Declining U.S. acreage and poor crop conditions added a little buoyancy to wheat prices recently. But the unsettling discovery of more grain and wheat stocks in China and India quickly put a damper on the upturn.
“It's been very subtle and insidious,” Dick Loewy, with AgResource in Chicago, said of the changes in stocks. “USDA raised world wheat stocks 4 million metric tons on the April 10 world supply/demand balance sheet. After the crop year, they find out that India didn't feed wheat.”
In addition, “If you took USDA's Chinese estimates of corn and wheat stocks as gospel, they were low enough that they would have had to import quite a large volume of wheat and would have exported far less corn.”
However, a recent independent survey found far more grain stocks in China than what was reported by USDA. The upshot is that USDA will add 10 million-12 million metric tons of grain stocks to China's balance in its May 10 report and will raise wheat stocks, too.
This news has kept the pressure on U.S. prices despite problems with the U.S. crop and low U.S. acreage.
Consider that USDA reported that 43 percent of the U.S. winter wheat crop was in good to excellent condition in the major wheat producing states as of April 9. That's down from 61 percent on the same date in 2000. The percent of the winter wheat crop rated poor to very poor in these states was 22 percent, up from 14 percent in 2000.
In Oklahoma and Kansas, wheat fields are being abandoned due to flooding and other weather-related problems.
The Kansas wheat crop sustained minimal wind and freeze damage, similar to 2000, according to the Kansas Agricultural Statistics Service. However, current crop conditions are worse due to last fall's late plantings.
As of April 9, 33 percent of the Kansas crop was rated good to excellent, down from 59 percent in 2000. Twenty-nine percent of the Kansas crop was rated poor to very poor compared with 10 percent in 2000.
Crop progress is lagging. Nine percent of Kansas wheat crop was reported jointed, compared with 58 percent a year ago and 37 percent for the 5-year average.
Oklahoma's winter wheat crop as of April 9 was rated 31 percent good to excellent, down from 75 percent in 2000. Thirty-four percent of the crop was rated poor to very poor, up from 5 percent a year ago. Many farmers initially delayed seeding because of early dry conditions, and then faced an extended period of rainfall that further delayed seeding and emergence. Farmers have abandoned as much as 40 percent of their crop.
When all is said and done, U.S. wheat production could drop below 2 billion bushels this year, the lowest since 1991.
In March, USDA, projected wheat plantings of 60.3 million acres, down four percent from 2000 and the lowest acreage since 1973.