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USW 2020/21 Harvest Reports Return This Week

The new crop U.S. wheat harvest is underway in south Texas and U.S. Wheat Associates (USW) will publish its first “Harvest Report” for marketing year 2020/21 on Friday, May 29.

USW Harvest Reports are published every Friday afternoon, Eastern Daylight Time, throughout the season with updates and comments on harvest progress, crop conditions and current crop quality for hard red winter (HRW), soft red winter (SRW), hard red spring (HRS), soft white (SW) and durum wheat.

Anyone may subscribe to an email version of the “Harvest Report” at this link. USW includes links in the email to additional wheat condition and grading information, including the U.S. Drought Monitor, USDA/NASS Crop Progress and National Wheat Statistics, the official FGIS wheat grade standards and USDA’s World Agricultural Supply and Demand Estimates report. Harvest Reports are also posted online on the USW website here.

The weekly Harvest Report is a key component of USW’s international technical and marketing programs. It is a resource that helps customers understand how the crop situation may affect basis values and export prices.

USW’s overseas offices share the report with their market contacts and use it as a key resource for answering inquiries and meeting with customers. USW/Mexico City also publishes the report in Spanish.

USW wants to thank and acknowledge the organizations that make “Harvest Reports” possible, including:

  • California Wheat Commission Laboratory;
  • Durum Wheat Quality and Pasta Processing Laboratory, North Dakota State University (NDSU)
  • Great Plains Analytical Laboratory;
  • Plains Grains, Inc.;
  • State Wheat Commissions;
  • USDA/Federal Grain Inspection Service;
  • USDA/Foreign Agricultural Service;
  • USDA/Agricultural Research Service Hard Winter Wheat Quality Laboratory;
  • USDA/National Agricultural Statistics Service;
  • Wheat Marketing Center;
  • Wheat Quality & Carbohydrate Research, Department of Plant Sciences, NDSU;
  • Wheat Quality Council.

 

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Spring Wheat Planting Progress Varies with Regional Conditions

By Claire Hutchins, USW Market Analyst

U.S. wheat farmers across the Northern Plains are hard at work trying to plant spring wheat for the 2020 harvest. Their efforts depend on widely varying regional conditions so many producers are behind schedule while some have pulled ahead.

USDA’s most recent crop progress report shows total U.S. spring wheat planting at 42 percent complete, slightly ahead of last year but well behind the 5-year average of 63 percent. Cool temperatures, overly wet field conditions and delayed field work from the 2019 harvest are slowing farmers down in northwestern Minnesota, eastern North Dakota and northeastern South Dakota. More favorable conditions are helping farmers progress across other parts of the Northern Plains.

According to USDA, only 40 percent of Minnesota spring wheat is planted, compared to the 5-year average of 67 percent. Most delays are in the northwestern part of the state.

“We’re only 15 to 20 percent planted in northwestern Minnesota where wetter conditions are slowing field work,” said Charlie Vogel, Executive Director of the Minnesota Wheat Research and Promotion Council.

Conditions are similar in eastern North Dakota.

According to Dr. Frayne Olson, Crop Economist and Marketing Specialist at North Dakota State University, eastern North Dakota had a very wet fall and not all of the region’s wheat, canola, corn and soybeans were harvested on time which pushed fall field work into spring 2020.

“Spring weather has remained cool and wet with very few days suitable for field work,” he said.

As of May 10, North Dakota spring wheat is only 27 planted compared to the 5-year average of 63 percent. Overly wet field conditions could drive farmers to opt for “Prevent Plant,” or fallow out, spring wheat acres. Farmers are eligible for crop insurance payments on fields when extreme conditions prevent them from planting the crop by a final, prescribed planting date.

“Even if some fields will be planted past the optimum seeding dates, there is still good yield potential,” Dr. Olson said. “Weather during the growing season will have a major impact on final yields and quality.”

In northeastern South Dakota, wet weather and colder soil temperatures are also delaying farmers’ ability to do spring field work. In this part of the state, farmers are also likely to Prevent Plant a portion of spring wheat acres. USDA estimates South Dakota producers will plant 850,000 acres (about 344,000 hectares) of spring wheat this year.

“At the beginning of the season, I thought we would come in a lot lower than USDA’s number due to overly wet field conditions, but recently, in the central part of the state, dealers sold of out spring wheat seed,” said Reid Christopherson, Executive Director of the South Dakota Wheat Commission. “Overall, we could end up close to USDA’s numbers.”

