The deepening drought in the northern Plains will result in the smallest harvest of spring wheat since 2002 — 423 million bushels, said USDA in its first forecast of the crop. Futures prices for hard red spring wheat, a high-quality variety and 90 percent of all U.S. spring wheat, soared in the past month as dry weather threatened a squeeze on supplies.
Hard red spring has the highest protein content of U.S. wheats and is prized for baking bread. It is grown mainly in the Dakotas, Montana and Minnesota. Durum, another spring-planted “hard” wheat, is grown mainly in North Dakota and is used for pasta. The USDA estimated the durum crop at 57.5 million bushels, compared to 104 million bushels last year.
“Severe drought conditions affecting the northern Plains,” said the USDA, “indicated a significant decline compared to last year for these two classes,” durum and spring wheat. Durum output would be down by 45 percent and spring wheat down by 20 percent.
“Compared with last year, yield decreases are expected in all (spring wheat) states except Minnesota,” said USDA. “If realized the forecasted yield in Minnesota will be a record high,” 61 bushels an acre.
Crop prices have a limited relation to food prices. Processing and shipping are the major factors in grocery prices.
The USDA estimate of the spring wheat crop was in line with market expectations and the durum forecast was 25 percent smaller than traders expected. However, USDA raised its estimate of the winter wheat crop by an unexpected 2 percent, pulling down prices for all classes of wheat, including spring wheat, said Agrimoney.
Futures prices for hard red spring wheat topped $7.99 a bushel at the Minneapolis Grain Exchange early this week. Following USDA’s crop report, the futures contract closed the day at $7.82 a bushel, still a lofty price compared to USDA’s estimate of an all-wheat average $4.80 a bushel for this year’s crop.
Some 39 percent of the spring wheat crop is in poor or very poor condition, compared to 7 percent at this point last July, said USDA’s weekly Crop Progress report. In North Dakota, the leading state for spring wheat, 35 percent of the crop is poor or very poor.
Traders told Reuters the hot and dry weather, now in wheat-and-cattle territory, could spread into the corn and soybean regions of the Midwest in coming weeks. “With the weather that we have had, I think the trade is anticipating yields will be something less than what we have now,” said Don Roose of U.S. Commodities.