This week's spring storm hitting the Northern states of the U.S. and the potential threat to acres dedicated to spring wheat has had little bearing on the new-crop spring wheat futures trade. The September contract rallied for the second straight session on Thursday to a high of $5.53 per bushel (bu), up 7 1/4 cents, only to stall at resistance and finish 1 3/4 cents higher at $5.47 1/2/bu.
USDA this week forecast U.S. spring wheat stocks to increase by 60% year over year to 305 million bushels (8.3 million metric tons), the largest carryout reported since the 1987-88 crop year, representing a bearish 55.9% of annual use. At the same time, new-crop trade may be tempered by reports that Canada will increase the area seeded to wheat in 2019, by some estimates as much as 10%. While Statistics Canada will release its first official estimates of planting intentions on April 24, note that a study in Wednesday's Canada Markets Blog shows that Statistics Canada has overstated the March intentions in each of the past five years relative to the final seeded acre estimates by an average of 3.9%.
This week's harsh spring weather in the Northern U.S. states that could bring 1 foot of snow or more to some areas may lead to concerns over spring wheat planting, although this is not seen in current market signals. It is important to note that, as of April 29, 2018, only 10% of the U.S. spring wheat area was planted, according to USDA data, behind the five-year average of 36%, which included 2% of Minnesota's area, 6% of Montana and 3% of North Dakota.
The Sept/Dec futures spread weakened to minus 15 cents on Thursday (December trading over the September), testing the spread chart support reached on July 9, Nov. 19 and again on Dec. 31. This is the weakest Sept/Dec spread seen in nine years on this date, with the five-year average calculated at minus 11 cents. Despite concerns expressed, commercial traders have yet to buy into them.
DTN 360 Poll
This week's poll asks if weather forecasts in the U.S. that could lead to a switch from some corn acres to soybeans will have any effect on your planting decisions. You can weigh in with your thoughts on this poll, which is found at the lower right of the DTN Canada Hone Page.
Cliff Jamieson can be reached at firstname.lastname@example.org
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