Cash Market Moves

HRW Wheat Begins New Crop Year

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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As the 2018-19 crop year ended, harvest of new-crop hard red winter began in north-central Texas, and while there have been slowdowns due to rain, Kimbrell Farms said averages have been good so far. (Picture courtesy Lindsay Kimbrell)

Despite challenging growing conditions in many areas during the 2018 harvest, the 2018 hard red winter (HRW) wheat crop had generally good kernel characteristics, according to the final U.S. Wheat Associates (USW) harvest report on Oct. 2, 2018. "Overall, 93% of composite, 91% of Gulf-Tributary and 98% of Pacific Northwest (PNW)-Tributary samples graded U.S. No. 2 or better. Test weight averages were at 60.9 lb/bu, above the five-year average of 60.3 lb/bu and above the prior year average of 60.5 lb/bu. The average wheat falling number was 373 seconds, which was comparable to the 2017 and five-year averages, and indicates sound wheat." (Falling number test is a determination of sprout damage in the wheat.)

The USW report also noted the average protein in 2018 of 12.4% (12% moisture basis) was significantly higher than the prior year and equal to the five-year average. Protein content distribution varied by growing region; the Gulf-Tributary average was 12.7% and the PNW-Tributary average was 11.7%. Approximately 12% of the samples tested were less than 11.5% protein, 29% between 11.5% to 12.5% and 60% were greater than 12.5%.

Here is a link to my 2018 HRW wheat harvest story on Aug. 20, 2018, that gives a good rundown of how the winter wheat growing areas around the U.S. fared:… .

In USDA's September 28, 2018, Small Grains Summary report, USDA noted winter wheat yields in Kansas were at 38 bushel per acre (bpa), down from the 2017 yield of 48 bpa. The yield in Oklahoma was at 28 bpa versus 34 bpa in 2017. Lower planted acres and drought conditions in Kansas, Oklahoma and many of the other key winter wheat states caused the lower yields in 2018.

On Dec. 6, 2018, Kansas Wheat reported acres in Kansas would likely be lower than the prior year, possibly reaching new 100-year lows in the state. The 7.7 million planted acres in fall 2017 were the third lowest in a century.

"Abnormal weather patterns in October and November contributed to the decrease in acres planted. According to the Kansas Mesonet, there was record precipitation throughout the state in October and below average temperatures in November," said Kansas Wheat. "The wet fall led to the state being essentially drought-free for the first time in years, but it also kept farmers out of the fields during fall harvest and wheat drilling time."

In the Feb. 8, 2019, Winter Wheat Seedings report, USDA estimated that HRW wheat seeded area was expected to total 22.2 million acres, down 3% from seedings in 2018. Planted acreage was down versus the prior year across most of the growing region, with the largest declines in planted acreage estimated in California, Kansas and Oklahoma. Record low acreage was seeded in Nebraska, noted USDA.


I asked Dan Maltby, a former HRW wheat buyer in Kansas City (KC) and currently a consultant for Risk Management Group in Minneapolis, for his price insight on last crop year and the year ahead.

"The past year was not a good one for U.S. HRW wheat producers unless they sold everything the first week of August 2018. Prices steadily eroded about $1.50 over the next 10 months," said Maltby. "This year, unfortunately, we might have already had the one marketing opportunity; although I don't yet think it's dead because there are three opportunities remaining that could help."

Maltby said the first one involves corn planted acres and yield versus demand destruction. "This will take a while to play out and, unfortunately, may very well have done its thing IF corn acres were to yield 171 bpa," he said. Given the late planting, we are all well aware that this is anybody's guess at this point.

"Second would be if spring wheat country stays dry; if so, expect the rally to be quick, and ultimately, probably fade," added Maltby.

Maltby said the third opportunity would be a Russian drought. "If that happens, then KC wheat will go much higher and stay up there much longer. The problem is that it is difficult to get reliable information from over there."

There is Australia, which is still dry and will probably stay dry, said Maltby. "But, Australian droughts don't seem to have the same rally power for KC wheat as Russia, Canada or this year, corn."

Summing up his three opportunities, Malby said, "Both No. 2 and No. 3 are great until it rains, and then, no prisoners are taken on the way down."


Given the relentless rains and storms in the Southern Plains over the past month, it is likely the new-crop wheat will face some quality issues and lower protein than last year's crop. The KC spot market basis is already showing strength for milling quality old-crop HRW wheat, as mills are concerned about the potential for weather related problems in the new crop, especially in Oklahoma and Kansas.

The DTN national average cash basis for the 2018-19 crop year ended above the maximum five-year average, much the same as the 2017-18 crop year. So far, early in the new-crop year of 2019-20, the DTN national average basis remains above the five-year average as well. This will likely remain the pattern given the potential quality issues.

In their June 10, 2019, weekly harvest report, USW said rainstorms continue to hit the Great Plains and Midwest, significantly slowing harvest. "Harvest is 22% complete in Texas and 1% in Oklahoma. In Kansas, there are increasing concerns about yield loss and impact from water; harvest is not expected to begin for another one to two weeks."

USW noted conditions have improved in Colorado and USDA estimates 80% of the crop there is in good-to-excellent condition. "HRW wheat conditions are also good in the Northern Plains and in Washington state. Harvest is still one or more weeks behind normal throughout the HRW wheat growing region as warmer weather is needed."

The bottom line is that until all U.S. new-crop bushels are harvested, graded and in the bin, nobody can determine with 100% certainty what the new-crop quality is as it stands in the field. Given the current weather forecast, it could be a while before we get a good handle on new-crop quality because it may continue to deteriorate as it waits to be harvested.

According to the DTN forecast for the week ahead, DTN Senior Ag Meteorologist Mike Palmerino noted scattered light to moderate showers and thunderstorms with locally heavier in central Kansas. In northwest Kansas, northeast Colorado and southwest Nebraska, scattered to light showers are forecast. Dry conditions or just a few light showers are expected elsewhere.

"Near to above normal rainfall in the Southern Plains increases disease pressure on maturing wheat, lowers crop quality and disrupts the early harvest," added Palmerino.

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