Harvest concerns cause US wheat futures to soar

US wheat futures soar


US wheat futures have reached the highest level in seven months as concerns build over the upcoming harvest.


Benchmark United States wheat futures closed sharply higher last week, rocketing to the highest level in seven months as concerns build over the upcoming harvest.

Deteriorating crop conditions through the important hard red winter wheat areas propelled futures up by more than 10 per cent to levels not seen since July last year. A significantly drier than normal winter across much of the central US has thrown some of the country’s major wheat production areas into severe drought which is raising doubts over the size of the upcoming harvest.

Recently released crop progress data showed than about half of the Kansas wheat crop was in poor to very poor conditions at the end of February. Winter wheat crops in the US will start to exit winter dormancy in the next two to three weeks as temperatures warm and crop conditions will continue to erode without some meaningful rainfall.

Australian farmers are no strangers to drought, having to regularly juggle with vagaries of dry seasons. Wheat yields in the 2017 Queensland and NSW wheat harvest were worst in a decade after a hot, dry winter. Subsequent summer crop yields through Queensland and northern NSW have also been disappointing after a hot and dry growing season.

But the prospects of smaller northern hemisphere wheat harvest offer the hope of improved world wheat prices in 2018.

Late February rainfall resurrected the Queensland monthly rainfall totals but it came too late to significantly improve the size of the sorghum harvest. There was a general 180-280mm of rain across Central Queensland in February but most of this fell in the last third of the month, just outside the optimal planting period for sorghum in the region.

Beneficial rain also fell in southern Queensland.  Roma, St George, Surat and the western side of Goondiwindi had 80-120mm for the month. Heavier rain was seen in around Dalby, Miles, Jandowae and McAlister. Falls were  lighter across the inner Downs.

While rainfall was too late for many sorghum crops, it’s providing valuable soil moisture for the 2018 winter crop.

The Bureau of Meteorology said the short-lived La Nina is breaking down. The Bureau’s extended rainfall outlook shows that Queensland and NSW cropping areas are expected to see average autumn rainfall, while large areas of central and southeastern Australia are likely to experience a drier than average autumn.

Local sorghum prices continued to strengthen last week as buyers chase for supplies from a smaller than expected harvest. Sorghum bids climbed by a further $10 to $330 delivered Brisbane while the Downs markets are up to $315 delivered.

Domestic feeders are showing limited buying interest in sorghum at levels close to wheat values. However, exporter buying interest has intensified as trade relationships between China and the US sour. Speculation is building that China may impose tariffs on US sorghum imports after the announcement from President Trump of a 25 per cent tariff on all steel imports.


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