Global wheat weather worries

[John_Walter]

Story just off the wire summarizing  how poor global  weather is pushing wheat prices higher so far this morning.

"Heavy rain slows, stops harvesting in roughly a third of Australia's wheat belt, threatening crop quality.... Storms halt wheat planting in Europe, while US hard red winter wheat "remains mired in drought for the foreseeable futures," according to DJ story quoting a weather service.

"Several problem areas exist for wheat," the report says. CBOT March wheat was trading up 5 1/3c to $6.90 1/2 a bushel, KCBT March wheat was up 3 3/4c to $7.38 3/4, and MGE March wheat rose 3 1/4c to $7.53 1/2.

Not discussed are any spillover effects on other commodities. But, the situation seems to hold some drama, no?

John

[kinsman1909250]

I'm thinking that with the Dollar going up and Silver and Gold retreating the grains are doing well to stand their ground. The Weather in Argentina is becoming dryer and corn yield estimates are coming down, If the Dollar wasn't gaining strengh there would be a more protacted up move in all the grains. How high is the dollar going to move? Just my two cents.

[Artifice]

FWIW In my experience short term weather events have little effect to values. Serioussustaining long herm threats can. But there as well, few crops are grown over such a diverse geography as wheat soeeven then it tales a cluster of toubles to really threaten crop size.We have had custers at least twice in recenyt yrs - the latest summer 2010- Russia, FSU and euroland. A medium producing county could lose 35% of its crop and be serious to them but barley move teh needle on a worl basis.

Wheat was weakest going back 2 wks, but now holding relative to Beans for sure. December action will be extra interestng this year. I hyave bias but no gteart confidence.

Artifice

[patriot3031376]

Artifice, Could you please use spell check? I hate to be critical as you do bring something to the table but just go back and reread your posts. I have to decipher them to make head or tails. Have a good day. Thanks

[smokeyjay]

Drama may come.  In the Western half of KS, wheat conditions are spotty at best.  Many areas have not had uniform emergence, let alone having good stands.  Even with rains that came in the last ten days, the wheat is beginning to emerge and there is little to no cover for the winter.  Roots are not well established, even on stands that had emerged earlier.  It may be a wild ride, and then, many may see their only reliable source of revenue, program payments, cut out of the budget.

[pritchh]

Patriot, my apologies , here  -- FWIW In my experience short term weather events have little effect to values. Serious sustaining long harm threats can. But there as well, few crops are grown over such a diverse geography as wheat so even then it tales a cluster of troubles to really threaten crop size. We have had clusters at least twice in recent years  - the latest summer 2010: Russia, FSU and Euroland. A medium producing county could lose 35% of its crop and be serious to them but barely   move the needle on a world basis.

Wheat was weakest going back 2 wks, but now, i.e. Thurs Fri,  holding relative to beans for some reason. December’s action will be extra interesting this year, have bear bias but just medium confidence. .   Artifice

[patriot3031376]

New crop wheat is very range bound at the present. Old crop has had seven inside days in a row trading if my memory is correct. It appears to be a follower right now but any of the mentioned weather events could break it to the upside. I farm in the largest SRW county in the eastern US. We have more wheat planted than I ever recall. If wheat prices do collapse in the next five months we will also see the biggest disappearance of planted wheat in history. It will be forced to hang with C&S or guys will abandon it in a heartbeat.

[Canuck_2]

SRW is the largest amount of wheat grown in Ontario too.

There is talk of more having been planted but I do not see evidence of that in my own local area.

As for abandoning these plantings, how much is priced?

Indications here are more priced ahead than usual. What % that is I do not know.

If priced already the abandonment will not happen.

[Artifice]

My 1.5 cents.  Not to sound obsessively negative but as well large amounts of wheat are abandoned annually. HWM is grown in a semi-arid clime so by nature % s will not make it each yr. SRW is less vulnerable and less is abandoned, but anyone starting the equation with 100% harvested is going to be way off. In a rough yr, yes a higher % won’t make it. Wheat os hard to kill, resilient. And weather is subject to reversion to the mean. The Missouri types who because it is dry Sept ’10 think it will be dry May ’11, are way off. OI have not run the data, but more than likely dry now increase the odds of avg or wet 6 months hence.

Interesting market for sure. 

Artifice

[Palouser]

Globally, the next shoe that could drop is the Aussie crop. Overall the quantity of wheat is still rated good. The problem that looms is the weather cycle. Going into the year the SO in the Pacific indicated a switch that would bring Aus moisture for a good crop. And yet the percip was uneven, but enough to get the crop planted. However, Western Aus then dried out again. Now the percip is building in the eastern areas, Queensland being first to harvest and then getting pounded by rain, hurting the quality. If this is an indication that the SO is bringing good rains it might be during harvest in the SE. I'm no weatherman, and consider this speculation. BUT, it is worth watching.

Quality hi pro wheat is still a global problem. Proprietary information out of Canada shows worse quality than generally acknowledged. It's still wheat, but with corn at high values and with questionable ending stocks a lot of wheat is being sold by producers at current feed prices. That statement doesn't account for huge margins exporters seem to be wringing out of buyers.