The CBOT’s most active futures contract, which is the bushel price, rose to 522 UScents on Thursday. This was its highest value since December 26.
The US Wheat Futures contract for March was 518 cents at the time this article was written.
The wheat price started the new year with a strong 500 US cents. The associated Euronext futures contract in Paris reached its highest level for seven weeks at EUR 192 per tonne.
Commerzbank AG says that the recent price hike for wheat can be directly attributed to the marked deterioration of the winter wheat plantation in several important US states. Kansas is one of them.
Since the end of November, this change is being observed.
Climate patterns affect crops
Analysts in agriculture point to weather conditions that are challenging, such as extreme temperatures fluctuations and dry periods, which can affect the crop’s health.
Kansas, a major wheat producer, has an impact that is significant on the global forecasts.
This causes the market to adjust upwards in order to reflect anticipated scarcity, and the higher costs of production associated with an unsatisfactory growing season.
The US Department of Agriculture published the statistics on Tuesday. However, there was a minimal reduction in Kansas’s percentage of crops that were rated excellent or good. Kansas is one of the largest US-growing states.
The degradation was more noticeable in Nebraska and Oklahoma, two neighboring states.
Further declines could occur due to the ongoing drought on the Plains. During the winter, USDA releases data on these states monthly.
The weekly data for the federal level won’t be released again until April.
US Winter Wheat Acreage
Next Monday, the USDA will release an initial estimate of US winter wheat acres.
Reuters’ poll suggests that this number will be likely 32,41 million acres. Commerzbank estimates that this would be the lowest acreage in six years.
According to a Reuters survey, market participants expected US wheat stock to reach 1,64 billion bushels on December 1.
The USDA will release this data, along with figures for the winter wheat planted last year, which totaled 33,15 million acres.
Carsten Fritsch is a commodity analyst with Commerzbank.
This would represent a 4.5% increase over last year.
Grain Stocks
The inventories of corn and soya are expected to increase significantly over the next three months, leading up to December.
The seasonal cycle of harvesting, when the majority of crops for the entire year are collected and stored in storage, is responsible for this significant accumulation.
The corn harvest will be a major factor in the increase of stocks. By the end of November, projections indicate that the stock level is likely to reach unprecedented levels.
The surge in supplies is a result of the success of the harvest season, and subsequent management after harvest of these important agricultural commodities.
The USDA reported that the expected US corn stock is projected to rise to 12,96 billion bushels. This represents an increase of almost one billion bushels compared with the previous year.
Meanwhile, it is expected that soybean stock will reach 3,25 billion bushels. This represents an increase of almost 5% from year to year.
The post Kansas crop troubles fuel wheat rally before USDA winter acreage estimation may be updated as new information unfolds
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