Wheat Letter: Pacific Northwest Drought Signals Production Problems

Hot, dry weather following a parched fall and a winter with less snow in some areas has many parts of Washington, Oregon, and Idaho experiencing some of the driest weather in a generation.

Much of the area that grows spring and winter soft white (SW) and white club wheat is experiencing some form of drought.

All eyes will be on U.S. Department of Agriculture's (USDA’s) first estimate of new crop SW production in its July World Agricultural Supply and Demand Estimates report, although a reduction in yield potential and concerns about protein levels are already anticipated.

The market has reacted to the weather with FOB prices for ordinary SW up $140.00 per metric ton ($4.00 per bushel) more than a year ago.

Demand for the 2020/21 SW crop was quite strong and ending stocks of 1.31 million metric tons are half of what they were in 2019/20.

The stocks-to-use ratio for SW ended the year at only 13%.

Now, the hot dry weather leaves farmers unwilling to forward contract new crop sales as they struggle to identify what volume they will produce and because dry conditions tend to increase protein, what protein levels they will be able to offer.

Traders are cautious because the drought’s effect on protein levels could make securing lower protein SW difficult.

It is important to remember that SW protein levels have been elevated in some past years.

Your local U.S. Wheat Associates (USW) office is an excellent resource to help you identify how to get the most value from every new crop.

Michelle Hennings, Executive Director of the Washington Association of Wheat Growers, recently noted that while winter planted SW is stressed with lower yield potential, spring planted SW has had so little moisture some farmers may not have any harvest.

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