According to the March 31 USDA 2021 Prospective Plantings report, total U.S. total spring wheat planted area is expected to fall to 11.7 million acres (4.34 million hectares), down 4% from last year, if realized. This estimate includes 10.9 million acres (4.41 million hectares) of hard red spring (HRS), down 5% from last year and down 6% from the 5-year average.

“We agree with USDA estimates that spring wheat acres will be down this year,” said one U.S.-based grain trader. “We’ve heard producers in the Dakotas and Minnesota say it would take a $7.00 per bushel cash price for HRS for them to plant more of it,” he continued.

The trade believes producers are going to plant corn and soybeans “fence post to fence post” this year in the Northern Plains.

Durum Down

USDA expects durum planted area to total 1.54 million acres (623,000 hectares), down 9% from last year and down 19% from the 5-year average.

For all U.S. wheat, USDA now expects planted area for harvest in 2021 to total 46.4 million acres (18.8 million hectares), up 4% on the year due to significant increases in both hard red winter (HRW) and soft red winter (SRW) planted area.

Extremely Dry

According to the U.S. Drought Monitor, most of the Northern Plains is abnormally to extremely dry. Farmers like to plant spring wheat early to increase yield potential and dry field conditions help them get spring wheat in the ground. But if adequate precipitation doesn’t follow April planting, persistent dryness could challenge spring wheat germination and yield potential.

North Dakota

USDA expects North Dakota farmers to plant 5.60 million acres (2.27 million hectares) of HRS for harvest in 2021, down 2% from last year.

“USDA’s number came in slightly higher than our expectations at only about 100,000 acres (40,000 hectares) less than last year,” said Erica Olson, North Dakota Wheat Commission’s Market Development and Research Manager. According to Olson, HRS acres could fall below USDA’s expectations following continued strength in corn and soybean futures prices.

While all the state is moderately to severely dry, some areas in southeastern North Dakota do have adequate subsoil moisture to get the young wheat established.

“Farmers haven’t had good precipitation since last summer,” said Olson, “they’ll take any precipitation they can at this point.”

USDA expects North Dakota durum planted area to fall substantially in 2021 to 1.50 million acres (607,000 hectares), down 18% from last year on more competitive canola and soybean prices in the northwest region of the state. However, Olson believes North Dakota producers could plant more durum acres than USDA expects based on competitive durum cash prices which are trading at least a $1.00/bu premium to HRS in most parts of the state.

Minnesota

USDA predicts Minnesota farmers will seed 1.40 million acres (557,000 hectares) of HRS for harvest in 2021, down 3% from last year but in line with industry expectations.

Extreme dryness in Minnesota wheat country has producers concerned.

“I talk to a lot of farmers. This is the first time since 1988 that we are planting into dust with no subsoil moisture. Our farmers are not used to planting into dust and praying for rain,” said Charlie Vogel, Executive Director of the Minnesota Wheat Research and Promotion Council.

But dry field conditions help spring wheat planted area. “This year, we’re not trying to plant around wet areas, we don’t have mud or slews in the field. Given the dryness, I believe every acre can be seeded,” continued Vogel.

Vogel believes Minnesota producers could see a record crop if timely precipitation follows April planting. “We only need an early May rain to change everything. We will be planted and insured at profitable levels. And we will spend a lot of time in church praying for rain,” he said.

Montana

Montana producers intend to plant 2.90 million acres (1.17 million hectares) of HRS in 2021, down 12% from last year, but in line with the 5-year average. Montana spring and winter wheat acres typically share an inverse relationship and this year is no different. Montana winter wheat acres are up 13% on the year at 1.75 million acres (708,000 hectares).

“Producers were able to get a lot of winter wheat in the ground in fall 2020, significantly more than they could in fall 2019 due to poor weather conditions, this pressures available area for HRS come April,” said another grain trader.

According to Sam Anderson, Industry Analyst and Outreach Coordinator at the Montana Wheat and Barley Committee, dryness has producers on edge, but favorable spring wheat prices will encourage them to plant into dry soil, despite the drought risk.

However, “If the weather remains dry throughout planting, we may see some acres going fallow to conserve soil moisture for the 2022 crop year,” said Anderson.

Updated Winter Wheat Estimates

On March 31, USDA revised the country’s total winter wheat planted estimate to 33.1 million acres (13.4 million hectares), up 3% from its January estimate and up 9% from last year.

The hard red winter (HRW) planted area forecast fell slightly from January to 22.2 million acres (8.99 million hectares), up 8% from last year, if realized.

The soft red winter (SRW) planted area estimate increased 3% from January to 6.42 million acres (2.60 million hectares), up 14% from last year and up 11% from the 5-year average on favorable planting conditions.

USDA’s white winter wheat planted area forecast is stable at 3.48 million acres (1.41 million hectares), in line with 2020. USDA expects total white wheat acres, planted in both winter and spring, will total 4.28 million acres (1.73 million hectares), up 4% from last year and up 4% from the 5-year average.

