The accelerating US wheat harvest is showing results better than many investors had feared, in line with what appears a relatively sanguine trend of northern hemisphere results so far.
US farmers combined 15% of their wheat last week, more than twice the figure of the week before, to take the harvest to 30% completion.
The figure, which was in line with market expectations, meant that the harvest was no longer the slowest on data going back to 1995, with progress now ranking ahead of that in 1997 as well as in 1995 itself.
Growers in the soft red winter wheat states of Illinois and Missouri proved particularly industrious, getting 32% and 34% respectively of their harvests in the barn, with among hard red winter wheat states growers in Oklahoma, which “received little to no rainfall over the week”, reaping 29% of their crop.
The USDA also raised by 2 points to 63% its rating of the proportion of US winter wheat view as in “good” or “excellent” condition, surprising investors, who had expected an unchanged rating.
The crop is now sparring with 2010’s as the highest-rated one of this century, for this time of year.
Oklahoma’s crop saw particular improvement, of 12 points to 73% good or excellent, with Illinois, Michigan and Missouri seeing notable improvements too.
And the data tally too with reports of harvest yields exceeding those farmers feared when heavy rains were falling on well-developed crops – a hindrance, rather than a help at that stage of development – with quality largely seen as beating expectations too.
‘Yields reported good not to say excellent’
Broker Benson Quinn Commodities said that “relatively early reports indicate the yield is as big as expected”, adding that “to this point, I have heard of few quality issues.
“Test weights tend to impress,” and while “it may be too early to get a good view on protein, I am hearing a lot of 11.5% protein, which is better than expected”.
CRM AgriCommodities said that “the winter wheat harvest is progressing very rapidly with yields reported good not to say excellent in Kansas”, the top US wheat-growing state, where growers harvested 23% of their crop last week to reach 28% progress.
In Kansas state itself, industry group Kansas Wheat reported a string of strong briefings from its reporters, with Meade Coop Elevator & Supply, for instance, noting “exceptional results”, with yields ranging from 65-80 bushels per acre, although protein levels “all over the place”.
A farmer in Ensign, south west Kansas reported an average yield of 80 bushels per acre, despite one half-damaged field returning in the 30s bushels per acre, although investors tend to take individual results with caution, especially as growers tend to be keener at reporting stronger results than weaker ones.
Still, on quality, the latest harvest briefing from US Wheat Associates, drawn from crop samples, on Friday showed “average protein increased slightly as harvest moved north from 10.9% last week to 11.3% this week”.
‘Positive so far’
Some decent data have been reported from the early harvest elsewhere in the northern hemisphere too, with Agritel reported Ukraine results as “positive so far”, although falling short of record levels seen in 2016.
The first 11% of the wheat harvest has come in at 3.25 tonnes per hectare, up from, 2.97 tonnes per hectare as of a year before, with the winter barley result at 3.33 tonnes per hectare, up from 3.19 tonnes per hectare, and with 57% of the crop combined.
Benson Quinn Commodities said that “early harvest data indicates that Russian quality is very good with some 13% protein [wheat] noted”.
Krasnodar vs Rostov
In fact, as of June 27, Russian farmers had reaped 3.5m tonnes of wheat at 4.20 tonnes per hectare, compared with 3.90 tonnes per hectare a year ago, official data show.
Yields in top growing region Krasnodar, a key source of Russian wheat export supplies, “are good and close to the record ones”, at 6.23 tonnes per hectare, SovEcon said, adding that this was “in line with our expectations”.
However, yields in Stavropol and, “unexpectedly”, in Rostov had proved “relatively modest”, SovEcon said, adding that if results do not show “a significant improvement soon”, the analysis group may downgrade its total harvest estimate.
The market is now awaiting too data on the early European Union harvest, and any evidence of damage from the recent heatwave, although many observers believe the heat too late to undermine crops markedly.
“We doubt a few hot days in Europe will affect the wheat yield at this stage of development,” Rabobank said.
In the southern hemisphere, dryness-hit Australia remains one of the world’s few major producers facing disappointing 2019 harvest prospects, with Rabobank pegging the crop at a modest 18m tonnes.
However, “there is still plenty of time for a recovery”, the bank added, with harvest not to begin there for four months or so.