CBOT wheat futures continued to retain support into the end of April last week, despite the rains in drought areas of the US over the weekend of April 21 and 22, and the dry weather that assisted spring wheat and corn planting in the second half of last week. Even a sharp increase in projected Canadian spring wheat acres this year was ignored by the market into the close last week.
The unexpectedly high wheat acreage projected for Canada comes on top of the larger than expected spring wheat acreage announced for the US a month ago. Canadian spring wheat acres are expected to increase by 15.4 per cent this year, the largest percentage increase in annual plantings since 1976. On top of durum and winter wheat acreage increases, an extra 2.87 mill acres will got to wheat in Canada this year, more than two million acres above market expectations.
The week started with a weaker tone after the US rains delivered pretty much what was expected, albeit still on the low side of what is needed. When the crop condition ratings issued on Monday night our time failed to show an improvement, the market seemed to find support that was built on for the rest of the week. One factor that did emerge during the week was signs of freeze damage from the freezing weather a couple of weeks ago. It takes time for this damage to show up, and sporadic reports of damage to more advanced crops did hit the news mid week. Also supporting the market weather wise is the reality that a lot more rain is required in the dry areas of Kansas, Oklahoma and Texas before we are likely to see the crop stabilise and improve. The forecasts were showing some rain, but arguably not the amounts required to make a big difference.
There is still the problem that some crops are beyond recovery, while other crops might simply hold their own rather than show marked improvement. The other US weather issue is delays to corn and spring wheat planting. However, strong progress should have been made in the second half of last week, with US farmers showing they have the ability to plant large areas very quickly when conditions are right.
So, support for the market prevented prices testing the late March lows, while still falling short of the April highs. We now enter May with more focus turning to the prospects for 2018 crops. This is where the delays to planting spring wheat in the US and Canada are coming into play. Importantly it is not just North America that is experiencing issues. Delays to cropping programs are being reported from Europe (too wet), Russia (slow snow melt), and Australia (too dry).
