US 2022-23 spring wheat output seen at bumper levels on higher yields
The planting progress of spring wheat in the US has surprised markets with expectations of a bumper output on the back of a jump in yields. The development, similar to China’s, comes at a time when global wheat markets are witnessing low supplies.
The US plays a pivotal role in global wheat supplies as the world’s fourth largest producer, exporting 11% of the global wheat trade, according to the Department of Agriculture.
China also faced a similar condition with its crop earlier this year due to dryness and delayed plantings, but the crop has recovered with the harvest likely to be larger on the year.
Weather surprises farmers
A dry winter followed by a wet spring delayed spring wheat plantings for the marketing year 2022-23 (June-May) and raised concerns about yields as traditionally, late-planted crops yield less than early-planted ones.
However, an improvement in weather conditions over the past few weeks has led to expectations for an increase in yields, local farmers said.
The US farmers majorly harvest winter wheat, while spring wheat production equates to around 25% of its total wheat produce. Countries like Mexico and the Philippines depend a lot on the US spring wheat.
The USDA has projected US wheat output in MY 2022-23 to increase to 1.8 billion bushels (48.5 million mt) against 1.6 billion bushels estimated for the previous year. The hard red spring wheat output is estimated at 457 million bushels, up 53.8% on the year from 297 million bushels in MY 2021-22.
The average yield for hard red spring wheat is likely to be 53.1 bu/acre, up sharply from 35.4 bu/acre in the previous year,according to a survey by the US Wheat Quality Council.
“The planting conditions after the fields dried were very good. Soil moisture levels have been and still are favorable for wheat,” the council said in a release.
Global wheat supplies have tightened due to weather vagaries in several origins like the EU and the drop in exports from the Black Sea region amid the Russia-Ukraine war.
If the dry weather conditions with adequate soil moisture content continue for two to three weeks, it would likely result in better yields, the council said.
Spring wheat yields in North Dakota — the top producing state — are forecast at a record 49.1 bu/acre, the council said. North Dakota makes up about half of the US spring wheat crop.
As of July 31, around 59% of the US spring wheat was in good to excellent condition, significantly up from 9% in the corresponding year last year. Close to 8% of the crop was in poor to very poor condition against 64% the previous year, according to the USDA.
However, concerns of sooner-than-usual frost conditions in early September were still keeping the market on its toes.
Exports still seen steady
Despite the likely increase in output, exports of all varieties of US wheat, including spring, were seen rising at a slower pace in MY 2022-23, according to the USDA.
Traders nevertheless expected that US wheat exports are likely to increase in MY 2022-23 as more buyers may be attracted to purchase the crop.
A likely increase in output may compensate the shortfall in shipments from the Black Sea region, traders added.
The USDA has projected exports of US spring wheat in MY 2022-23 at 230 million bushels, up from 210 million bushels mt the previous year.
Overall, US wheat exports could see a slight increase to 800 million bushels in MY 2022-23, compared with the previous season.
“There were concerns over the quality of the crop as well as the volume was likely to be smaller. Now that we are expecting a larger harvest of better-quality crop, the demand from importers may increase in coming days,” a farmer based in North Dakota said.
Anticipation of a larger harvest has weighed on futures prices with the September contract on the Chicago Board of Trade shedding nearly 4% at $7.87/bu within a week as of 0805 ET Aug. 3.
Expectations of robust US wheat exports have kept markets optimistic of a further decline in prices of the foodgrain.