forecast for western Nebraska, northeastern Colorado. Temperatures could get down to the upper 20s. Do not expect much in the way of damage in these areas unless temps get down the low 20s for a couple hours. It appears most of Kansas will be spared the cool temperatures. If the cold temperatures make it into Kansas, the market will take note as the Kansas crop is more developed and more susceptible.

A rally based on these or other factors would be a good opportunity to get some new crop wheat sold. Domestic and global and supplies will continue to provide resistance to these markets. The global crop seems to be in favorable condition. Outside of the pending Japan tender, US exports are expected to remain light. The trade is looking for 250,000 to 450,000 metric tons of wheat exports. Statistics Canada is going to release acreage estimates on Friday morning.

Do you have a question about this article? For a personal response within 24 hours, please email brian.henry@archerfinancials.com.

This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any
transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of AFS is strictly prohibited.

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PDF Version: Normal Weather to Keep Wheat Under Pressure