Wheat markets have sold off during the past two weeks, and one would think that crop prospects have dramatically improved since last month.
Have the Southern Hemisphere harvest prospects dramatically improved? Maybe the 2025 winter wheat planting conditions in the Northern Hemisphere have turned around the situation at the last minute. Neither situation has occurred, but wheat seems to be content to take guidance from the bearish stance in the corn markets.
The harvest is underway in Australia, and crop estimates range between 25 to 30 million tonnes, which is dramatically lower than the 40.5 million tonnes produced last year.
The Australian crop has faced several issues, including drought in both eastern and western growing regions and widespread frost in New South Wales. The impact of freeze will not be fully known until the crop is harvested in that state.
The Australian harvest is underway in Queensland and northern New South Wales and will advance southward during November. The Australian harvest normally finishes by the end of December.
There has been some improvement in the moisture situation in Argentina, but the core producing area in Buenos Aires remains dry.
The wheat crop in Argentina is still mostly in the reproductive stage, and additional rains would be welcome for filling out the crop. Production estimates for Argentina range between 17 and 20 million tonnes.
The markets are also ignoring prospects for the 2025 production year. Planting of winter wheat in the Northern Hemisphere is not going well, but it is still early in the production cycle.
The chief concern is drought in the Black Sea region (Ukraine and Russia), which has lowered sown area of wheat in both countries. Crop establishment is also a concern in both countries because winter wheat germination and emergence have been subpar.
Planting weather in Europe has been the exact opposite of those in the Black Sea region, with too much rain delaying planting across the region. The delays have been the most severe in France, but the wet conditions have affected the region from northern Italy to the southern United Kingdom.
Wet conditions in Europe have hindered the proper establishment of winter cereal crops. They have also increased the chances of more disease pressure in crops. The optimal planting window for winter cereal and oilseed crops has closed in Europe.
Dryness in the southern U.S. Plains is also causing concern for the 2025 hard red winter wheat crop. Planting conditions are poor across the region despite scattered rains in Kansas last week.
The poorest conditions for crop establishment are in southwestern Oklahoma, where extreme drought conditions persist. They have not been as severe this year as those in the 2022-23 growing season in the Southern Plains.
With all of these issues around the globe, it is frustrating to see the relative ambivalence of the market to these concerning conditions. When will the market turn around? The wheat market will likely begin to reflect the concerns about the 2025 crop early in the new year. Until then, it will likely move relatively in step with corn futures.
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