Wilco Market Report

Though reports are starting to trickle in about frost/freeze damage to the Hard Red Wheat crop, today’s Chicago wheat futures couldn’t decide whether up was down or down was up and finished again even.  The mid section of the country had another round of freezing temperatures over night (the third occurrence) and one large international bank is predicting a 27% drop in HRW production.  The news of weather continues with continued snowpack on the prairies of Canada and the northern U.S. potentially delaying the planting of spring wheat.  Further south the Corn belt, is getting wet…real wet.  Optimum time to plant corn is between April 20 and May 15.  Some have said that a producer loses a bushel a day of production for every day after May 15^th the corn is planted.  Later planting puts the critical pollination time further into the hot of the summer.  Flooding is already happening in Iowa, Illinois, and Wisconsin.  Can you imagine when the snow really starts to melt up north? As I said…..three and a half weeks and counting is the crucial time frame now.

As you know, the USDA is predicting record acres of corn and soybeans being planted.  A good amount (4 million plus acres) are in N.Dakota and Minnesota. If it stays wet for awhile, the growers may switch to soybeans, which can be planted later.  Even with the record acres of corn and soybeans thought to be planted this year, carryout numbers for wheat world-wide after this next crop year are predicted lower than this year.  But of course if corn soars it puts downward pressure on wheat pricing. How about the Russians?  I have attached a graph of  Russian wheat production since 1994.  

After the their huge crop of 2008, the world thought they would be the rulers of wheat production.  We cannot forget their influence as an exporter.  Currently the Black Sea Grain Conference is being held.  Two topics of particular interest are transportation and domestic supply.  The transportation system supplying the Black Sea ports is woefully underdeveloped with poor roads and shortages of rail cars.  During the large exporting year of 2011, Russia and to some extent Ukraine pricing was competitive as long as supplies were close to the Black Sea ports.  After that it simply became a exercise in futility to get the grain moved.  And the next topic discussed was that Russia will be so short of grain at harvest domestically, the home  larders will need to be filled first before exports bang on the rest of the world.  And remember their crop is suspect because of drought weather at planting.  As the adage says for all of this…..”we shall see…….”

Mike Wilhoit, Key Account Representative

Wilco-Winfield LLC

200 Industrial Way-P.O. Box 258 | Mt. Angel, OR 97362

Phone 503-569-0186 |Fax 503-845-9580

mwilhoit@wilco.coop  | www.wilco.coop