Kansas wheat tour shows impact of drought, yet some hope
Each year at the start of May, a large group of volunteer crop scouts tour the state of Kansas to sample wheat fields and get a firsthand look at the winter wheat crop. The Wheat Quality Council's Hard Red Winter Wheat Crop Tour allows the market to preview the primary winter wheat growing state ahead of the May U.S. Department of Agriculture estimates for the new crop.
This year's tour was heavily attended as the drought conditions through the winter and into the spring have generated a lot of interest from the industry. Farmers, agronomists, journalists and buyers were all present, wanting to see the crop for themselves. Is the crop in real trouble? Or have the recent rains boosted potential output?
From the scouts' perspective, the answer lies somewhere in the middle. Samples ranged from fields that will not even be harvested, to some with truly excellent yield potential. Going forward, it will all be about the rains that are received in the Plains in the next couple of weeks. Yield estimates pegged the Kansas crop at 37 bushels per acre, but it is not expected to be a total disaster as some feared. Total Kansas output is forecast at 243.3 million bushels (which would be the lowest since 1989). Look for lower output in the 2018-19 crop year (especially with reduced planted area), but large carry-in stocks will limit the reduction in overall supply.
Wheat prices in Minneapolis were firmer this week, but remain range bound. Kansas City and Chicago contracts remain in an uptrend as the winter wheat crop remains in poor condition. The USDA showed a modest improvement in crop conditions with 33 percent rated good to excellent from 31 percent a week ago. Spring wheat planting is a couple of weeks behind the normal pace of 36 percent completion. Just 10 percent of the crop is done.
The durum market remains quiet. Planting has only just begun in North Dakota. Only 1 percent of the total crop has been planted due to poor weather this spring. This is lagging the five-year average pace of 8 percent completion. U.S. exports of durum last week totaled 700,000 bushels.
The canola market was surprised by last week's Statistics Canada expectations for acreage this spring. After some initial support, the rally has cooled as many anticipate farmers will eventually plant more than the intentions report suggested. Additionally, demand (which has been very strong over the last few months) is waning. The result is a cooling of a previously supported market. Lastly, soybean oil prices in the U.S. and palm oil prices in Malaysia continue to struggle to find footing. Soybean oil markets are being driven lower by strong soybean meal demand leading to big crush volumes and abundant supplies while palm oil is weaker on softer export demand.
Peas and lentils
Planting is getting started in Saskatchewan. The cold and wet weather hung around longer than usual this spring. As a result, just 1 percent of crops have been planted to date. Conditions vary across the Prairies, with southern areas a little too dry while more northern areas are a little too wet.
The mustard seed market is focused on intentions for Canadian farmers. Statistics Canada announced plans last week for farmers to substantially increase planted area for mustard seed to 437,900 acres in 2018. Decent yields would then boost ending stocks for the 2018-19 crop year.
The USDA showed that the crop has now reached 26 percent completion for planting. This is lagging the five-year average pace of 44 percent completion. Weather has improved, so look for farmers to get caught up soon. Emergence is also lagging the normal pace at just 7 percent (compared to 17 percent for the five-year average pace).