The Good: September spring wheat finished the trading session up 35 cents per bushel despite a negative start to the regular trading session. The difference was in the USDA Acreage and Stocks reports released at 11:00 CDT. The reports were bullish for both corn and soybeans which propelled the wheat markets higher. September spring wheat futures closed the day at US$8.4975 per bushel, which is a new contract high. Of course the prospects for dry, hot conditions in the Northern Plains and Canada also supported the move higher. Whatever the reason, a move to new contract highs is most welcome.
The Bad: Spring wheat area in the U.S. dropped 1.4 per cent from the March estimates, although the big concern is where the acreage dropped. The highest yielding state for spring wheat is Minnesota, where the acreage dropped by 11.6 per cent. The acreage in Montana also dropped sharply with the area down 10.3 per cent. North Dakota saw an increase of 6.3 per cent in the June report. The bad news is that the crop in North Dakota is rated at 20 per cent good to excellent. o
The Ugly: The market was expecting a higher corn area, but USDA only delivered 92.692 million acres of corn which was below market expectations. The other problem is that the area increase in corn occurred mostly in Minnesota and the Dakota’s. The problem is that the region that saw the largest increase in corn area are is also experiencing severe drought conditions. Corn futures are finally realizing that the western Corn Belt is in some trouble and has already lost significant yield potential.