Welch on Wheat: Southern Plains Get Drier; Waiting for Price Strength

    Crop Progress. USDA has suspended its weekly crop condition updates until early April. Reports from Texas, Oklahoma, and Kansas will still be available on a monthly basis later this winter. At the end of November, U.S. condition ratings were very near normal. Texas’ crop condition index was normal, but well below last year at this time.

    Weather. The last U.S. wheat crop condition ratings from USDA were close to normal, but conditions in the southern high plains continue to get drier. A comparison of drought monitor maps for the High Plains over the last 2 months shows the increasingly dry conditions in Colorado and Kansas. Though no extreme drought is indicated (D3-D4), the percentage of area rated as in moderate to severe drought (D1-D2) has increased, especially in the wheat growing areas of eastern Colorado and western Kansas. The same is true for western Oklahoma and the northeast Texas panhandle. The precipitation outlook for the next five days is dry.

    The ENSO discussion this week from the Climate Prediction Center reports a reading of -0.4°C for the weekly temperature differential in the eastern Pacific. The current forecast path is for a mild La Nina event to be just about over by the time we reach spring. The 2017 January/February/March seasonal outlook is for warm and dry conditions across the southern U.S.

    Grain Commentary on AgFax

    Unable to display feed at this time.

    Grain Use. Despite a strong dollar and plentiful export competition, U.S. wheat export sales are still on pace to reach USDA’s target of 975 million bushels, 200 million bushels more than in the 2015/16 marketing year. Wheat inspected for export out of the Texas gulf is very near normal.

    Wheat priced as a feed grain is back below the price of grain sorghum in the central Texas panhandle, 83% the price of corn.

    The spread between March and May Kansas City wheat futures contracts is 111⁄2 cents today, right at full carry for that 60 day period (2 months x 6 cents per bushel/month = 12 cents). Any percentage of carry above 67% is generally considered to be a bearish commercial market indicator.

    Marketing Strategies

    2017 Wheat Marketing Plan. I have not yet priced any new crop wheat. I am waiting to see if we get any price strength from what looks to be fewer acres in 2017 and a drier than normal weather outlook this winter. The price trend at this point is still down.

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