Big Wheat Crops Coming
Successful Farming – 05/11/2019
Wheat production prospects continue to look impressive. USDA issued their first look at the 2019/20 year on Friday, and it suggests things aren’t going to get easier this next marketing year. All wheat production for the US was pegged at 1.897 billion bushels, up 13 million over last year despite acreage being down 2.0 million acres (a record low).Hard red winter wheat production was pegged at 780 million bushels, up 118 million over last year; soft red at 250 million would be 36 million less than last year and white wheat at 230 million is 6 million less than last year. Old crop ending stocks were raised 40 million to 1.127 billion bushels, following a 20 million drop in both exports (925 million) and feed usage (50 million). New crop end stocks are pegged at 1.141 billion bushels with exports for 2019/20 projected at just 900 million… Not hard to see why wheat is on its face. The trajectory of US and world production is strongly higher, and the export competition will be fierce. Granted, it is still early in the growing season and it’s possible something could come out of left field, but it would have to be soon, and we don’t see anything looming in the forecast – for the major exporters. We do some possible drought issues in China, which is no small producer but not a major exporter. They also already hold 50% of the world’s wheat stocks and 61% of corn, so they do have some buffer against lower production.
Escalating Trade War Could Dim Global Demand for Commodities
CNBC – 05/13/2019
China’s new round of tariffs announced Monday includes various agricultural products, such as chicken, wheat, sugar, ginseng and peanuts. In futures trading Monday, the July wheat futures contract rose 2.7% on the Chicago Board of Trade. The July sugar contract in New York was up just under 1%. However, Stutland said wheat and sugar futures still present a possible investment opportunity. The thinking is some demand may be pulled forward for those commodities before China’s new round of tariffs take effect June 1. “I think that’s why you’re seeing wheat and sugar sort of hang in there,” Stutland said. Those “might actually be an area to run in and hide, if you’re sort of looking to be a trader in all this.” But some observers suggested wheat futures’ jump Monday had more to do with bouncing back from Friday weakness than with China trade issues. Wheat took a hit Friday after the U.S. Department of Agriculture forecast a large global wheat crop. Regardless, China purchased only $105.5 million worth of wheat last year, down 70% from $351.1 million in 2017, according to USDA data.
China’s New Tariffs are Hitting US Farmers at ‘Every Single Angle’
CNBC – 05/14/2019
China’s latest tariff hike on $60 billion worth of U.S. goods hits farmers at “every single angle,” according to an economist at the American Farm Bureau Federation. “The retaliatory tariffs placed on U.S. farmers from China are a net negative on the industry,” Michael Nepveux told CNBC’s “Squawk Box Asia” on Tuesday. Ongoing U.S.-China trade tensions further escalated Monday when Beijingannounced that it would raise tariffs to as high as 25% on more than 5,000 U.S. products starting June 1. The new Chinese duties target a wide range of agricultural products, and U.S. farmers are set to be hardest hit. This is a “very, very challenging time for farmers right now,” said Nepveux, especially since Beijing’s tariffs come after March’s historic floods in the Midwest ruined farmers’ crops and stockpiles.“We’re sitting at one of the lowest net farm incomes we’ve seen in over a decade,” he added. ”(Farmers are) having huge challenges even getting out onto the field in order to try and plant.”
New Research from U of Illinois Accurately Predicts Australian Wheat Yield Months Before Harvest
AgriMarketing – 05/14/2019
Topping the list of Australia’s major crops, wheat is grown on more than half the country’s cropland and is a key export commodity. With so much riding on wheat, accurate yield forecasting is necessary to predict regional and global food security and commodity markets. A new study published in Agricultural and Forest Meteorology shows machine-learning methods can accurately predict wheat yield for the country two months before the crop matures. “We tested various machine-learning approaches and integrated large-scale climate and satellite data to come up with a reliable and accurate prediction of wheat production for the whole of Australia,” says Kaiyu Guan, assistant professor in the Department of Natural Resources and Environmental Sciences at the University of Illinois, Blue Waters professor at the National Center for Supercomputing Applications, and principal investigator on the study.”The incredible team of international collaborators contributing to this study has significantly advanced our ability to predict wheat yield for Australia,” says Guan. People have tried to predict crop yield almost as long as there have been crops. With increasing computational power and access to various sources of data, predictions continue to improve. In recent years, scientists have developed fairly accurate crop yield estimates using climate data, satellite data, or both, but Guan says it wasn’t clear whether one dataset was more useful than the other.
Last Flour Mill Carries Forward Minneapolis’ Industrial Legacy
StarTribune – 05/11/2019
One by one, the flour mills that built the “Mill City” a century ago have ground to a halt, leaving one last plant to carry on Minneapolis’ industrial legacy of making food from kernels of wheat. Looming across from the 38th Street light-rail station in south Minneapolis, the century-old Atkinson Mill will soon be the only flour mill left in a city that once boasted dozens of them. The last mill alongside the Mississippi River — which powered the industry’s growth — shuttered in 2003, and Archer Daniels Midland (ADM) is closing one of two plants on Hiawatha Avenue. “It’s sad that with that kind of history that you see that disappearing,” said Charlie Hatch, Atkinson’s plant operations manager. “But it is nice to be still here and still operating and still providing for the community. The 24-hour operation produces more than 1 million pounds of flour a day, enough to fill 20 tanker trucks. Its floors are packed with rows of grinding and sifting machines, all transforming wheat kernels into flour for bakeries and food production plants.
Source: U.S. Wheat Associates