October 27, 2010
US winter wheat off to worst start amid unfavourable weather
The US winter wheat crop has got off to its worst start since at least the 1990s, hampered by dry weather, in a further setback to attempts by northern hemisphere growers to bolster wheat supplies after a poor harvest.
The news sent wheat soaring 3% in Chicago and Paris.
The USDA, in its first assessment of America's autumn-sown wheat, rated 47% of the crop in "good" or "excellent" condition, the lowest figure for a first reading since at least 1995, when readily available records begin.
The figure compares with a 62% reading a year ago and a record 76% six years ago. And it is well short of the 60% figure that, according to broker US Commodities, the market had expected.
It also adds the US to the list of northern hemisphere producers suffering winter wheat hiccups, after lingering dryness prompted significant cutbacks to sowings in the former Soviet Union, where drought savaged the range of crops this year.
Ukraine on Monday estimated its winter wheat sowings had fallen by 7%, while Russia's are set to fall to 13 million hectares, some 25% behind initial government targets, Australia & New Zealand Bank believes.
Wheat for December stood 3.1% higher at US$6.95 a bushel in late deals in Chicago, with Paris's benchmark November lot closing up 2.6% at EUR215.75 a tonne.
Analysts said that the condition of the US crop was actually likely to show an improvement in next week's USDA crop progress report, following weekend rains in many areas, including Texas, where they fuelled a jump in the price of cotton, which is being harvested.
The previous worst starts for US winter wheat were set in 1999 and 2001, when first readings showed 50% of seedlings in "good" or "excellent" health. In both cases, the overall US wheat crop went on to record a drop in yields, as it did in 2004, when winter wheat started out rated 53% in the top two bands.
However, it was still too early to judge any lasting damage to prospects for the 2011 harvest, analysts added.
