The U.S. Department of Agriculture’s annual June 30 Acreage report brought some surprises to various grain and oilseed markets but quickly was overshadowed by weather that sent spring wheat to three-year highs above $8 a bu, pulling other grain markets higher in its wake.
The U.S.D.A. estimated 2017 all wheat plantings at 45,657,000 acres, down 9% from 2016 and the lowest since records began in 1919. The total included winter wheat at 32,839,000 acres, down 9% and the second lowest since records began in 1909, other spring wheat at 10,899,000 acres, down 6%, and durum at 1,919,000 acres, down 20%. Harvested area was forecast at 25,760,000 acres, down 15% from 2016 and the lowest on record for winter wheat, at 10,497,000 acres for other spring wheat, down 7%, and at 1,858,000 acres for durum, down 21%.
In addition to sharply lower planted and harvested area, weather and other factors contributed to soaring wheat prices. The heart of other spring wheat production is in the Upper Midwest, an area experiencing the worst drought conditions in the United States. As of June 27, the U.S. Drought Monitor showed severe to extreme drought across much of the southwest half of North Dakota, the northern half of South Dakota and the eastern half of Montana, with the rest of the Dakotas and most of Nebraska abnormally dry.
Minnesota, North and South Dakota and Montana account for 90% of 2017 U.S. other spring wheat planted area while North Dakota and Montana account for 91% of durum planted area. Minnesota so far has escaped most of the drought conditions.
In North Dakota, the top producing state for both other spring wheat and durum, planted area was down 13% from 2016 for spring wheat and was down 23% for durum, both exceeding the national declines. The spring wheat crop in North Dakota was rated by the U.S.D.A. as 41% good to excellent as of July 2, slightly above 40% for the six major spring wheat states, but good-to-excellent ratings were only 8% in Montana and 11% in South Dakota.
The spring wheat condition scare comes at a time when spring wheat may be needed more than ever by bakers to provide protein to blend with what appears to be a second consecutive low-protein hard red winter crop now being harvested.
While the fireworks have been in the wheat market, corn and soybean futures haven’t been quiet either, although weather has been benign to even favorable for both crops, except for those grown in the same area as spring wheat.
The U.S.D.A. estimated corn planted area at 90,886,000 acres, down 3% from 2016, and forecast harvested area at 83,496,000 acres, down 4%. The corn crop in the 18 major states was rated by the U.S.D.A. at 68% good to excellent as of July 2, compared with 75% at the same time last year. The average was lowered by good-to-excellent ratings of 47% in Indiana, 55% in North Dakota and 42% in South Dakota. Rainfall has been excessive in some areas for corn, but the moisture generally was welcome as the crop was entering the pollination phase, which is the key determiner of yield. Ten per cent of the crop was silking as of July 2.
Soybean planted area was estimated by the U.S.D.A. at 89,513,000 acres, up 7% from 2016, with harvested area forecast at 88,731,000 acres, also up 7%. The soybean crop in the 18 major states was rated 64% good to excellent as of July 2, compared with 70% at the same time last year. As with corn, the average rating was pulled down by Indiana at 51% good to excellent, North Dakota at 48% and South Dakota at 36%. Soybeans also were beginning their pollination period with 10% of the crop blooming as of July 2, although the pod-filling stage later in July and August is most critical for soybean yields.
The U.S.D.A. all wheat, other spring wheat, durum and soybean planted area estimates were below the averages of trade expectations, while the U.S.D.A. corn and winter wheat estimates were above the trade averages. The corn and soybean acreage numbers were surprising to many in the trade, with the corn number called slightly bearish and the soybean number bullish. But corn futures advanced the day of the report, largely following sharp gains in wheat and soybeans. Spring wheat then took center stage because of weather, providing support for all three wheat markets and even more fuel for corn and soybeans.
Wheat futures pulled back some late last week after the spring wheat condition rating ticked slightly higher, and some questioned if the rapid run-up had been overdone, but only after Minneapolis September had soared 50% from the June 1 low to the July 5 high and Kansas City and Chicago September contracts had gained more than 30%.