Due to recent droughts that have plagued the American plains over the last couple of years, farmers are expected to have to abandon around 67% of their wheat crop for this season. This would be the lowest harvest in more than 100 years. The shortage could potentially have the greatest impact on the production of feed for cattle and other livestock. In response to this, the USDA has stated that they expect corn harvests from this year to be particularly bountiful, hopefully stabilizing the grain industry and keeping farm animals fed.
By Michael Hirtzer and Tarso Veloso; May 12, 2023
(Bloomberg) — America’s wheat fields have become so plagued by drought that farmers are now poised to abandon crops at the highest rate in more than a century.
Producers are expected to harvest about 67% of their planted acres, the US Department of Agriculture said Friday. If realized, that would be the lowest harvest ratio since 1917, the agency said in a monthly report.
Years of dry conditions on the US Plains have taken their toll on America’s famed fields of grain. Some wheat plants this season were so stunted by a lack of moisture that they won’t produce so-called heads of grain, leaving little reason to harvest them. Farmers can instead file crop-insurance claims for failed acres, or choose to plant something else. Next week, an annual tour in the top wheat-growing state of Kansas will allow analysts to survey fields and make production estimates.
“We’ll see short wheat, thin stands, some wheat that looks really good and a lot of fields that aren’t going to be harvested,” Justin Gilpin, chief executive officer of the trade group Kansas Wheat, said of next week’s crop tour.
The USDA forecast that the high rate of abandonment will drag US wheat supplies to lower levels than analysts were expecting. That could keep domestic prices elevated, even with rival producers such as Canada and Argentina likely to boost output.
Futures of hard red winter wheat, the variety grown in drought-struck states including Kansas and Oklahoma, surged as much as 6.9% after the data was released. That’s the biggest intraday gain for the most-active contract since October.
Read More: USDA WASDE Crop Report for May: TOPLive Transcript
Meanwhile, corn production in the US is expected to rise to a record, bringing up global grain supplies and giving relief to livestock producers hit by rising feed costs.
Corn futures were little changed. Traders were forced to exit short positions after the “shocker” wheat-production estimate, Charlie Sernatinger, head of grains at Marex Capital, said in a note.