Healthy Kansas wheat crop on track for early harvest

Reuters News
Posted: Apr 30, 2012 12:58 PM
Healthy Kansas wheat crop on track for early harvest

By Michael Hirtzer

CHICAGO (Reuters) - Kansas farmer Jerry McReynolds' wheat fields have developed a full month early, which has him optimistic for a harvest that should yield better than last year's drought-reduced crop.

Many farmers in Kansas and across southern U.S. Plains states of Texas and Oklahoma seeded their crop at the time of a devastating drought with little hope of a good crop but timely snow and rain brought the wheat back from the brink.

There are still threats to the crop, such as a late frost, before the harvest but odds are slim of any major failure at this stage of plant development.

"It's a crazy year. It looks like the earliest wheat we've ever had, maybe the earliest in history," said McReynolds, 65, who farms in Rooks County, in north-central Kansas.

Crop scouts will fan out across the state this week to inspect the crop as part of an annual tour organized by the Wheat Quality Council.

The largest planted wheat area in four years and the expected early harvest already have prices for the hard red winter wheat, which is widely used in breadmaking, the lowest in more than a year.

"It's a good crop and, in general, there's plenty of wheat in the world," said Adam Tepper, commodities analyst with Arlon Group, an agriculture-focused investment company in New York and a crop scout on the tour.

The Kansas yield should be an improvement over last year's 35 bushels per acre. That yield was the lowest in four years, according to the U.S. Agriculture Department.

Heavy rains over the weekend in the U.S. Plains may have damaged some of the wheat. The heaviest rain, more than 8.5 inches occurred Sunday in northern Oklahoma, but southeast Kansas also received. Flooding was reported in those two areas.

Meanwhile, world wheat stocks of roughly 206 million tonnes are the largest in 11 years amid a rebound in global production, USDA said.

A Reuters poll of analysts' and traders pegged the Kansas yield per acre an average 45.0 bushels per acre and total state production at 408.0 million bushels, which may be a conservative estimate.

"Based on the crop ratings, crop production could total 457 million bushels and record or near record yield per acre of 49 to 50 bushels per acre is possible," said Bryce Knorr, senior editor for Farm Futures Magazine.

The U.S. Department of Agriculture (USDA) a week ago said the 63 percent of the U.S. winter wheat crop was in good-to-excellent condition, well above the 35 percent rating a year ago.

"Based on 5 percent abandonment I get a 402 (million) production but I have heard up to 415 million. If it's really as good as everyone says it is, I could be low on my estimate," said Joe Christopher, analyst for Crossroads Commodities Inc.

A record-large group of 100 attendees will take part in the Hard Wheat Quality Tour, up from about 70 last year. They are from agriculture powerhouses like Archer Daniels Midland, Bunge LTD and Cargill as well as from traders such as Gavilon and Glencore.

Also scheduled to tour the wheat fields is a sustainability manager from Walmart Stores Inc, a sourcing manager from grocer Kroger Co, plus representatives from ConAgra Foods Inc and Mexican breadmaker Grupo Bimbo.

"They will see one of the more even crops, one that is 20 days early and almost all headed out so it will be a good tour," a Kansas City Board of Trade wheat trader said.

Kicking off in Manhattan, Kansas, the tour will access yield potential in some 400 wheat fields over three days across the state, dipping into parts of Colorado, Nebraska and Oklahoma, before concluding in Kansas City on Thursday where it will issue its final production and yield estimates.

Along the route, scouts will count the number of wheat plants in a 3-foot row (about 1 meter) and the number of grain kernels in each head.

The tour's crop estimate will precede USDA's first HRW wheat production forecast due on May 10.

"The main thing is that conditions have certainly improved and we'll be looking to see if the crop has responded to those improved conditions," said Jefferies Bache analyst Shawn McCambridge.

The region is recovering after the worst drought in at least four decades that parched parts of Kansas and, to a greater extent, Oklahoma and Texas. Mild drought conditions persist in southwest Kansas while west Texas still suffers from extreme drought conditions.

However, more frequent rainfall elsewhere in Kansas as well as unseasonably warm weather earlier this year sped the HRW wheat crop's development as it broke dormancy.

Farmer Tom Morton, who grows wheat, cotton and sorghum south of Wichita in south-central Kansas, said he has the earliest wheat crop ever and could harvest in May, instead of mid- to late-June as in normal years.

"I don't believe we've ever cut wheat in May in my lifetime and that's definitely a possibility this year," Morton, 63, said.

Still, the dirt in his fields is cracking and he would welcome a rain to help finish the crop.

"At the moment, I'm somewhat comfortable if we don't get any rain. We're not in bad shape on moisture."

Hard red winter wheat futures have declined about 12 percent from their high on February 1 at the Kansas City Board of Trade, pressured by expectations of a large harvest and bountiful existing global wheat supplies.

The premium of KCBT futures over the lower-quality benchmark soft red winter wheat contract at the Chicago Board of Trade on Friday narrowed to its smallest since August 2010 as conditions in the southern Plains improved.

(Reporting By Michael Hirtzer; Editing by Bob Burgdorfer)