USDA warns of 'Dust Bowl' as drought damages wheat

US officials warned of conditions in Oklahoma deteriorating in line with those of the infamous 1930s' Dust Bowl as they cut again their rating of the domestic winter wheat crop, underlining findings of a much-watched crop tour.

The proportion of US winter wheat rated as "good" or "excellent" fell a further 2 points last week to a 31%, US Department of Agriculture data showed.

"Plants are in their worst condition for this reporting week since 1996," Commerzbank said.

At Citigroup, analyst Sterling Smith said: "More troubling is the poor/very poor category which is at 39% compared with 34% a week ago."

The deterioration reflected the worsened health of crops in the southern Plains, hard red winter wheat country, where a crop tour last week of Kansas forecast the weakest crop in 18 years in the top US wheat-producing state.

'Dry, windy conditions prevailed'

The USDA rated the proportion of Kansas crop in good or excellent condition at 17%, down four points over the week, during which "dry, windy conditions prevailed".

Winter wheat in selected states rated "good" or "excellent", and (change on week)

Oklahoma: 6%, (-3 points)

Texas: 13%, (unchanged)

Kansas: 17%, (-4 points)

Colorado: 31%, (-5 points)

Washington: 40%, (unchanged)

US average: 31%, (-2 points)

In Colorado, the proportion of wheat seen as good or excellent fell by five points to 31%, as "dry conditions with high winds last week depleted surface soil moisture across the state".

In neighbouring Oklahoma, just 6% of the crop was seen as good or excellent, down 3 points week on week, and dwarfed by the 73% rated "poor" or "very poor", as temperature extremes continued in a state already suffering from drought .

The state recorded temperatures as high as 103 degrees on Sunday, amid a heatwave which has continued in southern Plains into this week, while Friday saw a reading of 26 degrees Fahrenheit.

"There were reports of declining winter wheat conditions and signs of freeze damage," USDA scouts said.

'Similar to the Dust Bowl'

Indeed, "drought, record heat and low humidity" continued to plague crops, besides causing wildfires one of which spread of 3,000 acres, causing one death.

"Producers in the Panhandle continued to experience high winds, cooler temperatures and low moisture conditions similar to the Dust Bowl in the 1930s," the scouts said, referring to the period of drought and dust storms which forced tens of thousands of families off the land.

The "extreme drought and windy conditions" had delayed spring plantings too.

Hard vs soft

The comments come as hot temperatures continue to plague the US south, although cooler temperatures are expected on Wednesday.

"Chances for rain through the latter half of the week and into the weekend should offer some localised relief, but the overall condition of the region isn't expected to see significant improvement," Brian Henry at broker Benson Quinn Commodities said.

The poor health of the US hard red winter wheat crop has driven the premium of July futures more than $1-a-bushel above those of lower-protein Chicago soft red winter wheat, the world benchmark, and a crop in far better health.

In Illinois and Ohio for instance, two of the top soft red winter wheat states, the proportion of crop rated good or excellent is 60% and 50% respectively.

Analysts are now expecting a US hard red winter wheat crop of 762m bushels this year, up only 18m bushels despite higher sowings, and the third lowest in 15 years.

Brokers urge calm, despite heavy US sowing delays
Agricultural Commodities
Agricultural Markets
Agricultural Companies
Agricultural Events