According to Christopherson, farmers are closely watching the decline in corn and ethanol demand and its impact on corn prices compared to spring wheat.

“Early in the planting window, producers may choose spring wheat over corn. Late in the planting window, they may choose soybeans,” said Christopherson.

Despite challenges in the eastern Northern Plains, spring wheat producers further west and south are making strong progress in the 2020 planting season.

“Warmer, drier weather, better harvest progress in fall 2019 and an earlier start are giving farmers a boost in central-western and southwestern Minnesota,” said Vogel.

About 85 percent of intended spring wheat acres are planted in that part of the state. Vogel estimates Minnesota’s southwestern region could add 50,000 “new” spring wheat acres this year (acres that would traditionally would have gone to either corn or soybeans) as producers explore spring wheat and cover cropping rotational opportunities that could add value to overall farm profitability.

“In the north, we saw record seed corn sales in January, but we have recently seen record seed corn returns so some of those acres will go to spring wheat,” said Vogel.

In late March, USDA estimated Minnesota producers would plant 1.35 million acres (about 546,000 hectares) of spring wheat, down 7 percent year-over-year, if realized. Given recent marketing and price challenges with corn and the interest in new crop rotation systems, Vogel estimates Minnesota producers could actually plant up to 1.44 million acres (about 583,000 hectares) of spring wheat this year, in line with 2019.

In western North Dakota, “Producers are seeing better progress due to warmer, drier conditions,” said Erica Olson, the North Dakota Wheat Commission’s Market Development and Research Manager. Despite the possibility for more Prevent Plant acres in the eastern part of the state, she believes North Dakota spring wheat acres could still reach USDA’s estimate of 6.10 million acres (about 2.5 million hectares) in 2020.

Favorable planting weather in central South Dakota is helping farmers get into the fields and plant more quickly than their peers in the northeastern part of the state. According to USDA, 75 percent of the state’s spring wheat is planted compared to 38 percent last year and the 5-year average of 78 percent.

Dry weather is helping Montana producers work through their spring wheat planting efforts. Though only 50 percent of the state’s spring wheat is in the ground compared to the 5-year average of 62 percent, progress is right in line with last year. Additionally, according to Cassidy Marn, Executive Vice President of the Montana Wheat and Barley Committee, Montana could see more spring wheat planted area than USDA’s initial estimate of 3.30 million acres (about 1.34 million hectares) due to potentially less acres planted to barley in 2020.

“We could easily reach 3.30 million acres this year, and I wouldn’t be surprised if we reached 3.40 to 3.50 million acres,” said Marn, which would be up to 1.42 million hectares.

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Dry Weather and Freezing Temperatures Challenge Hard Red Winter Wheat Crop

By Claire Hutchins, USW Market Analyst

The condition of the U.S. hard red winter (HRW) wheat crop is not improving. Farmers – and the markets – are concerned about the threats to yield potential from wide-spread April freezes and increasing dryness across a significant portion of the Central and Southern Great Plains.

USDA’s most recent crop condition ratings reflect the weather effects on the 2020-21 winter wheat crop, reducing the total crop rated good to excellent from 62 percent to 57 percent. According to Romulo Lollato, Kansas State University Wheat and Forages Specialist, drought weakens winter wheat’s ability to recover from freeze damage and both conditions challenge winter wheat yield potential. So the change in ratings is focused on the HRW crop, based on the worsening dryness in north central and southwestern Kansas, eastern Colorado and south central Nebraska. And this week, the extent of freeze damage is being monitored carefully in the following states.

Kansas.  Between April 20 and April 27, USDA reduced its Kansas winter wheat rating from 46 good to excellent to 40 percent as localized freezes and expanding dryness threaten crop progress.

“About 50 to 60 percent of the state’s wheat was impacted to varying degrees by freeze damage,” said Lollato. In north-central Kansas, several counties showed varying but considerable freeze damage. According to researchers at Kansas State University, the crop in that region needs moisture soon to help with freeze damage recovery. In parts of central Kansas, late-sown fields, following a soybean crop, showed severe leaf and tiller damage from recent freeze events. In parts of northwestern Kansas, dry soil conditions predisposed plants to freeze damage and in some cases severely damaged fields turned yellow and brown as plant tissue deteriorated. Southwest Kansas is still extremely dry and could impact the crop’s ability to recover from freeze damage. Looking ahead, hot, dry temperatures across the state could further challenge the crop’s ability to recover from freeze damage.

