Articles of Interest- Monday, September 9, 2019
September 9, 2019
Wheat Finds a New Low
Successful Farming – 09/08/2019
Wheat markets came back from the long Labor Day weekend under pressure, establishing new contract lows in Kansas City and Minneapolis, and a new low for this move in Chicago. Pressure in corn with improving Midwest weather also added to the negative bias for wheat. The massive spring wheat harvest is grinding along, and it looks like rains may delay some regions across the north. With tons of wheat being piled on the ground, it is hard to envision the spring wheat futures staging any kind of sustained rally as producers will be quick to price wheat on even small rallies. In addition, spring wheat’s very high loan rate is already encouraging farmers to plant yet more spring wheat next year – the opposite of what the market is telling them to do. Kansas City/Chicago spreads have seen a notable increase in trading activity the last few weeks. With KW trading at record discounts to Chicago, the spread has prompted commercials to deliver hard red winter wheat against the Chicago soft red winter contract.
Australia: Exports Face International Price Pressure
The Land – 09/09/2019
The size of Australia’s wheat export surplus may have a big bearing on this year’s wheat prices during this year’s harvest. If exportable supplies are tight, and grain needs to move from WA to the east again, we could have a repeat of last year, where strong basis levels supported grain prices right through to the end of December, after recovering from lows set in November. On the other hand, if the east coast wheat supply is better this year, forcing more of the SA and WA crops into export markets, our market may come under more pressure. This year we have international price pressure coming from multiple fronts. Russia is a major competitive source, but so too are Canada and Argentina. Currently, Russian prices are falling, down $US10 a tonne in the past four weeks, and down $US42 from a year ago.
Trump’s Trade Policies Drain Profits from Montana Wheat Farmers
Missoula Current – 09/05/2019
On a hot August day in southern Montana, Michelle Erickson-Jones climbed onto her green combine, a massive machine that reaps and separates ripe grain. August is harvest season, so Erickson-Jones was focused on gathering the mature wheat on her farm and preparing it for sale.
“We cut somewhere around 250 to 300 acres a day,” she told me over the phone, even as she maneuvered the combine through a field. All told, she and her family spent 21 days collecting wheat this year — a good harvest. Despite that bounty, problems arise once the wheat is sold. Ongoing international trade disputes are causing Montana wheat farmers’ earnings to stagnate. With around half a million dollars in operational costs and less than $25,000 in subsidy payments from the federal government, Erickson-Jones, a fourth-generation farmer, will not make a profit this year. “It’s been three years since I’ve drawn anything but a break-even budget, and that’s hinging on good (wheat) production,” she said.
Brexit Deadline Piles Pressure on UK Farmers to Export Surplus
The Guardian – 09/07/2019
Farmers across the UK are scrambling to finish their harvests and ship their surpluses abroad before the Brexit deadline of 31 October, when a no-deal departure would force them to abandon European markets in favour of Africa. There has been a relatively good harvest of wheat and barley this year after the rollercoaster weather of 2018, when a freezing spring followed by a record-breaking heatwave wrought havoc. “Exports have continued at a strong pace since the first weeks of August,” said David Eudall, the head of arable market specialists at the Agriculture and Horticulture Development Board. But he estimates that as much as half of the UK’s likely wheat surplus of 2m tonnes, and 0.5m tonnes of barley, could still be awaiting export by the end of October. A no-deal departure would drastically curtail access to EU markets, with only a limited amount allowed in at a tariff of €16 (£14) a tonne. Farmers would be left seeking markets in north Africa, where British grain would have to be discounted to compete, leaving many out of pocket.
Average Kansas Wheat Test Weight at High of 61 Pounds
Kansas Ag Connection – 09/09/2019
Preliminary data for the 2019 crop year from 13,780 carlot samples from 48 counties showed an average test weight of 61.0 pounds per bushel, according to the USDA’s National Agricultural Statistics Service and Kansas Grain Inspection Service, Inc. For comparison purposes, last year’s crop averaged 60.6 pounds, while the 10-year average was 60.8 pounds per bushel. Protein content averaged 11.5 percent, down 0.8 percentage point from 2018, and below the 10-year average of 12.2. The Northeast District had the highest protein content at 12.2 percent, followed by the North Central District at 12.1 percent. Statewide, moisture content averaged 11.6 percent, above 11.4 percent last year and the 10-year average of 11.2.
Source: U.S. Wheat Associates