Wheat harvest starting to add pressure on prices

As the middle of August was nearing, the approaching harvest was keeping pressure on the wheat markets, although there were signs of getting prices to a somewhat more stable point. “Obviously, the buyers know the greatest availability of supplies (is at harvest) when the crop is coming off the field and easier to move to town,” said Jim Peterson, marketing director with the North Dakota Wheat Commission. “That’s continued to press the Minneapolis futures, which were in that $5.70 to $5.80 range.”

Futures for the winter wheat classes were approaching down to the $5 level, he noted. Adding basis to the futures means current cash prices for 14 percent protein spring wheat are in that $5 to $5.20 range.

“Relative to the past few years, these are certainly challenging levels for a lot of producers, and it’s not just the wheat market,” he said, adding that a big pressure point has been the national corn and soybean crops, both of which are rated over 70 percent good/excellent.

“Corn is on track for a record yield, so corn futures are getting below the $4 level. Soybeans are below $10 a bushel, so it’s just been a pretty tough market environment all around,” he said.

The supply side is driving prices right now with big crops and near ideal weather, but one fact that could start shifting things is the updated production report from USDA report on Aug. 12 in which they will update yield estimates for spring wheat, corn, and soybeans. The question is – will it hold some surprises that are contrary to current expectations?

In July, USDA estimated corn yield at 181 bushels per acre, but Peterson said a lot of trade expectations are for 185-189 bushels per for the August estimate. Last year, it was 179 bushels per acre.

“So, some pretty lofty numbers. We’ll see, but if those yield estimates don’t come in that high, maybe that will start to put some support under the whole grain complex,” he said, adding that nationally, the wheat yield is estimated at 52.6 bushels per acre. That’s up from 51.2 bushels in 2024, and nearly 49 bushels in 2023.

The winter wheat crop yield estimate is currently 54.3 bushels per acre, which would be the second highest level on record. The record level was set in 2016. For spring wheat, the USDA July estimate was 51.7 bushels per acre, which would also be the second highest yield on record, just below the 2024 yield.

“So, we’ll see. Obviously, there’s been a lot of big storms across North Dakota, Minnesota, and even South Dakota wheat production areas. There’s certainly been some crop damage, but trying to get a full assessment is challenging, until more harvest takes place,” he said. “But the majority of the crop is mature and ready for harvest. I think that does start to raise some quality concerns with the level of rain that was received. Hopefully, the near-term forecast will dry out and we can get a better harvest.”

Looking at the spring wheat crop condition, nationally 95 percent of the crop was headed as early August, but Montana was only at 85 percent. That’s because producers there had some later planted crop, and some crop that struggled with dry weather that’s now getting rain.

“There’s going to be some pockets of really late harvest in Montana,” he said.

Nationally, 5 percent of the crop is harvested as of the first week of August. Typically, it’s at 9 percent, so the pace is a little behind normal. By state, South Dakota harvest was at 25 percent complete. Minnesota and Montana were at the 4-5 percent level, while North Dakota harvest was at just 1 percent complete.

“So, until the combines can start to roll, and we get the new USDA estimate, right now it’s just speculation on the crop,” he said.

Nationally, the hard red winter wheat harvest is 86 percent complete. Montana’s harvest was 35 percent complete and was running into some rain delays across parts of the state. South Dakota harvest is at 80 percent.

“The current quality estimate on the crop is about 12.1 percent protein levels, which is up from 11.9 percent last year. Test weight seems to be the biggest challenge with the rains they’ve had, slightly lower test weights on average, but no major falling number issues,” he said.

Looking globally, the world is looking at a record world wheat crop, according to Peterson, noting that France is about 90 percent harvested, while Russia is close to 50 percent harvested. “Hopefully, as they get into the tail end of their harvests that might put some traction under the market. Then (attention) will switch to the U.S. and Canadian spring wheat crops,” he said.

“The Canadian crop went through some pretty dry conditions in June, which did impact the crop, but they have been getting some rains of late that has maybe improved some of the crop, but a lot of people feel it came too late to really benefit the crop,” he continued. “Until we uncover the crop over the next couple weeks, supply anticipation is putting pressure on the market.”

That said, Peterson pointed out the U.S. has good demand that’s already on the books, and he feels more demand will be building.

U.S. exports of all wheat currently stands at 378 million bushels (MB), which is up 21 percent from a year ago. That’s largely driven by hard red winter wheat with 151 MB in exports, which is double last year’s pace. Spring wheat sales have been improving in recent weeks due in part to a price advantage over Canada into the Asian region. To date, U.S. spring wheat sales are at 100 MB, which is off 4 percent from last year, but it’s improving.

Of the top five markets for U.S. spring wheat, the Philippines, which had been behind in their purchases, are now up to 19 MB, which is equal to their year ago pace. Mexico is at 17.5 MB, which is slightly ahead of last year. Taiwan is at 9 MB, followed by Japan at 7 MB, and Korea at 6 MB.

“I think this is a good trend to see. Four of those top five markets are equal to or ahead of a year ago in sales pace. Hopefully, we can avoid any significant rain delays, any quality issues to the crop and we’ll see what the yield forecast comes out from USDA. If it’s lower than the market is expecting, then hopefully we can start to get some support under the market,” he said.