Late-sown fields in north central Kansas showed severe leaf and tiller damage from recent freeze events. Photos courtesy of Romulo Lollato.

Colorado. “Our story is dryness – we need rain,” said Brad Erker, Executive Director of the Colorado Wheat Administrative Committee.

Several weeks ago, USDA rated 54 percent of Colorado’s winter wheat in good to excellent condition. As of April 27, only 37 percent of the state’s crop is in top condition. Moderate to severe drought plagues the eastern third of the state, where the winter wheat is grown. There is little evidence yet that freeze damage has impacted the crop, but reports are still developing. Looking ahead, high temperatures and no moisture in eastern Colorado could continue to pressure the state’s yield potential.

The April 23 UNL Drought Monitor showed a significant expansion of abnormal dryness and severe drought across the Central and Southern Plains, with dry conditions expanding in North Dakota and the Pacific Northwest.

Nebraska. HRW conditions in Nebraska are better than in Kansas and Colorado, with 69 percent of the crop rated good to excellent. However, freezing temperatures impacted wheat across the state. According to Sarah Morton, Agriculture Promotion Coordinator for the Nebraska Wheat Board, temperatures close to 10 degrees Fahrenheit (-12 degrees Celsius) in Nebraska’s southern Panhandle “knocked the wheat back and turned it brown,” slowing growth. Freezing temperatures in southwest Nebraska also burned back the wheat. Adequate soil moisture levels and warmer temperatures in the western part of the state are expected to help the crop recover from recent freezes. On April 23, the University of Nebraska – Lincoln Drought Monitor introduced abnormal dryness into the south-central portion of the state.

Oklahoma. Reports from Oklahoma show significant freeze damage in some of the state’s southwest and south-central counties. Some counties in southwestern Oklahoma reported freeze damage across 40 to 70 percent of the crop. In several extreme cases, some areas in south-central Oklahoma showed freeze damage in virtually every field. The April 23 Drought Monitor expanded areas under abnormal dryness and severe drought in the Oklahoma Panhandle. As of April 27, 62 percent of the state’s HRW is in good to excellent condition, down from 65 percent the week before, with expectations that the condition will continue to deteriorate.

“It’s an extremely challenging time for southwestern Oklahoma producers,” said Mike Schulte, Executive Director of the Oklahoma Wheat Commission.

Header photo courtesy of Romulo Lollato.

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COVID-19 Changes Global Wheat Trade Dynamics

By Claire Hutchins, USW Market Analyst

It is no secret that these are uncertain times. As countries across the world work to contain and combat the novel coronavirus (COVID-19) outbreak, U.S. Wheat Associates (USW) is closely monitoring the effects of the outbreak on global wheat trade dynamics. Over the past several weeks, several major wheat exporters have implemented measures to curb 2019/20 wheat exports to stabilize domestic prices amidst greater demand uncertainty—spurring upward price movement across the world. In its April World Agricultural Supply and Demand report, USDA updated its global wheat trade estimates to reflect new policy and price dynamics.

Russia. Between March and April, USDA reduced its total Russian wheat export forecast for 2019/20 by 4 percent to 33.5 million metric tons (MMT), 7 percent less than last year, if realized, on the news of potential grain export restrictions for the remainder of the marketing year. In late March, Russia’s Agriculture Ministry proposed a 7.0 MMT quota on the country’s grain exports between April and June to stabilize prices and protect food security during the COVID-19 pandemic. Despite USDA’s reduced Russian wheat export estimate, members of the grain trade believe the quota will not have a serious impact on the country’s grain exports. During the same period last year, Russia exported a total 4.90 MMT of all grain, well below the quota threshold. According to a Russian grain trader interviewed by AgriCensus, “I think some 4.5 to 5.0 MMT of wheat exports between April and June were expected … so a 7.0 MMT quota is not dramatic.” Between March 19 and April 12, according to AgriCensus, Russian FOB prices for 12.5% protein wheat (on a dry moisture basis) increased 10 percent from $208/MT to $229/MT.

Ukraine. During the week of March 27, Ukrainian millers and bakers asked the government to limit grain exports and related products to maintain domestic bread prices during the coronavirus pandemic. According to Reuters, Ukraine’s economy ministry said it would control wheat exports, sell flour on the domestic market and agree with traders on a maximum volume of exportable wheat. UGA, Ukraine’s major trader’s union agreed with an economy ministry proposal to limit the country’s 2019/20 wheat exports to 20.2 MMT, 26% higher than last year, if realized. USDA’s total 2019/20 Ukrainian wheat export forecast is unchanged month-over-month at 20.5 MMT. By April 8, Ukraine’s total grain exports reached a record 47.0 MMT, 18.1 MMT of which is wheat, up 21% on the year.