Visit the U.S. Wheat Associates (USW) website for more market and crop information and analysis at https://www.uswheat.org/market-and-crop-information/.

By Claire Hutchins, USW Market Analyst

Winter wheat farmers in several states have not had an easy winter. All eyes are on Kansas, Nebraska and Colorado as “a perfect storm” of a historic freeze combined with severe dryness threatens new crop yield potential in the heart of the country’s breadbasket.

Producers in the Great Plains have seen sustained temperatures below 10° Fahrenheit (F), low enough to cause serious concern about the crop’s ability to survive dormancy. Typically, snow cover and adequate soil moisture would help insulate the dormant crop, but this year has been anything but typical as severe to exceptional drought conditions persist from western Kansas into western Nebraska and eastern Colorado.  Unlike lighter freeze damage, from which the wheat can bounce back under the right conditions, this year’s freeze event has the potential for “winterkill” in some regions, and ultimately challenge the final production volume.

“Today, there’s no way to tell the extent of the damage, but by mid-March when fields start to green up, we will know what we are facing,” said Justin Gilpin, CEO of the Kansas Wheat Commission.

Here is a look at the three states most concerned about new hard red winter and hard white crop conditions.

Kansas

According to USDA, as of late January 2021, the state’s topsoil moisture supplies were 21% very short and 34% short, 15 points worse than this time last year.

“We got the wheat up and growing, but do not have enough moisture to set brace roots,” said Gary Millershaski, a Lakin, Kans., farmer and a U.S. Wheat Associates (USW) director. “We had a couple of inches of snow, but temperatures of 19 degrees F below zero tell me half the tillers might not make it.”

Though conditions are drier and colder in western Kansas, wheat farmers in the region were able to get the crop planted on time, which will help its ability to fight low temperatures, said Romulo Lollato, Wheat and Forage Specialist at Kansas State University. Later-planted wheat will have a harder time fighting the freeze.

“Right now, our main concern across the region is winterkill which could limit harvest potential,” said Lollato.

Nebraska

“In Nebraska, our concerns are poor emergence, weak stands and drought conditions,” said Royce Schaneman, Executive Director of the Nebraska Wheat Board. According to USDA, just 30% of the state’s wheat is rated good to excellent, down from 70% good to excellent this time last year due to substantial drought conditions.

The wheat is extremely susceptible to sustained freezing temperatures as parched soil and limited snow cover offer little protection.

“Moving forward, we need a good warm-up in spring, no late freezing and many timely rains,” said Schaneman. “If we have the perfect growing conditions throughout the season, we can expect an average harvest. We are off to such a poor start so given the current outlook, this could be a tough year.”

Colorado

“Winterkill has now become a major concern with last week’s extreme temperatures, down to 15 F to 25 F below zero,” said Brad Erker, Executive Director of the Colorado Association of Wheat Growers.

Looking ahead, Erker said the best weather for producers in Colorado would be a “big, wet snow” by the first week of March.

“Moisture to come could heal the situation but the timing of the moisture will be a big factor,” said Erker. “If we go too long into the growing season without moisture, we will start losing potential. We are in worse shape now than this time last year, and 2020 ended up being a very small crop for us. We can’t wait until the end of April for moisture or we will lose a lot of acres.”

By Claire Hutchins, USW Market Analyst

Header photo Copyright Leonard Schock.

 

By Claire Hutchins, USW Market Analyst  

Seven months into marketing year 2020/21, USDA currently forecasts total U.S. wheat export sales will reach 26.8 million metric tons (MMT), which, if realized, would be 2% more than 2019/20 and 7% more than the 5-year average. As of Dec. 24, U.S. wheat commercial sales are 9% ahead of last year’s pace at 20.6 MMT, led by hard red winter (HRW), hard red spring (HRS) and white wheat (soft and hard).

Hard Red Winter

Total HRW sales of 7.10 MMT are 3% ahead of last year and are 7% ahead of the 5-year average as significantly increased exports to Nigeria and China more than offset reduced sales to Mexico, the largest market for HRW.

Current sales to Nigeria of 758,000 metric tons (MT) are up 30% on the year due to greater export elevation capacity out of the Texas Gulf compared to other U.S. export terminals. While exporters in the Center Gulf and Pacific Northwest (PNW) have to balance massive commodity export programs, which makes it comparatively more expensive to elevate wheat, exporters in the Texas Gulf have fewer commodities and lower volumes to balance, making it easier and less expensive to elevate and ship HRW.

As of Dec. 24, China has purchased 1.12 MMT of HRW after no purchases in 2019/20. Strong HRW export sales so far in 2020/21 can be attributed to the Phase One agreement between the United States and China. So far in MY 2020/21, China is the second-largest market for HRW behind Mexico.

Export sales to Mexico are down 8% on the year at 1.65 MMT due to volatility in the value of the peso and significantly reduced restaurant demand following the COVID-19 outbreak.

