In a notable turn of events, the recent USDA report evaluating the condition of wheat crops in the United States has triggered fluctuations in stock market quotations. Released on March 31, the report sheds light on the status of winter wheat crops across the nation.
US Crop Conditions and Sowing Projections
According to USDA data, approximately 56% of winter wheat crops in the US are reported to be in good or excellent condition, a significant increase from the previous year’s 28%. Conversely, 11% of crops are categorized as poor or very poor, marking a decrease from 36% last year. Additionally, only 1% of the area has been sown with spring wheat, aligning with the average 5-year sowing rate.
Forecasts suggest a decrease in the area of wheat sowing compared to the previous season, with projections indicating a reduction from 49.575 to 47.498 million acres. Notably, winter wheat is expected to witness a decline of 7.5%, amounting to 34.135 million acres.
Market Response and Price Trends
On Monday, the MATIF exchange remained closed, while electronic trading in the United States saw a response to the crop conditions. May futures witnessed a decline in prices:
- Soft winter SRW wheat in Chicago dropped by 0.6% to $204.7/t.
- Hard winter HRW wheat in Kansas City decreased by 1.7% to $211.5/t.
- HRS durum spring wheat in Minneapolis experienced a 1.6% decrease to $233.2/t.
International Implications
As of March 28, wheat exports from the USA totaled 14.78 million tons, indicating a decrease of 2.1 million tons compared to the previous year. With only two months remaining in the season, reaching USDA’s projected 19.3 million tons seems unlikely.
Meanwhile, the EU Commission anticipates a reduction in soft wheat sowing area, leading to a projected harvest decrease by 4% to 120.8 million tons, the lowest since 2020/21 MR.
Global Procurement Trends
The State Food Safety Authority of Saudi Arabia (GFSA) recently made a significant purchase of flour wheat through an international tender. Acquiring 795,000 tons of flour wheat with a protein content of 12.5%, this purchase, set for delivery in June – July, aligns with trends observed in Egypt’s recent tender. This procurement is expected to exert pressure on export prices in the near future.
Weather Impact on Quotations
Despite favorable conditions for winter wheat crops in the Black Sea region of Ukraine and the Russian Federation, dry weather patterns may support quotations in the coming days.
This comprehensive analysis underscores the intricate relationship between agricultural conditions, market dynamics, and global procurement trends, shaping the trajectory of the wheat industry in the United States and beyond.
Source: GrainTrade