Romania. On April 10, Romania’s government issued a military decree banning cereal and other food exports including wheat to non-European Union destinations during a state of emergency, expected to last until mid-May, in response to the COVID-19 pandemic. Romania is a key origin for Egypt’s General Authority for Supply Commodities (GASC) and the unexpected absence of Romania from the global market supported prices between GASC’s February and April tenders. On April 14, GASC bought 120,000 metric tons (MT) of Russian wheat at $240/MT FOB, 5 percent more expensive per metric ton than its February 11 tender when it bought 180,000 MT of Romanian wheat at $228/MT FOB. According to a European grain trader interviewed by Reuters, “There is not much 11.5% or 12% protein (dry matter basis) left in big volumes of 60,000 MT in Russia and Ukraine while Romania is temporarily out of the game.”

European Union, Other. To date, besides Romania, other countries in the EU have not implemented wheat export restrictions. According to USDA, European Union (EU) wheat exports have surged in the past month on ample supplies and competitive prices. In France, the EUs’ top wheat-producing country, total wheat exports in 2019/20 now stand at 8.0 MMT, 12% greater than this time last year. USDA expects total EU wheat exports will reach 31.0 MMT this marketing year, 25% greater than last year and 7% greater than the 5-year average.

 

United States. The U.S. grain export industry and the government agencies that protect and promote U.S. agriculture are working to ensure continuous trade flows despite market uncertainty during COVID-19. As of April 2, U.S. wheat export sales to date total 25.0 MMT, up 2 percent from last year. On April 9, USDA reduced its 2019/20 U.S. wheat export estimate from 27.2 MMT to 26.8 MMT, still 5% greater than last year and 9% above the 5-year average, if realized. Seasonally slower export sales and higher U.S. wheat export prices through the last half of March pressured USDA’s total U.S. wheat export forecast month-over-month. Heightened domestic demand and large hard red winter (HRW) sales to China supported U.S. export prices between mid-March and early April.

Under these unprecedented circumstances, USW is doing everything it can to continue to promote the reliability, quality and value of all six U.S. wheat classes to our overseas customers. USW encourages our customers and stakeholders to reach out to our colleagues by telephone or email. We are ready to provide the information our customers need about U.S. wheat supplies or market factors, or to answer any marketing and processing questions that may arise. Another option is to submit a question to our “Ask the Expert” page on our website at https://www.uswheat.org/market-and-crop-information/ask-the-expert/.

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USDA Predicts Slight Decline in U.S. Spring Wheat Planted Area

By Claire Hutchins, USW Market Analyst

According to the March 31 USDA Prospective Plantings report, U.S. total spring-planted wheat area is expected to fall to 12.6 million acres (5.1 million hectares), down 1 percent from 2019/20, if realized. This estimate includes 11.9 million acres (4.82 million hectares) of hard red spring (HRS), down slightly from last year. USDA expects U.S. durum planted area to total 1.29 million acres (522,000 hectares), down 4 percent from 2019/20. For all U.S. wheat, USDA now expects all wheat planted area for harvest in 2020 to total 44.7 million acres (18.1 million hectares), down 1 percent from 2019 and the lowest all wheat planted area since records began in 1919.

North Dakota farmers are expected to plant 6.10 million acres (2.47 million hectares) of HRS, 9% below last year. Last year’s overly wet field conditions affected HRS quality and led to significant cash price discounts at country elevators. According to Dr. Frayne Olson, Crop Economist and Marketing Specialist at North Dakota State University, farmers are “getting very frustrated with HRS quality discounts and the net price they receive at the elevator,” which he says is a disincentive for farmers to plant more HRS.

“I think the North Dakota HRS acreage number is a little low, but it may also reflect USDA concerns about Prevented Planting this spring,” said Dr. Olson. Farmers are eligible for crop insurance payments on fields when extreme conditions prevent them from planting a crop by a final, prescribed planting date, “There are areas in eastern North Dakota and western Minnesota that are going to have potential problems with Prevented Planting. However, that should not be an issue from central North Dakota to eastern Montana.”

