The USDA cut deep into its spring wheat production outlook because of hot and dry conditions, as shown via the Gro Drought Index. But the department left unchanged its estimate for corn yield, which Gro forecasts will need to be reduced as well.
In its July WASDE report, the USDA estimated spring wheat production of 345 million bushels, down 41% from last year and the smallest crop since 1988. Spring wheat yield is expected to slump 37% year over year to 30.7 bushels per acre. Gro has been warning since late March that dry conditions in the US and Canada could depress spring wheat production.
Spring wheat harvested acreage is still very much unknown, because abandonment is likely to spike as producers opt to forgo harvest costs. In past years of similar drought conditions, farmers abandoned 15% of spring wheat acres in 2002, while in 1988 over 20% of acres were left unharvested. Currently the USDA is forecasting a 3% harvest loss, but this is bound to be much higher given current growing conditions.
Gro’s GFS forecast shows hot and dry conditions are expected to return to both the US Northern Plains and Canadian Prairies, further stressing spring wheat crops. Crop conditions continue to deteriorate, with the latest week's readings for South Dakota at just 3% good-excellent, Montana at 13%, North Dakota at 16%, and Minnesota at 28%. Nationally, US spring wheat conditions are at the lowest levels since 1988.
Similar dry conditions also threaten spring wheat production in Canada, the world’s biggest producer of spring wheat. Gro’s Canada Spring Wheat Yield Forecast Model provides daily yield forecasts at the district level across Canada's largest wheat-producing provinces.
The September futures contract for the spring crop, known as Minneapolis wheat, has jumped more than 20% in the past two months, posting a new closing high of $8.5725 per bushel.
Despite ongoing drought conditions in the Western Corn Belt, the USDA stuck with its corn yield estimate of a record 179.5 bushels/acre, delaying any downward adjustment at least until its first survey-based corn yield forecast in early August.
But Gro expects the USDA will eventually need to cut its yield estimate, based on projections by Gro’s Corn Yield Forecast Model. Unlike the USDA’s survey-based reporting, the Gro model updates daily, using satellite-based data that provide near-real-time environmental and growing conditions, including vegetative health (NDVI), soil moisture levels, and GFS 16-day forecasts.
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