USDA Report Doesn't Settle Wheat Debate
HRS could get tight if exports are better.
Bryce Knorr
Published: May 18, 2009
USDA provided friendly news to the wheat market last week, but it may not have been friendly enough. The agency's first estimate of winter wheat production was a little lower than expected, and the spring wheat crop remains in jeopardy. But either yields must fall sharply, or demand increase substantially, to justify higher prices into harvest.
Minneapolis futures continue to have the most promise seasonally. With acreage and yields likely to fall, supplies look tight into 2010. This week's balance sheet contains my first forecast of 2009 supply and demand by class, and spring wheat looks like it should tighten further. Just how much depends on demand for milling quality wheat, especially if bad weather and lower acreage rims Canadian output. My model assumes slow exports, and HRS could get very tight if exports are better.
The outlook for winter wheat is much less clear. USDA's estimate of hard red winter wheat looks adequate, and my own yield model continues to look a little better.
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Tagged: wheat, winter wheat, usda, spring wheat, farmfutures
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