The risk of quality challenges with HRS and more favorable marketing opportunities for soybeans compared to HRS also adds pressure to North Dakota HRS planted area. North Dakota producers are expected to plant 6.60 million acres (2.67 million hectares) of soybeans for harvest in 2020, up 18 percent from last year.

Of USDA’s prediction of reduced durum planted area, North Dakota Wheat Commission’s Market Development and Research Manager Erica Olson said, “North Dakota’s durum numbers surprised us a little bit, they were very low last year and we expected to see an increase this year.” USDA expects durum planted area in North Dakota to fall 11 percent on the year to 674,000 acres (273,000 hectares) as producers recoil from last year’s difficult, delayed harvest and cash price quality discounting.

Similar to the situation with HRS, North Dakota farmers are getting “very frustrated with durum quality cash price discounts” at North Dakota elevators, Dr. Olson said, “Farmers look at net income versus risk for growing each crop when deciding what to plant. If a farmer can raise Choice durum, net income is good. However, if you raise Ordinary durum, the math does not work. The risk to reward tradeoff has not been good the past several years.” Stable to slightly higher durum planted area in Canada adds pressure to U.S. durum prices which also discourages U.S. durum planted area.

In Minnesota, USDA predicts HRS planted area will fall 7 percent to 1.35 million acres (550,000 hectares), while soybean planted area will increase 8 percent to 7.40 million acres (3.0 million hectares) and corn planted area will increase 8 percent to 8.40 million acres (3.40 million hectares).

Charlie Vogel, Executive Director of the Minnesota Wheat Research and Promotion Council, has a slightly different opinion about the outlook for HRS.

“We expected HRS planted area to go down in Minnesota—two weeks ago, but it’s a different world now,” he said, citing the recent strong HRS futures rally attributed mainly to increased nearby domestic demand for bulk products.

“Given the futures rally, I now expect Minnesota HRS planted area could be in line with or slightly above last year’s acreage, if we get warm, dry planting conditions through spring,” said Vogel. However, if western Minnesota receives too much precipitation in the coming weeks, he does think farmers in certain areas may also be expected to make Prevented Planting claims for HRS.

Montana producers are expected to plant 3.30 million acres (1.34 million hectares) of HRS this spring, up 14% from last year and the highest since 2002.

According to Sam Anderson, Industry Analyst and Outreach Coordinator at the Montana Wheat and Barley Committee, “It is important to think about harvest and planting conditions last autumn: with lots of moisture, it was hard to get in the field and snow came very early. Those conditions explain most of the changes in this year’s prospective plantings estimate. Farmers were not able to get all their winter wheat in the ground last fall, resulting in the 400,000-acre (162,000-hectare) shift from winter wheat to spring wheat.”

Montana winter wheat planted area is down 20 percent on the year to 1.60 million acres (648,000 hectares).

Updated Winter Wheat Estimates

On March 31, USDA also made minor revisions to the country’s winter wheat planted area from its January forecast, which still hovers around 30.8 million acres (12.5 million hectares), down 1 percent from last year. The hard red winter (HRW) wheat planted area forecast fell slightly from January’s estimate to 21.7 million acres (8.79 million hectares). The soft red winter wheat planted area estimate increased slightly from January to 5.69 million acres (2.30 million hectares), up 9 percent from last year. The white winter wheat planted area forecast increased slightly from January to 3.42 million acres (1.38 million hectares). USDA expects total white wheat acres, planted in both winter and spring, to total 4.10 million acres (1.66 million hectares), in line with last year.

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Pandemic Adds Pressure to U.S. Wheat Prices

By Claire Hutchins, USW Market Analyst

It is no secret that these are uncertain times. As countries across the world work to contain and combat the novel coronavirus (COVID-19) outbreak, U.S. Wheat Associates (USW) is closely monitoring the effects of the outbreak on global wheat trade dynamics. According to a host of U.S. grain traders, it is too soon to tell the immediate effects of the pandemic on the international demand for U.S. wheat.

However, there is a clear relationship between the turbulence in global economic markets and the export price of U.S. wheat. Over the past several months, the export price for all classes of wheat out of the Gulf and Pacific Northwest (PNW) has fallen due to substantial pressure in the U.S. wheat futures markets, pressure that the pandemic has only increased.

Between late January and mid-March 2020, nearby Chicago Board of Trade (CBOT) soft red winter (SRW) wheat futures fell 12% from $5.74/bu to $5.06/bu. Nearby Kansas City Board of Trade (KCBT) hard red winter (HRW) wheat futures fell 11% from $4.86/bu to $4.32/bu. Nearby Minneapolis Grain Exchange (MGEX) hard red spring (HRS) wheat futures fell 7% from $5.48/bu to $5.08/bu.

