By John DePutter & Dave Milne – March 29, 2017
US Hard Red Winter Wheat ratings are far below last year. The Kansas wheat crop condition is rated at only 38% good to excellent, down from 56% last year at this time. Oklahoma’s crop is rated 37% good to excellent, down from 63% last year at this time.
– USDA, March 27.
What it means:
Some years, low crop ratings wouldn’t matter much to the markets. This year, they do. That’s because US winter wheat seeded area is the smallest since 1909. That’s not a typo.
In January the USDA pegged total fall-planted wheat area at 32.4 million acres, down 10% from a year earlier and the second lowest since records were kept going back to the early 1900s.
With a smaller acreage base, the average yield will have to be pretty darn good if US farmers are going to produce the same amount as last year or the year before.
And with these low crop ratings in the two largest winter wheat production states of the Union, it’s a stretch to think average yields will be on par with last year’s all-time record high.
With wheat production already set to decrease due to fewer US acres, and now with less than ideal weather causing sub-normal condition ratings, it looks like the
Americans will be hard-pressed to continue their multi-year buildup in wheat supplies.
Point is this: With some cuts here and there elsewhere around the world, and a bit of luck on the demand side, the global wheat surplus could stop growing, and maybe even reverse.
“Depressed cereal prices, good oilseed values and solid subsoil moisture levels in key production areas have the grains industry expecting big rises in Australian canola plantings this year.”
– Queensland Country Life, March 27
What it means:
Farmers down under aren’t going to snow us under with too much canola.
Sure, farmers in Australia are looking for a rotational break after dedicating more ground than ever to pulse crops a year earlier. Sources say good moisture levels in key parts of Australia, and relatively buoyant pricing are also adding to the interest in canola. Some say acres might jump 30%.
But a big acreage hike in Australia is far from proven.
A winter crop, seeding of canola typically doesn’t get underway until about late April. (Sidenote: The Bureau of Meteorology (BOM) is forecasting a drier than average season for Australia.)
Besides, Australia could increase production 30% and it wouldn’t be a major market factor.
Australia is a small player. In Canada we produced more than 18 million tonnes the past two years. Early estimates from the Australian government put 2017 Aussie canola output at 3.7 million tonnes. A couple of good rains (or not enough) in Canada can have a far greater impact on world canola supplies than the size of Australia’s crop.
Meanwhile, if the Aussies do grow more canola, chances are it’ll mean they’re growing less of other stuff like wheat, malting barley and Red lentils, for instance.
Which would not be a bad thing.
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