Persistent dryness and drought-like conditions in most parts of the US are likely to hit the country's spring wheat crop, raising concerns over quality and harvest prospects.
Não está cadastrado?
Receba e-mails diários com alertas, notas ao assinante; personalize sua experiência.Cadastre-se agora
The extremely dry conditions could hurt the yield potential for spring wheat, and in some areas even force farmers to abandon the planted crops, analysts have said.
US spring wheat condition scores are the lowest in 33 years, at only 20% of the crops rated as being in good to excellent condition against a five-year average of 66%. At this stage, concerns of yield losses are prominent.
Spring wheat, which is typically planted in the US northern plains during the spring months and harvested in the late summer or autumn, constitutes about 25% of total US wheat production.
It has been extremely dry across the spring wheat areas in the northern plains, with rainfall over the past three months only 50-75% of normal in most areas, said Kyle Tapley, senior agricultural meteorologist with weather agency Maxar.
As of June 27, topsoil moisture levels over the northern plains were recorded 60-160 mm below normal, according to National Weather Service data.
Dryness in the US has reached historical levels this year. The US is witnessing its worst drought conditions in over 20 years, a study of data from the US drought monitor showed.
According to the data, over 35% of the total area of the US is facing severe to exceptional drought conditions, the highest percentage in at least 20 years.
Weather outlook no comfort
The next three months are likely to bring above normal temperatures and below normal precipitation in the Western and Northeastern US, Climate Prediction Center's long-range outlook suggests.
Tapley echoed that view. "Below-normal rainfall along with slightly above normal temperatures are expected across the northern plains in July and August, which should maintain stress on the spring wheat crop and continue to reduce its yields," he said.
Dry weather is leaving farmers unsure about what volume of spring wheat they will produce, and what protein levels they will be able to offer as dry conditions tend to increase protein, a report by US Wheat Associates said.
Though markets will be keenly watching the US Department of Agriculture's first estimate of new crop spring wheat production in its July World Agricultural Supply and Demand Estimates report, a reduction in yield potential and concerns about protein levels are already anticipated, it said.
The unusual heat is likely to lead to early maturity of the crop, bringing in the supplies earlier than expected, analysts have said.
Spring wheat tends to have higher value than its winter wheat counterparts due to its higher protein levels. However, heat affects protein levels as wheat grows, but given the extent of heat and dryness this year, experts fear losing out on entire crops in some places rather than just the right protein content.
Concerns over abandonment
"The spring planted wheat has had so little moisture that some farmers may not have any harvest," the US Wheat Associates report said.
If rainfall does not increase in the coming weeks, some farmers may choose to abandon their crops in the driest areas. However, it is difficult to estimate how widespread this would be, said Tapley.
Since spring wheat gets more value, farmers try to harvest anything that will at least pay the cost of harvesting, so cases of abandonment are typically very low -- usually less than 5%, said Arlan Suderman, chief commodities economist with StoneX.
"In 1988, abandonment was 22% because so many fields had poor yield potential. I do not know if abandonment will be that high this year, but it does appear that it will be high," Suderman said. "Based on the current forecast, it would not surprise me to see abandonment reach 20% or more."
Global supply could tighten
Lower production in the US, against a backdrop of export restrictions from Russia and similar drought conditions in Canada, could tighten spring wheat supplies in the world markets.
Canada -- the largest producer of spring wheat globally -- is also experiencing drought conditions that are likely to slash production of wheat in the country, according to a recent report by Gro Intelligence.
Russia is another big producer of spring wheat, but has imposed export restrictions that could affect global supplies, the report said. The US, Canada and Russia are also the top exporters of spring wheat.
Meanwhile, demand for spring wheat is forecast to be strong in 2020-21, US Wheat Associates said. "Demand for the 2020-21 spring wheat crop was quite strong and ending stocks of 1.31 million mt are half of what they were in 2019-20."
Any reduction in the spring wheat crop size might also destabilize the domestic US supply and demand balance, with US wheat year-end stocks for 2021-22 forecast to shrink 18% year on year to a seven-year low of 650 million bushels, while domestic use is projected to be higher.