July 6, 2021
Kealan Griffin, CHS grain merchandiser, discusses the state of U.S. wheat crops and the outlook for wheat prices.
Wheat production is seeing uneven performance across the U.S. While winter wheat harvest approaches the finish line, spring wheat is growing through dry conditions in many areas. How might export demand and stocks affect prices for wheat growers this year?
Crop conditions run the gamut
Weather is the big wild card in the 2021 wheat performance game, says Kealan Griffin, a grain merchandiser with CHS. “The winter wheat crop overall is in relatively good shape,” he says. “I say ‘relatively good shape,’ because the Southern Plains and the southeastern U.S., where most of the hard red and soft red winter wheat crops are grown, have received timely moisture to support growing conditions this year. As harvest progresses, we’re seeing some excellent yields and those producers are benefitting from good prices.”
On the other hand, growers of spring wheat and white wheat crops are facing tough conditions, Griffin says.
“Spring wheat was planted into dry soils,” he notes. “And while a lot of areas were able to catch some scattered showers last month, the return of heat and wind the past few weeks has erased a lot of those gains.” He believes the crop will be limited going up to the finish line, but that there could still be time left in the growing season for a rally.
“Moisture is really important now during critical development stages,” he adds “After seeing crop condition reports the last two weeks, sentiment in the market has changed, with the trade business realizing that below-average yields will be likely.”
Stocks and the export picture
Shrinking stocks for wheat, corn and soybeans have offered great support for wheat prices, says Griffin.
“We’re coming off a year that saw increased global export demand for grains, which started last fall when China increased its buying pace and continued through the year,” he says. “Heading into the new crop cycle, we’ve still got commodity prices near recent highs. We’ve seen global buying back off somewhat, as everyone looks at the production potential for harvest.
“Right now, the main support for continuation of these strong wheat prices seems to be how the rest of the growing season might play out in corn markets,” Griffin continues. “The wheat market is sensitive to a possible drop in corn production this year. Disappointing corn production could lead to increased wheat demand. We’re looking at the potential for an increase in domestic and global wheat feeding, and that’s providing some optimism that another year of strong export demand could be in the cards for U.S. wheat growers.”