USDA warns US winter wheat outlooks face test amid ongoing drought

Two of the USDA’s key analysts have warned that the US winter wheat harvest now faces a key phase of its development amid historically poor rated conditions and have said it may struggle to thrive as the new calendar year approaches.

Speaking during the Global Grain Geneva conference, Seth Meyer, the US Department of Agriculture's (USDA) Chief Economist, and Dr. Mark Jekanowski, chair of the World Agricultural Outlook Board, warned that the conditions were so poor that prospects of the crop bouncing had been reduced.

“Historically, (with poor) conditions in the fall, if you get good snow cover or moisture, the crop will come back,” Jekanowski told delegates, but such is the scale of the damage, moisture may already not be enough.

Typically, analysis on the current winter wheat plantings doesn’t reach a critical stage until early in the new calendar year, but the USDA is currently maintaining poor or very poor ratings for 32% of the total planting - versus 20% at the same stage of last year.

Meyer acknowledged that the ratings, which are based on farmer surveys, can be subjective, but warned that the situation was close to unrecoverable.

“It is in such poor conditions that meteorologists are saying it’s not clear we’re going to break this cycle,” Meyer said, referring to the usual recovery of poor yields through the winter period.

The World Agricultural Board Forum is charged with publishing the monthly updates to the USDA’s hugely influential World Agricultural Supply and Demand Estimates (Wasde) report, with the November update published last week.

Wasde

While the USDA is yet to update the upcoming winter wheat outlook in earnest, Jekanowski referenced the changes made to the agency’s outlooks for Argentinian and Australian wheat production estimates.

With harvest almost underway in the two Southern Hemisphere powerhouses, Argentinian wheat outlooks were trimmed on the back of persistent dry conditions, while Australia’s production ramped higher amid good rains.

“As it stands right now, we’re expecting a big crop in Australia,” Jekanowski said, confirming that the USDA would continue to monitor and adjust as appropriate.

“There are some concerns in the eastern part (of Australia) that maybe they got a little too much rain… there could be quality issues if rain exceeded optimal levels. It isn’t going to show up directly in our estimates, but it will show up in feed usage,” he warned.

As of its November update, the USDA expects 2022/23 marketing year Australian wheat production to total 34.5 million mt - the second biggest production on record if achieved and up 1.5 million mt versus the October update.

For Argentina, the country’s wheat production outlook was reduced to 15.5 million mt, down 2 million mt from last month’s figures.

Finally, the USDA is currently forecasting 2022/23 US wheat production of 1.6 billion bu (43.5 million mt).