Russia banned grain exports on Aug. 15, and it now appears Ukraine will follow suit. Both nations are suffering from massive drought — the worst in 50 years — that has ruined yields and made the countries leaders eschew export sales to shore up native food supplies.
In early August, as the wheat market was responding to Russia’s expected ban, Delta Farm Press spoke with Dan Basse, president of Chicago-based AgResource Co. (see Russian wheat, drought and speculation). Among his comments during a follow-up interview on Aug. 16:
What you’re hearing on the wheat front?
“After this weekend, the area of Russia, the Ukraine and Bulgaria has a bit wetter forecast. Even though there were some showers over the weekend, most were less than a quarter-inch across the grain-growing area of Russia. But the climatologists suggest this weather profile brings a chance for more rainfall and cooler temperatures.
“To me, that’s important because there’s a chance to get the winter wheat crop in the ground. They can plant from the last days of August through mid-October.
“In my mind, that’s something we should be watching. And I think that’s also the case in the wheat market’s mind. However, I hate to become too bearish on Chicago’s September wheat that’s below, say, $6.50 per bushel (nearly $2 off the high set in early August).
“Undoubtedly, though, the wheat market kind of has its tail between its legs and is suffering from the prospect of Russia’s drought being a one-time event rather than multi-year.”
Have you heard anything about wheat seed availability?
“We’ve been hearing (about a potential dearth) of seed. Interest in planting wheat has been very big across the Midwest, the Delta and stretching into the Plains. Seed producers we’ve talked to cite very strong demand. There still seems to be seed available and there should be enough for everyone.
On increasing wheat acreage…
“From our work, it appears winter wheat will be up somewhere in the vicinity of three million acres. We think that will mean less soybean acreage, maybe some corn. We’ll have a kind of acreage fight between corn, soybean and wheat ground as we enter next spring. That’s something to watch.”
On the Ukraine’s ban and finishing out U.S. crops…
“We’re watching to see what the announcement on Ukraine’s export ban will be. And by ‘ban’ I mean a quota system. It looks like they’ll put a quota of five million metric tons of all grains — 2.5 million metric tons to be exported by Sept. 31.
“We’ll also be looking at crop condition ratings for the next couple of weeks. My focus is on states like Indiana, Ohio and portions of the northern Delta where rain is lacking. We need rain to finish off the bean crop and help the last of the corn.
“If heat and drought come back in, we may have to trim crop estimates a bit. In the corn market that would be tough because we already don’t have a lot of end stocks available.”