Wheat often gets the supporting actor nod in the U.S. grain market theater. But with all the headlines about it this winter, its new-found star status has it center stage.
The storyline beings with Mother Nature not being kind to U.S. wheat farmers this season. Drought conditions throughout the fall and winter left growers worried about the crop’s potential. And then the recent record-smashing cold snaps have only made those concerns worse, even if it is winter wheat.
Then the plot thickened. Last week, the USDA released their supply and demand estimates for the crop, and they are taking note of Mother Nature’s toll.
The agency expects 500K more acres to be harvested than last year but with a lower average yield at 49.1 bushels/acre.
Translation: More acres doesn’t necessarily mean more bushels to sell.
And that may be a problem this year.
→ Export taxes on Russian wheat took effect on February 15 and will double on March 1.
→ Argentina is battling dry conditions, limiting yield prospects on many crops, especially wheat.
→ Chinese demand for wheat continues to rise as farmers look for alternatives to pricey corn.
Bottom line: It’s not time for a curtain call yet. Demand for U.S. wheat is expected to surge in the coming months.