Chicago Wheat: Review Of The Week

May CBOT wheat closed at $5.80 ½ up 21 ½ cents on the day and 23 ¼ higher on the week, to finish at it's highest levels since late January.

Assorted weather problems in the US and elsewhere around the world, plus firmer outside markets and spillover strength from corn & beans all helped wheat push sharply higher. A broadly weaker dollar was also seen as supportive for the entire US grains complex.

The USDA will report Monday night on US spring wheat planting progress with all eyes on the largest producing state of North Dakota which had only manged to get 3% of its planting done by last weekend compared to 51% normally at this time of year. That's a pretty impressive delay by any standards, particularly for the state that normally accounts for 45% or more the the entire national production.

Meanwhile winter wheat also took a knock this week on news that a crop tour in the US said that production in Kansas, the largest producing HRW state, would come in at 333 million bushels, down from last year’s 356 million bushel crop. Yields were called at 40.8 bushels/acre compared to earlier expectations for 44-46 bu/acre.

That's a lot better than the situation in Oklahoma however with that state's Grain and Feed Association saying that the harvest there will produce only 77.5 million bushels of wheat this year, that is less than half of what the state produced in 2008. Yields will only average 21.24 bushels/acre according to them after the states crop was badly hit by early season drought coupled with a hard freeze at the beginning of April.

Much of the Texas winter wheat crop has been similarly afflicted with one report this week saying that abandonment rates there could be very high this year.

A watchful eye is being kept on developments in Argentina too where the year long drought and government/farmer dispute is seen cutting plantings 18-20%, with many analysts now calling for a Nov/Dec 2009 harvested crop of only around 11 MMT. That might be higher than the 2008 drought-ravaged crop of 8.3 MMT, but it is sharply lower already than earlier calls for a crop of 15 MMT.

Bear in mind of course that at this time last year the Argentine 2008 crop was expected to produce around 15-16 MMT, and look what happened to that!