Wheat markets looking to upcoming harvests to offset reduced exports from the Black Sea region will likely be disappointed by the US winter wheat crop. Gro’s US Hard Red Winter (HRW) Wheat Yield Forecast Model is currently pointing to a double-digit-percentage drop in production compared with last year on continued dry conditions in the US southern Plains.
That’s bad news for wheat end users, from bakers to packaged food manufacturers, whose margins have been squeezed by a near doubling in wheat prices since last year, and a 50% price surge since Russia began its attack on Ukraine on Feb. 24.
Global wheat stocks, already at their lowest level since 2013, are being hit again because of the war. The two countries combined normally produce 14% of the world’s wheat and supply 29% of all wheat exports.
Winter wheat growing areas in Kansas, the biggest producer, are currently experiencing “severe” levels of drought, while Texas is seeing “extreme” levels of drought, Gro’s Drought Index shows. Gro’s Climate Risk Navigator application allows users to identify a region’s growing conditions weighted by the specific crop.
The outlook for the US HRW crop could improve after the crop breaks dormancy in the spring. But even favorable weather in April and May is unlikely to deliver an exceptional harvest. Gro’s machine learning-based yield forecast model should be monitored for daily updates on the crop’s prospects.
Production of hard red winter wheat, which makes up nearly 40% of total US wheat production, rose 14% last year compared with the previous year. But spring wheat production plunged 44% because of drought in the northern Plains. Parts of the northern Plains, such as North Dakota and South Dakota, are still experiencing moderate drought conditions. A repeat of last year would wreak havoc on US spring wheat supplies.
Register for our March 24 webinar, “Preparing for 2022 Global Wheat Supply and Demand,” where Gro’s research analysts will dig deeper into global wheat balance sheets.