Fundamentally Speaking

Despite one of one the slowest starts to plantings for the U.S. spring wheat crop, Minneapolis spring wheat futures remain pinned close to not only contract but multi-year lows.

Similar to the situation outlined in our posts on corn, the spring wheat market shows global wheat stocks more than ample, domestic feed and milling utilization plateauing if not declining and numerous factors (cheaper overseas origin, high valued U.S. dollar, trade wars) curtailing our export sales. The market appears indifferent to the possibility of final 2019 spring wheat acreage falling short of farmer intentions or seeing yields fall below trend.

The accompanying graphic focuses on these two very factors which is the change in acreage from the spring to what actually gets seeded and the impact of late plantings on yields. On the right- hand axis is the percent of the U.S. wheat crop planted by May 1. The left-hand axis reports the change in planted acreage from the end March prospective plantings report to the final acreage figures given in the September small grains summary.

Also included within the small blue boxes is the percent that final yields deviated from the 1981-2018 trend. The general consensus is that late plantings can result in less planted acreage than had been anticipated and a tendency for below-trend yields. Lower yeilds may be caused by the key reproductive phase pushed into the hotter part of the summer and the chance of losses from an early fall freeze.

We see that as of May 1 this year, a mere 16% of the U.S. spring wheat crop has been planted, well below the 10-year average of 39% and the 20-year average of 42%.

The question is whether later than normal plantings automatically result in a drop in planted acreage and is depressing for yields. The answer is no although such conditions increase the likelihood of a shortfall in seedings and below trend yields.

Last year, for instance, as the case this year only 16% of the crop was in the ground as of May 1 yet final acreage was 575,000 higher than the March intentions and yields record high at 48.3 bushels per acre (bpa) or 7.3% above trend.

However, 2013 with just 17% planted by 5/1/13 saw plantings decline by 1.105 million yet final yields were 9.9% above trend, also a new record at that time of 47.1 bpa.

The 2011 crop was a very slow year with a mere 10% in the ground as of May 1 which ties 1997 as the slowest planting pace by May 1 going back to 1981. In 2011 acreage fell by 2.033 million acres with yields 10.3% below trend.

Other slow planting years such as seen from 1995-1997 saw below trend yields yet acreage increases two of those three seasons.

Keep in mind that plantings can really accelerate after May 1 with spring wheat farmers able to plant half their crop in a week’s time. High prices at planting, which is not the case this year, can prompt farmers to stick with their original planting intentions as much as possible and delayed spring seedings are often due to saturated soil conditions which may prove beneficial for yields later in the growing season.

(KR)

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