US winter wheat may fall to five-year low on drought

A severe drought has slashed the US winter wheat crop to the smallest in five years, a Reuters Poll showed, but bread lovers will be spared the pinch in their wallets as the shortfall has been factored into wheat futures. The crop in parts of the southern Plains has emerged from its winter dormancy to the worst drought in four decades and needs rain to bolster output before the harvest this summer.
Global wheat stocks are at adequate levels but there are concerns about dry weather in France, Europe's top exporter, Germany, China and wet weather slowing seeding in Canada. "Globally there is an adequate supply despite a reduction in the Plains but now we have to see if any other weather issues cut production. For example it could be a problem if Europe stays dry and Canada stays wet," said Jerry Gidel, an analyst for North America Risk Management Inc.
"There will be substantial reductions in Texas and Oklahoma and it's a little more variable in Kansas. Southwest Kansas is in bad shape but it's better further north and east," he said. Production of winter wheat in the United States this year may fall over 7 percent from 2010 despite a 10 percent boost in seedings because of drought in the south-west.
At the Kansas City Board of Trade, where hard red winter wheat futures are traded, prices neared $10 a bushel in February before falling to $8.81-1/2 on Monday. The global benchmark for wheat at the Chicago Board of Trade, which peaked this year near $9 per bushel in February, fell 9-1/2 cents to $7.59-3/4 per bushel on Monday.
SMALLEST KANSAS WHEAT CROP IN 9 YEARS SEEN According to a Reuters poll of 11 analysts ahead of this year's annual tour of the US Plains hard red winter wheat belt, winter wheat production could fall to 1.379 billion bushels, down from last year's output of 1.485 billion and the lowest since 1.294 billion bushels were produced in 2006.
The state of the hard red winter wheat will get a close look this week as scouts fan out across Kansas - which produces about 25 percent of total wheat crop - and other nearby states to assess the quality of the crop. Kansas wheat has the lowest condition ratings in 15 years, and the crop is in poor shape in Texas and Oklahoma, the No 2 and No 3 states for hard red winter wheat.
OKLAHOMA WHEAT CROP SEEN SMALLEST IN 40 YEARS Output in Oklahoma was pegged at 73 million bushels - the smallest crop in 40 years - on a yield of 22.2 bushels per acre, down from 121 million bushels last year on a yield of 31 bushels per acre.
The state's crop has been sheared by the drought in the South, the worst in four decades. In Texas, analysts were expecting production at 106 million bushels on a yield of 24.5 bushels per acre, compared with a production of 128 million bushels and yield of 34 bushels per acre in 2010.
"I think it is going to look bad in some places," said Ben Handcock, executive vice president of the Wheat Quality Council, which organises the tour. Handcock said wheat in central Kansas should be good. But analysts said that in the south-west portion of Kansas and in Texas and Oklahoma the crop will not be very good because of the drought.