It was a long-deserved month for winter wheat farmers, who have been looking for prices to tick higher. Russia’s surging production and exports have weighed on global wheat prices for months.
But a combination of bullish factors has pushed Chicago and Kansas City red winter wheat prices higher. U.S. acreage is sitting at lows not seen in more than 100 years.
Kansas City May HRW wheat prices closed the month up 8.7%.
Chicago SRW wheat prices for May 2018 topped $5.00 for the first time since August 2017 and gained 7.2% for the month.
We already expected low acreage and lower production. Now, quality concerns are moving to the top of the list as markets eye the ongoing drought across the country. Last Monday, the National Agricultural Statistics Service said that rated 49% of wheat in Kansas poor or very poor.
The USDA rated just 11% good, and 1% — yes 1% — excellent. The agency cited a lack of topsoil moisture that continues to affect quality as the crop prepares to come out of dormancy.
The lack of snow cover and rain/snow during this growing season could create very tight local markets in the months ahead.
It could be a sellers’ market, which is why farmers are encouraged to get their wheat tested and to post a block of their unpriced 2017/18 old crop winter wheat on FarmLead.
Posting on FarmLead can provide growers with more access to buyers who are trying to fill their quotas and to get the best price possible for their grain.
What Else is Driving Winter Wheat Prices?
This month we have focused on the impact of drought on the global wheat production, as well the importance of high protein, high-quality wheat. But there are several other key stories that developed during the month that will be valuable for winter wheat growers and buyers moving forward.
Specifically, in the month of February, we’ve looked at:
• The lower 2018/19 production estimates across Europe, Australia, and North America;
• if Argentina is a legit wheat trader now;
• The impact on US and Canadian exports from the signing of the TPP; and,
• Russia’s strong supply and competitive prices effect on U.S. exports.
The lower production across Europe, Australia, and North America is part of a broader story that we continue to cover here at FarmLead. The global wheat export industry is experiencing a significant shakeup.
Russia, Canada, and Argentina will likely see the greater market share in the years ahead.
Moving into the month of March, the winter wheat crop will start to emerge from dormancy. With that, the market has been considering the impact of drought conditions of winter wheat prices.
Be sure to sign up for for free 3-week trial at GrainCents as this month could be the most impactful for how and when you price your winter wheat for the rest of 2017/18 old crop supply, as well as a significant portion of your potential 2018/19 production.