During the same period, PNW HRW 11.5% protein (on a 12% moisture basis) FOB prices fell 7% from $241/MT to $224/MT. Gulf HRW 11.5% protein FOB prices fell 9% from $235/MT to $214/MT and Gulf SRW FOB prices fell 13% from $262/MT to $228/MT.

Gulf HRS 14% protein FOB prices fell $16/MT from $267/MT to $251/MT and PNW HRS 14% protein FOB prices fell $12/MT from $263/MT to $251/MT.

Under these unprecedented circumstances, USW is doing everything it can to continue to promote the reliability, quality and value of all six U.S. wheat classes to our overseas customers. USW encourages our customers and stakeholders to reach out to our colleagues by telephone or email. We are ready to provide the information our customers need about U.S. wheat supplies or market factors, or answer any marketing and processing questions that may arise.

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U.S. Wheat Associates Launches New Price Charting Tools

By Claire Hutchins, USW Market Analyst

Navigating U.S. export markets and making purchasing decisions is a complicated, risk-involved process, especially when wheat customers have so many options for sourcing their supplies. As representatives of the U.S. wheat industry, U.S. Wheat Associates (USW) recognizes it has a social contract to ensure our customers have access to accurate, unbiased price information to help them make timely buying decisions.

One of the ways USW has done that over many decades is by publishing a weekly Price Report on Friday afternoon that gives the world’s buyers an independently derived baseline of export prices for U.S. wheat by class, protein level, export region and delivery month. This report provides an independent assessment of weekly export prices across a broad segmentation of the U.S. wheat sector and delivers independent estimates of export basis and export prices based on industry surveys.

USW recently launched new Price Charting Tools based on Price Report data to help overseas customers visualize current and historic U.S. wheat FOB prices and export basis values by export region, class, protein level and date. The Price Charting Tools, found on the USW website, also feature wheat futures prices by date and grain exchange. Customers can also chart FOB and basis spreads between different classes, protein levels and export regions.

“The new charting tools are valuable resources for overseas buyers to view historical price trends of four of the six wheat classes produced in the United States,” says Mike Spier, USW Vice President of Overseas Operations. “USW’s new charting tools will give buyers valuable insight by showing them how past changes in the U.S. and world wheat supply and demand situation influenced U.S. wheat prices.”

These new graphing tools link users to the most detailed, public database of historic U.S. wheat FOB and export basis levels.

“Not only can users look back at historical market behavior as one clue toward looking to and anticipating future action, but they can also look at a breadth of historical value relationships including intra wheat class relationships and winter wheat class protein level spreads,” says USW President Vince Peterson. “This is one exceptional tool for wheat buyers that are trying to analyze and select the value proposition best offered and delivered by the various U.S. wheat classes.”

To access USW’s new Price Charting Tools directly, click here. To access the Price Charting Tools from anywhere on the USW website, click “Price Charting Tools” under the Market and Crop Information menu at the top of the page. For more information on the USW Price Report, click here.

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Supply, Quality and Price Support USDA Wheat Export Estimates

By USW Market Analyst Claire Hutchins

Between January and February 2020, USDA raised its total U.S. wheat export estimate from 26.5 million metric tons (MMT) to 27.2 MMT, 7% greater than last year, if realized. U.S. Wheat Associates (USW) believes the United States is on track to reach USDA’s export estimates due to favorable marketing trends in the first half of 2019/20 that led to a strong export pace between June 2019 and February 2020.

U.S. wheat farmers continue to produce an abundant supply of high-quality wheat, which is always a factor in overseas demand. Export prices have certainly attracted customers’ attention in marketing year 2019/20. And if they compare current price trends to what has happened at this time of year on average the past five years, customers can also see an unusual buying opportunity.

HRW. USDA expects 2019/20 HRW exports will reach 10.6 MMT, 18 percent greater than last year, if realized. Relatively low HRW prices during the first half of 2019/20 boosted HRW exports into early 2020. Between early June 2019 and late December 2020, the average Gulf HRW 11.5% protein (on a 12% moisture basis) FOB price trended about 7 percent below the 5-year average price. As of Feb 13. 2020, HRW exports to all destinations total 6.44 MMT, 33 percent greater than this time last year and 61 percent of USDA’s 2019/20 forecast. HRW prices climbed between late August and early January but have fallen back 4 percent between to $226/MT FOB, offering a price incentive for the final months of the marketing year.

