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Global wheat condition one to watch

As the June 1 start of the 2009-2010 marketing year approaches, market attention is shifting to crop developments in the U.S. and other major exporting countries. Global wheat conditions are mostly positive but developments in the U.S. and Argentina will greatly affect the direction of prices over the next few months.

Continued drought in Oklahoma and Texas, the second and third largest hard red winter wheat states, respectively, could result in sharply lower yields. The National Agricultural Statistics Service reports 70 percent of the Oklahoma crop and 75 percent of the Texas crop are in "poor" to "very poor" condition. Texas AgriLife Extension economist Mark Welch reported that current Texas crop conditions are similar to 2006, when yields were only 24 bushels per acre, the lowest level since the late 1970s.

In contrast, the May 4 Crop Weather report from Kansas Agricultural Statistics rates the Kansas crop as 53 percent "good" to "excellent." Industry stakeholders are crisscrossing Kansas in early May on the annual Hard Winter Wheat Tour sponsored by the Wheat Quality Council.

U.S. hard red spring wheat planting is well behind schedule, with only 15 percent of the crop planted compared to 32 percent this time last year and the five-year average of 36 percent. The problem is concentrated in North Dakota (the largest HRS producing state), where only 3 percent of the crop is planted compared to 54 percent last year and the five-year average of 51 percent. A late planting date often means fewer planted HRS acres and can leave the crop that is planted more vulnerable to weather damage later in the season.

Argentina's farmers have been hit by the worst drought in 70 years, which has devastated their 2008-2009 corn and soybean harvest and likely will severely impede 2009 wheat plantings. The Buenos Aires Grain Exchange estimated that planting might fall to 3.7 million hectares (9.1 million acres), which would be the lowest level since the exchange began recording data in 1910. History indicates such a situation could prompt Argentina's government to restrict exports to protect domestic supply, leaving significant demand--mainly in Brazil--to be filled by alternative origin wheat.

Sales of agricultural products to Cuba in 2008 could have been worth more than $1 billion if current financing and travel restrictions had not been in place, according to new analysis from the International Trade Commission.

The new numbers, presented at a conference on improving ag trade with Cuba held in early May in Washington, also show wheat exports could have been worth between $172 million and $209 million, versus actual export value of $137 million. The U.S. wheat industry's market share could have been 12 to 25 percentage points higher than it actually was.

U.S. Wheat Associates and the National Association of Wheat Growers are working on trade policy on behalf of growers and strongly support policy changes to open trade with Cuba.

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