Wheat: American crop kicks off the year with bearish indicators
•However, the risk of winterkill for this crop remains relevant and deserves to be monitored closely.
•At this point, the scenario of a larger winter crop remains for the US. Improving conditions increase the chance of higher yields and less abandonment of area.
•As a result, the American crop continues to bring bearish fundamentals to wheat markets, and the improved conditions in Kansas indicate that the Kansas vs. Chicago spread should remain around the average.
Report shows good conditions, especially for HRW
In its monthly crop report, the USDA showed that winter wheat condition ratings improved in December in Kansas, the largest winter wheat producer in the US, as drought eased in much of the southern plains, although ratings fell in other states, including Montana and Colorado.
Nationally, 30% of the winter wheat crop was in a drought-stricken area as of December 26, the USDA reported last week, down from 32% a week earlier and a significant drop from 69% a year earlier. Farmers in the Plains states grow hard red winter wheat (HRW), the largest class of wheat in the US, which is milled to produce flour for bread.
Source: USDA, hEDGEpoint ( *calculated based on states where conditions were reported)
Source: NOAA, hEDGEpoint
Source: USDA, Refinitiv, hEDGEpoint *Refinitiv's cultivated area forecast