Spring Starts Out Well for Wheat

DTN Analyst Bryce Anderson writes three years ago, bad weather in the U.S. and Australia helped spike commodity prices at the time.

There is no major threat to wheat from a weather standpoint starting out spring. This year, conditions are completely opposite. Weather trends for North America's wheat crop moving into the spring 2010 season are generally bearish from a market weather standpoint.

"Wheat is very dependent on row-crop markets for any sort of rally," said Telvent DTN Analyst John Sanow. "We just have so much wheat around."

U.S. wheat stocks at the end of the 2009-10 marketing year are estimated at more than 1 billion bushels, in spite of only 37 million planted acres, the lowest acreage since 1972.

GOOD WEATHER FOR WHEAT

A favorable post-winter weather pattern will help the crop. Telvent DTN Ag Meteorologist Mike Palmerino said the last winter may be unprecedented for its generally ample moisture provisions across the central U.S.

"How often historically do you come out of spring and look at adequate to surplus soil moisture in every wheat area of the U.S.?" Palmerino asked. "At this point, you're looking at virtually every major wheat area -- and even some minor areas -- looking so good that, even where wheat is just a cover crop for something else, they (producers) don't want to tear it up."

For the largest-quantity wheat variety in the U.S. -- hard red winter wheat -- conditions are looking promising as spring begins. In Kansas, 88 percent of the state's wheat crop rated fair or better as of March 1. In Nebraska, that fair or better rating total stood at 92 percent. Oklahoma's wheat crop March 15 was fair or better on 94 percent of the acreage. In Texas, the overall wheat condition index of 74 on March 14 was double the value of 37 posted in mid-March last year.

Palmerino is also optimistic about the prospect for wheat in the Canadian Prairies for 2010.

"Right now, the Prairies are fairly dry," Palmerino said. "But that's probably a good thing, because the drier conditions will allow producers to get into the fields and get their wheat planted for this year. My overall feeling is that the rains will continue to develop in most of the Prairies as the storm track shifts northward late spring into early summer."

Other major wheat areas share a similar favorable trend. Australia, for example, had a disastrous crop in 2007-08. This year, the Australia harvest is almost double the shortfall two years ago.

There is one possible threat to wheat that could bring on a rally in Palmerino's view: if wetter conditions set in similar to a persistent rain pattern that occurred in 2008.

"The only adverse issues would be if it stays wet long enough to where you could have some disease or harvest issues in late spring or early summer," Palmerino said.