Market Morsel: US wheat crop starting in a poor state
The Snapshot
Last week, I wrote about how the Chinese winter wheat crop was reported to be in a sorry state in the article Big Wheat Trouble in Big China. At the time I mentioned that this is a year of story after story in wheat markets. Another emerging issue is the US.
The map below is the most recent US drought map (17th March), and shows large parts of the nation are suffering through drought conditions. Ukraine and Russia are effectively removed from global trade flows, so the US becomes more important. If there is a major downgrade in production in the US, in either the wheat or corn crop, it will create fireworks.
The USDA release a condition report. The second map below shows the states that currently report on their conditions. These are the combined percentage of the crop identified as good/excellent.
In this map, we see a low volume of the crop considered good/excellent in Colorado, Kansas, Arkansas, and Texas. The second chart below shows the year on year change between the two.
There will be more state data released in the coming weeks as the crop is inspected, but we expect that the conditions will marry up with the drought map. The US winter wheat crop is in a precarious situation.
It is important to note that there is still a long way to go, and a good drenching will really turn the crop around. It is definitely something to keep a very close eye on. Will the old saying, ‘a bad crop gets worse’ play out?
If a northern hemisphere crop goes bad this year, whether US, Canadian or European, it will blow the recent rally into the long grass.