HRS. USDA forecasts 2019/20 HRS exports will reach 7.48 MMT, 6 percent greater than last year, if realized. As of Feb 13. 2020, HRS exports to all destinations total 4.62 MMT, slightly below last year and 62 percent of USDA’s 2019/20 forecast. Gulf HRS 14% protein prices trended dramatically below 2018 values and the 5-year average price between early June and late September, until concerns of a wet harvest brought prices more in line with 2018 levels at about $270/MT. However, HRS prices are trending down in the second half of 2019/20 and are, on average, 5 percent lower than the 5-year average FOB trendline at about $264/MT. Industry experts believe HRS FOB prices could continue their downward trend on cheaper nearby secondary rail rates and light export demand, beneficial for deliveries in April and May 2020.

SRW. USDA predicts SRW exports will total 2.72 MMT, 22 percent lower than last year, if realized. USW reported Feb. 5, soft red winter (SRW) export prices had been climbing steadily since the end of the 2019 harvest on reduced production, tight ending stocks and stable domestic and overseas demand. However, after Jan. 24, a dip in export demand pressured prices, offering an opportunity for SRW importers to lock in a lower price through the end of marketing year 2019/20. Between Jan. 24 and Feb.14, 2020, SRW prices fell 6 percent to $247/MT FOB. Despite reduced production and higher than average prices, SRW exports to date are in line with this time last year at 1.83 MMT, 67 percent of USDA’s final forecast.

White wheat (soft and hard). USDA predicts 2019/20 white wheat exports will total 5.31 MMT, in line with last year and 15 percent greater than the 5-year average of 4.60 MMT. For the majority of the first half of 2019/20, soft white (SW) wheat (representing 99 percent of U.S. white wheat production) 10.5% maximum protein prices trended well below the last year’s price and the 5-year average price over the same time period, providing overseas customers with ideal white wheat buying opportunities. As of Feb. 14, the SW 10.5% protein maximum FOB price was $237/MT, 2 percent lower than this time last year and 5 percent below the 5-year average. As of Feb. 13, 2020, all white wheat exports total 3.56 MMT, 3 percent greater than last year and 67 percent of USDA’s final white wheat export forecast.

Durum. USDA predicts 2019/20 U.S. durum exports will total 1.10 MMT, 83 percent greater than last year and 54 percent greater than the 5-year average. Durum exports to Italy, the largest market for U.S. durum, are more than double what they were this time last year at 439,000 metric tons (MT) due to a 12 percent reduction in European Union (EU) durum production in 2019. Year-to-date U.S. durum exports now total 655,000 MT, nearly double last year’s export pace and 60 percent of USDA total 2019/20 durum export forecast.

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Market Offers Soft Red Winter Buying Opportunity

By Claire Hutchins, USW Market Analyst

Soft red winter (SRW) export prices had been climbing steadily since the end of the 2019 harvest on reduced production, tight ending stocks and stable domestic and overseas demand. Then after Jan. 24, 2020, export basis and FOB prices dipped, offering an opportunity for SRW importers to lock in a lower price through the end of marketing year 2019/20.

From mid-July 2019 to mid-January 2020, SRW export basis rose 65 percent from $0.85 per bushel (/bu) to $1.40/bu, 33 percent higher than last year at this time and 47 percent higher than the 5-year average.

However, between Jan. 24 and Jan. 31, 2020, a dip in export demand pressured SRW export basis for the first time since early September. SRW export basis fell 7 percent to $1.30/bu, the lowest since early December 2019. Lower basis and softer futures prices also pressured SRW FOB values 4 percent between Jan. 24 and Jan. 31 from $262/MT to $251/MT.

Market watchers, including those at U.S. Wheat Associates (USW), believe this price decline is a good buying signal. They believe SRW export basis will remain high through the end of 2019/20 based on still tightening exportable supplies and stable demand from overseas customers. Members from the grain trade also believe SRW export basis will be higher than average through the 2020/21 harvest based on significantly reduced beginning stocks year-over-year and substantial reductions in SRW planted area in states tributary to the Mississippi River, where a significant amount of SRW is transported from the countryside to export facilities in the Gulf.

