US and Russian winter wheat quality head in opposite directions

The quality of winter wheat crops in Russia and the US are heading in opposite directions as cold weather in North America takes its toll and improving conditions on the Black Sea aid development, according to updates from the Russian and US departments of agriculture.

Some 95% of the 17.1 million hectares of winter grain planted across Russia for the 2018/19 campaign were deemed by Russia's ministry of agriculture to be in “good” or “satisfactory” condition Tuesday, unchanged from its December 29 view.

Citing reports from state weather agency Roshydromet, the ministry of agriculture said, “erratic weather was seen over the European part of Russia… That said, conditions for winter crops were mostly satisfactory.”

Meanwhile, data from the USDA showed a widespread deterioration in the condition of US hard red winter crops across much of the country on Monday as an earlier cold snap took its toll.

Figures showed the proportion of winter wheat crops rated as being “poor” or “very poor” condition extended across the country on both a month-on-month and year-on-year basis, with particularly notable deterioration seen in major growing regions.

The move compounds what has been so far a fairly miserable period for US farmers, who lost market share to Russia.

According to official export data compiled by Agricensus, US market share of internationally traded wheat slipped from 18% to 14% in the past year.

That compares with Russia’s share of international trade climbing from 17% to 23%.

Snow and ice

News of a good crop in Russia may be met with scepticism following talk of winterkill damaging the seeds earlier this month.

However, a fall in temperature and an increase in rainfall has since led to snow cover forming on fields, with the ministry of agriculture saying “generally, the forecast for the harvest of winter crops in the European part of the country is optimistic.”

Approximately 70% of the Russian wheat crop is grown within European Russia – equivalent to 60 million mt during the record-breaking 2017/18 crop.

But while the snow has been kind to Russia, its the bitter cold that is the culprit for what may be poorer yields across the Midwest and the Southern Plains of the US.

In Kansas, the biggest winter wheat state by area, the “poor” or “very poor” rating extended to 44% from 22% while those in “good” or “excellent” dropped to 14% from 37%.

It was a similar story in Oklahoma, the third-biggest producer, where the “poor” and “very poor” crop jumped to 79% from 42% while “good” or “excellent” fell to 4% from 15%.

The Chicago wheat market has rallied on the news, with the March Kansas City HRW price up 13% to $4.6425/bu since touching a contract low in mid-December.