Market Impacts: After a slide, wheat markets stabilize while barley continues to hold ground
USDA crop progress reports have continued to show spring wheat seeding progress lagging behind the average. In the report for the week ending May 3, 2020, average seeding progress is reported at 29% in comparison to the 5-year average of 43%. For the same period, the percent of the winter wheat crop rated good to excellent was 55%, a 1% increase from the previous week and lower than the 64% reported at this time last year.
With the Cargill beef processing plant reopened as of this week, it remains to be seen if the facility will be able to operate at full capacity. Given the recent closure, there is a backlog of cows waiting for processing that are now on a “maintenance feed” to maintain their finished weight. At the time of writing, feed barley prices continue to hold at prices similar to the past several weeks.
North American wheat futures markets held steady for the majority of this week. At the time of writing, Chicago, Kansas, and Minneapolis futures are trading within a steady range.
Durum markets continue to be showing strong pricing, an unsurprising result given the lower production in 2019 combined with stronger export levels than in recent years. As we enter the new crop year, we can expect that weather will become a stronger force in market movements than COVID for the next several weeks.
At the time of writing, feed barley prices continue to hold steady despite the prospects of a 2020/21 feed market with ample supplies.
The U.S. corn crop is off to a strong start with USDA reporting 51% of acres planted, well ahead of the average rate of 39%. As the U.S. is expected to plant 97 million acres of corn and Canadian farmers are expected to plant over 7 million acres of barley, there could be a large supply of feed grains available this fall.
While the ethanol market would normally absorb a significant amount of U.S. corn, low oil prices continue to limit the demand for ethanol production. With a potentially large new crop of feed grains looming, it remains to be seen how long feed markets can maintain their current prices.