Hard Red Spring

Total HRS export sales of 5.78 MMT are 9% ahead of this time last year and are 4% ahead of the 5-year average. Sales to the Philippines and Japan, the top two markets for HRS, are up 5% and 6% respectively on competitive prices and increased focus on food stability following the COVID-19 outbreak, says the trade.

Export sales to China, now the third largest market for HRS, are up more than 700% on the year at 518,000 MT following the Phase One trade agreement.

White Wheat

Total U.S. white wheat sales, represented mainly by soft white (SW) wheat, are 47% ahead of this time in 2019/20 at 5.52 MMT and are 49% ahead of the 5-year average. In the Philippines, the largest market for U.S. SW, export sales are up 5% from this time last year and 29% from the 5-year average on competitive SW prices compared to other classes of U.S. wheat. The increased demand by Philippine millers is also partially due to early customer buying in response to tight export elevation capacity in the PNW. Strong U.S. Wheat Associates (USW) educational programs in the Philippines helped customers stay informed and make timely buying decisions in the first half of MY 2020/21.

SW sales to key Southeast Asian markets like Vietnam, Thailand, Malaysia and Indonesia are more than 20% ahead of last year’s pace as customers work to secure inexpensive, high quality supplies for 2020/21 delivery before the large Australian harvest comes to market.

Soft Red Winter

SRW export sales remain sluggish. Total SRW export sales are down 25% on the year at 1.57 MMT, down 28% from the 5-year average. SRW export sales to 7 of the country’s top 10 overseas markets are behind last year’s pace.

“SRW prices are just too high right now,” said one grain trader, “the United States is priced out of the world market, especially to our buyers in Latin America and Nigeria.” Limited exportable supplies of SRW along the Mississippi River due to lower planted area in key states and extremely tight export elevation capacity in the Center Gulf due to increased export demand for soybeans and corn supported SRW export prices in the first half of MY 2020/21.

Between early June and late December 2020, the average SRW free on board (FOB) price was $247/MT, 12% higher than the same period last year. According to AgriCensus, over that period, the average SRW FOB price was 11% higher than Russian 11.5% protein wheat (on a dry matter basis), a key competitor into Latin America and Nigeria.

To date, sales to Mexico and Colombia, the two largest markets for SRW, are down 10% and 26% from this time last year, respectively. Though SRW sales to Mexico are down on the year, sales of SW to Mexico are up 289% from last year at 92,000 MT as customers take advantage of the significant price difference between the two classes.

As of Dec. 24, there are no SRW export sales to Nigeria compared to last year’s volume of 171,000 MT.

Durum

Year-to-date durum sales in 2020/21 are 25% behind last year’s pace at 590,000 MT but are 20% ahead of the 5-year average. Total sales to Italy, the largest market for U.S. durum, are only 6% behind last year’s pace at 433,000 MT, which is 63% more than the 5-year average.

 

U.S. Wheat Associates (USW) publishes a commercial sales report every week on Thursdays on it’s website.

By Claire Hutchins, USW Market Analyst

U.S. hard red spring (HRS) wheat exports are caught in the crosshairs of an ongoing trade dispute between the United States and the European Union (EU), to the detriment of U.S. farmers and EU customers alike.

Effective Nov. 10, the European Commission (EC) announced a 25 percent import duty on hundreds of U.S. goods, including bulk agricultural commodities like non-durum wheat. The tariffs, punitive in nature, are the latest in a long-running disagreement between the United States and the EU over state subsidies to airline manufacturers Boeing and Airbus.

The disputes date back to late 2019 when the Trump Administration hit the EU with import tariffs on $7.5 billion of goods following a World Trade Organization (WTO) ruling that Europe’s Airbus, Boeing’s main rival, received illegal subsidies between 2011 and 2018. The WTO authorizes punitive tariffs as retaliation to pressure a country to comply with a WTO ruling. In October 2020, the WTO determined Boeing had also received illegal subsidies, thus opening the door for the EU to hit the U.S. with import duties on $4.0 billion of U.S. goods.

The EU’s tariffs apply to all non-durum U.S. wheat entering the bloc. The tariffs have the biggest impact on HRS demand, the largest class of U.S. wheat sent to the EU besides durum. With the tariffs, HRS farmers lost competitive access to the EU, a considerable, consistent market. EU customers regularly import about 300,000 metric tons of HRS per marketing year, making the bloc a top-10 export destination for the Northern Plains wheat. The market disruption will also disrupt the routine of EU customers who have come to depend on the unique functionality of high protein HRS, unmatched by domestic varieties, for valuable products like holiday breads and pizza dough.

Unfortunately, there is no termination date scheduled for either set of tariffs and agricultural trade between the United States and the EU will continue to suffer as a result. U.S. Wheat Associates (USW) encourages the United States and EU to prioritize a fair, timely solution to this trade dispute to reinforce the trusted partnership between U.S. farmers and our customers in the EU. In the meantime, USW will continue to monitor the situation and will regularly communicate with producers, customers and exporters about these developing uncertainties.