Fundamentally Speaking

Massive U.S. and world wheat supplies have sent Chicago wheat futures (soft red winter) as low as $3.60 per bushel this year, the lowest since August 2006 while Kansas City wheat futures scored a low of $3.67 per bushel, the lowest value for this class of wheat (hard red winter) since November 2005.

Finally, the Minneapolis wheat contract (hard red spring) appears to have set a low in February around $4.81 per bushel which is the lowest price here since August 2009.

In response, U.S. wheat farmers slashed plantings this past year with the all U.S. wheat planted and harvested acreage this year at 50.82 million and 44.09 million respectively and both of these are the lowest figures since the 1970-71 season.

Unfortunately, our wheat producers can't win for losing for even with this low acreage, production was very strong this past season at 2.321 billion bushels, which is the highest U.S. output since 2.512 bln was produced back in the 2008/09 season and prior to that 2.344 billion in the 2003/04 marketing year.

The main reason was a record smashing yield this past season at 52.6 bushels per acre (bpa), a full 5.5 above the 2013/14 high of 47.1.

This is 12.6% above the 1960-2015 trend yield calculations as the only other times yields have been this much above trend in the past 66 years as indicated in the chart was 14.2% above trend in 1971/72 and 15.1% above trend in the 1983/84 season.

(KA)

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