Specifically, farmers reduced SRW planted area for harvest in 2019 due to overly wet field fields in the fall of 2018 and unprofitable prices. SRW production fell 17 percent from last year to 6.50 million metric tons (MMT), the lowest since 2010/11. USDA expects SRW ending stocks at the end of 2019/20 to fall 49 percent to 2.88 MMT, the lowest in 10 years. USDA predicts SRW exports will total 2.72 MMT, in line with the 5-year average.

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Income Potential and Weather Fight Against Winter Wheat Seeding for 2020

By Claire Hutchins, USW Market Analyst

With winter wheat prices remaining at or less than the cost of production and with a very wet planting season, it is no surprise that many U.S. farmers chose to plant slightly less winter wheat for harvest in 2020. USDA’s 2020/21 Winter Wheat Seedings report, released Jan. 10, reported U.S. farmers planted 30.8 million acres (12.5 million hectares) of winter wheat, down slightly from 2019/20 and 7% less than the 5-year average of 33.2 million acres (13.4 million hectares). Decreases for HRW and white winter wheat more than offset an increase in SRW planted area. USDA noted that this is the second smallest number of winter wheat acres on record.

Hard red winter (HRW). USDA assessed HRW planted area at 21.8 million acres (9.35 million hectares), down 1% from 2018. Planted acreage is down year-over-year in several major HRW-producing states with the largest decreases reported in Colorado, Montana and Nebraska. Colorado planted area fell 12% year-over-year to 1.90 million acres due to extreme dryness in the southeast, depressed commodity prices and pest pressure in the northeast. Record low planted area of 900,000 acres (364,000 hectares) in Nebraska can be attributed to weaker marketing conditions and an overly wet, late soybean harvest which prevented fall HRW planting.

“This didn’t just happen overnight,” says Royce Schaneman, executive director of the Nebraska Wheat Board. “State-wide plantings have been trending down for a number of years due to poor marketing conditions.”

HRW planted area in Kansas and Oklahoma is stable year-over-year at 6.90 million acres (2.79 million hectares) and 4.20 million acres (1.7 million hectares), respectively.

Total winter wheat planted area in Texas jumped 9% year-over-year to 4.90 million acres (1.94 million hectares). About 95% of Texas winter wheat is HRW and 5% is SRW.

“Adequate soil moisture in many regions, combined with favorable marketing conditions compared to cotton, allowed producers to maximize HRW acres,” says Darby Campsey, director of communications and producer relations for the Texas Wheat Producers Board.

In South Dakota, North Dakota, Montana and Wyoming, a very wet fall also prevented more HRW seeding, although these states usually plant a relatively small percentage of total U.S. HRW.

Soft red winter (SRW). Total SRW planted area of 5.64 million acres (2.28 million hectares) increased 8% from 2018. Increases in most SRW-producing states more than offset decreases in Delaware, Illinois Indiana, Michigan, Missouri and Wisconsin.

According to Tadd Nicholson, executive director of the Ohio Corn and Wheat Growers Association, the state’s SRW planted area increased 12% over last year to 560,000 acres (227,000 hectares) due to ideal, timely planting conditions following a miserably wet spring which left many corn and soybean acres unplanted.

In Illinois, SRW planted area fell 25% from last year to 490,000 acres (198,000 hectares).

“It was one of the craziest years for weather in Illinois,” says Mike Doherty, interim executive director of the Illinois Wheat Association “It was the third wettest year on record and most of the precipitation fell in the first eight months. Farmers were beside themselves trying to manage other crops through the wet weather. Across the state, corn and soybeans were harvested 30 to 60 days late. You just can’t plant winter wheat if you can’t get the other crops out of the ground.”

There is also SRW grown in areas of Texas and Campsey reports that “strong marketing opportunities and better, dryer planting conditions for SRW compared to last year’s overly wet field conditions led to a significant increase in SRW acreage year-over-year.”

White winter wheat. White winter wheat planted area fell to an estimated 3.37 million acres (1.36 million hectares), down 4% from 2018. White winter wheat planted area in Idaho, Oregon and Washington fell below last year. Idaho farmers reported planting 720,000 acres (291,000 hectares) compared to 730,000 acres (295,000 hectares) in 2018. Planted area in Oregon fell 5% from last year to 700,000 acres (283,000 hectares). Washington planted area fell slightly less than 2018 to 1.70 million acres (688,000 hectares).

Durum. Winter durum planting in the southwestern United States is estimated at 70,000 acres (28,300 hectares), up 9% from 2018 but 41% less than 2017. Arizona and California plant Desert Durum® from December through January for harvest May through July.

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