Ag Blogs -
Tuesday, 12 May 2009 10:08
There’s no doubt about it. The soaking rains over the past couple of weeks have been a last-minute lifesaver for the Kansas wheat crop. The consensus, though, is that USDA is a little too optimistic in their first-ever projection of Kansas wheat production.
USDA today said they think the crop is 340.0 million bushels with a 40.0 bushel yield. While that’s down from last year’s crop at 356.0 million bushels at 40.0 bushels/acre, that’s over the latest industry estimate of 333.3 million bushels at a 40.8 bushel yield estimated by last week’s Wheat Quality Council hard winter wheat tour.
Tom Leffler at Leffler Commodities in Augusta, Kan., thinks even the wheat tour’s estimate is too high, let alone USDA’s estimate.
Tom says that without some help from Mother Nature, the wheat tour’s estimate of 333.3 million will be tough to achieve, and he expects wheat production to decline lower than today’s USDA figure of 340 million. The unfortunate thing about having so much moisture is that it is actually pushing wheat yields backwards. Fields become waterlogged, and diseases can become an issue. If the rain lasts into harvest, then we’re really in trouble.
The other problem, Tom says, is that Oklahoma and Texas will probably get smaller, too. USDA put the Oklahoma crop at 80.5 million bushels with a 23.0 bushels/acre yield, down from 166.5 million bushels at 37.0 bushels/acre last year. Texas wheat production was figured at 64.8 million bushels with a 27.0 bushel/acre yield, down from 99.0 million bushels last year at 30.0 bushels/acre.
And if that wasn’t enough bad news, it seems no one in the Northern Plains can get into the field to plant the spring wheat crop. That’s another price positive factor for wheat, Tom says. Wheat may be a hearty grass that can withstand a lot of stress, but even in the Northern Plains it can get scorching hot. And if the crop is late in reproduction, the heat won’t be good news.
The moral of the story?
Put it all these factors together and wheat prices should go higher in the short term, Tom says. But when Judgment Day arrives for the crop at harvest, prices likely are going to have a hard time holding on as new supplies hit the market.