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Market Commentary

Afternoon Comments 06/18


Wheat futures rallied along with corn Tuesday. The slow pace of the winter wheat harvest indicated on the Monday afternoon USDA Crop Progress report apparently sparked buying interest, since it reminded traders that the delayed winter wheat crop could fall victim to hot, dry conditions during the weeks just ahead. Conversely, the spring wheat crop could thrive in a summery environment. July CBOT wheat climbed 7.0 cents to $6.875/bushel at its Tuesday settlement, while July KCBT wheat advanced 5.5 cents to $7.1925, whereas July MGE futures dipped 1.25 to $7.99.
Market Info

The 2013 winter wheat crop is in poor condition

Doane Advisory Services  |   November 5, 2012
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USDA started providing condition ratings for the 2013 winter wheat crop this year. As of the end of October, the winter wheat condition ratings index comes in at 225. That is down from a rating index of 233 last year at this time and is the lowest index rating in at least the last 27 years. The only other year that the index was below 230 was in 2001 when it stood at 229. The average index rating for the last five years is 250, but ratings were very high for the 2009 and 2010 crops.

click image to zoom The severe drought is clearly having some lingering effects on the winter wheat crop. But the early season condition ratings are not a good indicator of final yields. It is important to get a good stand of the crop in the fall, but spring weather usually plays a huge role in determining yields. Condition ratings were well below average for the 2010 and 2011 crops, but yields turned out to be very good. Still, the crop needs to get established in the fall, especially in the Plains states where spring winds can cause soil erosion if there is no vegetation. The poor start this year will also limit the amount of cattle than can be grazed on the winter wheat crop.

 


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