269 MILLION bushel wheat production drop!

[WRAPper]

U.S. 2006 all-winter wheat production is pegged at 1.264 billion bu, reported USDA on Friday. That is below the analysts' estimate of 1.299 billion bu. The average 2006 U.S. winter wheat yield was forecast at 40.5 bu/acre, a 1.9-bu decrease from a month ago.

U.S. hard red winter wheat production was lowered to 659 million bu, down from its 715 million bu estimate in May, and well below last year's crop of 930 million bu. That estimate is based on an average yield in Kansas of 31 bu/acre, down from 34 bu/acre estimated in May and the actual yield of 40 bu/acre a year ago. Kansas production is estimated at 291 million bu, down from 380 million bu a year ag

Montana winter wheat production down sharply. USDA expected it to hit 76.05 million bushels this year, more than 18 million bushels fewer than a year ago, as heat and wind have taken a toll on the growing crop.



I'm thinking that extra 300 acres I planted to wheat above the usual rotation won't quite make up the shortfall.
I posted in march texas would lose 40 plus million but to imagine an overall drop in production of over 200 million bushels, this plus the forecast has got the overnight trade heading up strongly again. Could this year go from looking like the last for many to our generations 1974??(what dad tells me was his best year in his farming career, prices and profit wise)

[cottonpicken]

-yes prices will get dramatically better and thats all that matters. but it is the elephants that move the markets not obvious supply demand fundementals.

[melvill]

One of the things that scares me most is when producers get "all bulled up". I remember when canola cash prices were over $10.00 per bushel and a LOT of producers held off selling because all the participants at "Esso University", as my wife's uncle called it, were sure it was going to eleven bucks!

The USDA winter wheat production estimate was 1264 million bushels. The range of estimates among generally credible forecasts was 1270 to 1330. However, remember that this 1264-number was not based on surveyed acreages. It was based on the March planted acreages estimates.

The July 12 production report may give a much better overall picture. Right now market psychology is focused on reduced production but very little is being said about price-induced reduced consumption, which is apparently already happening in the U.S.

[melvill]

Charlie reminded me that I forgot to mention that, yes, the winter wheat seeded acreage is a known number.

The number that isn't known is harvested acreage. Apparently USDA is resurveying to determine abandoned acres. That'll be in the July report.

[Pulseman]

Hello W****r,

I hope you don't spent all the imaginary dollars you may make on 2006 rightaway. Would be nice if prices would double, so we could make some profits. But then you have directly the neighbours that are willing to spend $400 - 500.000 for one irrigated quarter and take the profitability out of the game.

To the higher price potential for wheat. I don't believe, that the cheap farm product theory has any bearing. It is just that the trader and buyer has seen enough product around and we are eagerly (with the CWB help, where the boys and girls have no higher wages by higher prices) selling for what ever we can get because we are afraid to sit on our product for one year. Remember when oil was under $20? This was in 2002, now we are at $60 and our economy still works, because the $20 or $60 have no impact, but the value added portion and I believe that this factor is as big on Ag commodities then it is on the oil. So, going from $6 per Bushel for the mill (delivered and cleaned etc.) to $18 would not make as big as a difference as we may believe.

[WRAPper]

Pulseman
Just staggering really that the drought in the states has reportedly taken in one winter crop what we produce in total wheat in canada in 10, with the pull back of the funds the last couple weeks we may have seen the highs for now.
Hopefully the fixed price I took a few weeks back on a portion of this years crop at profitable levels will be real money.