About 69% of the U.S. winter wheat production area is currently experiencing drought conditions, according to U.S. Wheat Associates, a development market analysts say is supporting higher futures. Dry conditions remain the principal market driver, U.S. Wheat market analyst Luke Muller wrote in his May price report. 69% under drought
U.S. hard red winter futures on the Kansas City Board of Trade moved higher this month, rising 24 cents to trade at $6.83 per bushel as traders weigh crop stress in major winter-wheat regions. In the Pacific Northwest, soft white wheat is trading near $6.30 per bushel on the Portland market, where the U.S. Drought Monitor shows much of the region is abnormally dry or in moderate drought. Kansas City $6.83
Analysts say most of the recent price gains have come from the futures market rather than changes in local cash values; basis — the spread between local cash and futures — has remained largely stable. U.S. Wheat communications director Julia Debes and Muller noted that U.S. prices have moved up relative to other global origins as markets digest drought in leading U.S. winter-wheat areas, while many Northern Hemisphere competitors remain in fairly good condition.
Regional price trends
Severity of drought varies by location, and that variability is showing up in spring crop prospects, Muller and Debes said. They warned that precipitation arriving late in the season can come too late to benefit some fields, creating pronounced yield differences between spots that received scattered rains and those that did not. Scattered rain events recently occurred across parts of the Plains, but those showers were not widespread enough to erase stress across the larger production area.
The Pacific Northwest's dry pockets are contributing to thinner local soil moisture, and growers there are watching forecasts closely as the crop moves through key growth stages. Where moisture was received, producers may see less yield loss; where it was absent, damage and production variance are more likely across fields. The U.S. Drought Monitor continues to show a broad footprint of dryness across major winter-wheat states.
Drought and outlook
Market observers point to healthy carryover stocks and the geographic diversity of U.S. winter-wheat acres as moderating factors that help limit extreme swings in national production and prices. Still, weather remains the dominant influence on near-term price direction at this point in the season, and traders are watching any change in moisture patterns closely. General break-even price for many producers is reported at $7.71 per bushel by the Washington Association of Wheat Growers, a figure that growers and advisors are using to gauge risk and marketing decisions. Break-even $7.71
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