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2018 Hard Red Winter Wheat Harvest Nearing the Finish Line | KRVN Radio

2018 Hard Red Winter Wheat Harvest Nearing the Finish Line

2018 Hard Red Winter Wheat Harvest Nearing the Finish Line
Courtesy of Casey Makey‎ - taken near Dalton, Neb.

As of Friday, Aug. 17, U.S. Wheat Associates (USW) noted in their weekly harvest update that other than a few acres in Wyoming, the 2018 HRW harvest progress is now limited to Montana (71% complete), Washington (74% complete) and Idaho (74% complete).

USW said that Washington, Oregon and Idaho continue to report a very good crop with high test weights, but generally lower protein than other HRW wheat-producing areas. Kansas finished harvest in early July and saw lower yields due to drought, but reported good quality.

After touring the wheat fields in Kansas and northern Oklahoma this past April with the Wheat Quality Council, I wasn’t expecting much in the way of yields as drought gripped most of both states, with many of the fields we inspected showing the stress. Those of us on the tour did see some hope if timely rains fell, but some spots were beyond help.

Moisture did come for some, but others received hail with the rain. Jeanne Falk Jones, Multi-County Specialist in Agronomy at Kansas State University Research and Extension in the Sunflower District, told Kansas Wheat in their July 16 harvest report that, “I cover Wallace, Sherman and Cheyenne counties, and from what I’ve seen the variable of wheat has been driven by hail,” Jones said. “Wheat that wasn’t harvested was because it got hit with a lot of hail.”

Jones told Kansas Wheat that, “Truly it was hail that was the name of the game,” Jones said. “What could have been really high potential wheat was lost during the hail storms.”

Jones added that, “We are thankful for the wheat that we got during the growing season. We had a few really good past harvests, and this year was kind of a letdown. The dry conditions just really took it out on the wheat.”

Scott Van Allen, who farms in Sumner County, Kansas, told me that harvest went very fast with excellent weather. “The wheat was very short because of the dry fall, winter and spring,” he said. “We had no moisture from Oct. 21, 2017, till March 21, 2018. Yields were from 21 bpa (bushels per acre) to 46 bpa. I don’t have any individual protein results but the overall was 12.5% to 13%. Test weights were all over with some at 60 pounds, some 64 pounds. All in all, a lower than average harvest as yields go, but the quality helps with the marketing.”

In the Aug. 10 USDA Supply and Demand Report, Kansas was forecast to harvest 277 million bushels with a yield forecast of 38 bpa, down 10 bpa from 2017 due to the extended drought.

Farmers in South Dakota saw a better harvest than one year ago when drought caused many of them to either zero out acres or bale them for feed. While acres planted for winter wheat were lower last fall, down 9% from the prior year, results were good; except for the lost acres due to two hailstorms that moved through north central South Dakota this past summer.

Tim Luken, manager at Oahe Grain, Onida South Dakota, told me that, “Winter and spring wheat harvest in the Onida area started July 9, and we finished the first week in August. Winter wheat harvest yields where all over the map and the June 27 and June 29 hail events didn’t help matter any either. Not only did this cut our acres of winter wheat, but as a whole winter wheat acres are dwindling in the state.”

Luken said his yields on winter wheat ranged from 25 bpa all the way to the best I heard of 94 bpa, and this was across my scale. “I was hearing a lot of 50 bpa to 60 bpa overall,” said Luken. “Quality was excellent with no vom (vomitoxin) or scab issues at all. It was nice to see a crop come in and not have any quality issues this year. This year, the average test weight was 60.8 and our protein was 13.5%; this is the highest average protein I have ever seen in the 11 years I have been here.”

In the Aug. 10 USDA Supply and Demand Report, South Dakota was forecast to harvest 37.2 million bushels (up 79% from 2017) with a yield forecast of 51 bpa, up 11 bpa from 2017 when drought covered the state.

Montana farmers planted 150,000 fewer acres of winter wheat last fall than they did the season before after being shut out in 2017 from one of the worst droughts in 10 years that covered nearly the whole state. This year, Montana wheat farmers are expected to have one of their best harvests, according to various sources in the state.

Todd LaPlant, elevator manager at EGT LLC, Kintyre Flats, Montana, told me that very little winter wheat was planted last fall in eastern Montana. “But, what we have seen at harvest this year has been excellent quality of 61 lbs and 12.5% pro on average,” he said.

USW noted in their harvest update report that Montana continues to report very good yields, very good test weights and very good protein, though planted area was lower this year in the state. “With some variation between southern and northern regions, the Montana Grain Lab reported that overall the crop is averaging 63 pounds and 12.6% protein,” noted USW.

In the Aug. 10 USDA Supply and Demand Report, Montana was forecast to harvest 75.4 million bushels versus 66.8 in drought-stricken 2017 with a yield forecast of 52 bpa, up 10 bpa from 2017. If Montana hits that mark, the 2018 yield would be a record.

Oklahoma Wheat Commission reported on their website in early July that 98% of the winter wheat in the state had been harvested. “Quality for the 2018 wheat crop across Oklahoma will be favorable with high test weights and high proteins. Test weights on average will range from 60 to 62 pounds, with reports on protein running 12.5% to 13%,” noted the report.

While quality is expected to be high, the USDA in the Aug. 10 report estimated the Oklahoma wheat harvest at 55 million bushels versus 98.6 in 2017, with a yield forecast of 25 bpa, down 6 bpa from 2017. Like Kansas, Oklahoma faced drought conditions in the fall, winter and spring, which contributed to the lower harvest acres.

Overall, the USDA forecast total HRW hard red winter production in the U.S. at 661 million bushels versus 750 million bushels in 2017. Lower planted acres and drought conditions in many of the key winter wheat states caused the lower production this year.

USW noted that the consensus among industry sources is that the quality of the 2018 HRW wheat crop ranks among the best that U.S. farmers have produced in many years.

HIGH PROTEIN CROP CAUSES PROTEIN PRICE SPREAD TO NARROW

The USW weekly harvest report on Aug. 17 showed that with harvest nearly done in the Northern Plains and western U.S., the overall 2018 protein average was at 12.5% versus 11.5% in 2017 and 11.2% in 2016. That’s good news for mills, but not great news for farmers with higher protein.

Remember that flour mills’ flavor of choice is 12% protein when it comes to making flour. While flour mills make a 13% protein flour, the most common is a mid-mix, 12% protein flour. One thing to note is that 1% of the wheat protein is lost in the flour-making process.

Mills will want to blend the 2018 crop with old-crop and have been paying better prices for the lower proteins. The spot premium spread between ords (below 11%) and 14% started to narrow ahead of harvest because higher protein was expected out of Kansas and Oklahoma due to drought conditions. On Friday, Aug. 17, spot ords were at +120KCU, 11% to 12% proteins were at +140KCU and 13% through 14% were at +150KCU. On June 27, the day basis rolled to the September futures, ords were quoted at +92KCU, 11% through 12% proteins were quoted at +127KCU to +162KCU and 13% through 14% was quoted at +177KCU to +182KCU.

The same holds true for wheat at the Gulf as far as blending the new-crop down to meet export specs. The Gulf 12% protein basis saw the same effect on basis as the milling prices, with 12% protein on Aug. 17 quoted at +120KCU and ords quoted at +85KCU. On June 29, 12% protein was quoted +146KCU with ords quoted at +98KCU.

The one bright spot for HRW wheat prices has been the strength in the flat price thanks to futures rallying over production issues in the EU, and just recently, rallying over unconfirmed reports that that Russia’s Ag Ministry “may have” mentioned curbing grain exports due to lower production there. Should this happen, that could mean good news for U.S. exports, which are currently moving at a snail’s pace in relation to USDA forecast for 2018-19 exports.

Traders are doubtful this will take place, but this is not the first time it has been reported and then denied by the Russian AG Ministry. However, remember that Russia and Ukraine halted wheat exports in 2010-11 because of lower-than-expected crop production in 2010. They also imposed various restrictions in the form of higher export taxes as well, which in turn slowed exports there.

The bottom line is that if any of the above should take place, it will be music to the ears of U.S. exporters and producers.

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