Commodities

Low wheat prices irk Kansas farmers, capping US winter wheat acreage

Published

11 months ago

October 12, 2023

Low wheat prices irk Kansas farmers, capping US winter wheat acreage

By Julie Ingwersen

CHICAGO (Reuters) – U.S. farmers are about halfway done planting winter wheat for harvest in 2024, but acreage is expected to remain stable or decrease from last year because of lower prices and farmers’ disenchantment with the crop after three years of drought.

A smaller acreage base sets the stage for reduced U.S. wheat production, tightening global supplies and leaving the world more vulnerable to shortages if the flow of wheat from top global exporter Russia is disrupted by poor crop weather or war in Ukraine.

U.S. wheat exports are already projected to hit a 52-year low in the 2023/24 marketing year, reflecting strong competition from Russia and other suppliers.

A government forecast of U.S. winter wheat acreage, which typically accounts for about two-thirds of overall U.S. wheat production, will not be available until January. That will be well after the crop is planted. But analysts and farmers mostly told Reuters they expect plantings to be similar to or smaller than a year ago.

S&P Global projects plantings for 2024 at 36 million acres, down roughly 2% from a year ago, based on a monthly survey of farmers and agribusinesses.

“I think the trend would be sideways to lower for acres,” said Dan O’Brien, an agricultural economist at Kansas State University. “The psychology of recent challenging experiences, both in the market and in harvesting last year’s crop, are working against wheat acres,” O’Brien said.

U.S. plantings of winter wheat, used for bread and cookies, totaled 36.7 million acres for the 2023 harvest, a 21% expansion from a 111-year low in 2020. Over the last few years farmers have gradually expanded plantings, fueled by pandemic supply chain disruptions and a price spike after Russia invaded major grains producer Ukraine in 2022.

Last year’s plantings figure was still well below levels seen a decade ago. While the United States is still among the top five exporters, it has slipped in the global rankings. Competitive prices for corn and soybeans have also squeezed out wheat in the Plains and Midwest. Wheat futures on the Chicago Board of Trade are near three-year lows, and K.C. hard wheat futures are hovering at two-year lows.

Crop insurance policies that guarantee minimum prices for the 2024 wheat crop were set in mid-September at $7.34 a bushel for Kansas wheat, down $1.45 a bushel from last year. This soured some growers who relied on insurance money in the past after abandoning their crops due to drought.

Vance Ehmke, who farms in west-central Kansas, said he will plant less wheat this year in favor of other crops including triticale, used for cattle feed. Ehmke predicted that Kansas wheat acreage would stay about the same, but that wheat could lose acres in wetter areas of the state that can support more profitable crops like soybeans.

Farmers hope the El Nino climate phenomenon, which occurs when surface waters in the equatorial Pacific Ocean are warmer than normal, will end years of winter droughts. Climatologists are divided on how much rain the phenomenon will bring to the southern Plains.

Wheat seed, meanwhile, is expensive and in tight supply. Three years of drought reduced farmers’ ability to reuse their own seed, so many had to buy certified seed, said Eric Woofter, a farmer and chief executive of Star Seed in Osborne, Kansas.

“It’s in short supply, and oh my God, ever so expensive,” said Chris Tanner, who farms in Norton County, in northwest Kansas. “I don’t feel like the profitability is going to be there,” Tanner said of winter wheat.

Commodities

Gold prices edge lower but keep record highs in sight ahead of inflation test

Published

12 hours ago

September 10, 2024

Investing.com– Gold prices fell slightly in Asian trade on Tuesday but remained close to recent peaks as traders awaited key U.S. inflation data for more cues on the Federal Reserve’s plans to begin cutting interest rates.

The yellow metal benefited from safe haven buying following a severe risk-off move across markets last week, which was triggered by concerns over slowing economic growth.

Spot prices came within spitting distance of a record high on Friday, but then pulled back as the advanced ahead of this week’s inflation reading.

fell 0.1% to $2,502.07 an ounce, while expiring in December fell 0.1% to $2,531.0 an ounce by 00:22 ET (04:22 GMT).

Gold steady with Inflation, Fed meeting in sight

Focus this week is squarely on inflation data, due on Wednesday, for more cues on the U.S. economy.

Any signs of cooling inflation are likely to spur increased bets on lower interest rates in the coming months- a scenario that bodes well for gold.

Wednesday’s inflation reading comes just a week before a , where the central bank is widely expected to cut interest rates by 25 basis points.

Expectations of the September cut were also a key driver of gold’s recent gains, given that the cut is likely to kick off an easing cycle by the Fed.

Lower rates bode well for gold, given that they reduce the opportunity cost of investing in the yellow metal.

Other precious metals fell on Tuesday, having largely lagged gold in recent weeks. fell 0.1% to $945.0 an ounce, while fell 0.2% to $28.590 an ounce.

Copper edges lower, Chinese trade data brings little cheer

Among industrial metals, prices retreated on Tuesday, taking little support from data that showed some economic resilience in top importer China.

China’s unexpectedly grew in August on strength in the country’s . But laggard offset cheer over this trend, given that they signaled sluggish demand in the country.

China’s overall copper imports shrank 12.3% year-on-year in August, although they were still in positive territory for the first eight months of the year.

The soft import data came following a string of weak readings on China’s economy over the past week, which raised concerns over slowing growth in the world’s biggest copper importer.

The data, coupled with a broader risk-off move in global markets, saw copper nursing steep losses over the past week.

Commodities

Oil prices steady with storm disruptions, demand fears in focus

Published

12 hours ago

September 10, 2024

Investing.com– Oil prices steadied in Asian trade on Tuesday as traders sought to gauge the impact of Tropical Storm Francine on U.S. oil production, while concerns over sluggish demand remained in play.

Prices were nursing steep losses from the prior week amid renewed concerns that global oil demand will slow, especially following middling economic readings from top importer China. The prospect of oversupply and increased production also weighed.

But oil prices rebounded on Monday as sentiment improved.

expiring in November were flat at $71.86 a barrel, while steadied at $67.90 a barrel by 22:37ET (02:37 GMT).

Tropical storm Francine set to batter Gulf of Mexico

A slew of oil companies were seen stopping production and refining activities in the Gulf of Mexico as Tropical Storm Francine made its way towards the U.S. mid-South.

The storm is expected to potentially strengthen into a hurricane before making landfall, and is expected to lash the upper Texas and Louisiana coasts with heavy rain and gale winds this week.

The storm could potentially cause extended disruptions in the energy-rich Gulf of Mexico, reducing crude supplies in North America and presenting a tighter near-term outlook for oil markets.

This notion offered oil markets some support, helping them recover a measure of bruising losses logged last week.

Oil battered by demand concerns, China woes

Oil prices were nursing steep losses in recent sessions as markets fretted over slowing demand, especially in top crude importer China.

A string of weak economic readings from the country for August drummed up concerns over slowing growth, as did signs that increasing electric vehicle adoption was also denting fuel demand.

Beyond China, caution over U.S. interest rates also weighed on oil markets, especially ahead of key inflation data due later this week.

The inflation reading comes just a week before a Federal Reserve meeting, where the central bank is widely expected to cut interest rates by 25 basis points.

Commodities

Oil dips as weaker demand counters storm Francine

Published

12 hours ago

September 10, 2024

By Ahmad Ghaddar

LONDON (Reuters) -Oil prices gave up the previous day’s gains on Tuesday as a weaker demand outlook offset U.S. supply disruptions from Tropical Storm Francine and global oil oversupply risks that continue to weigh on the market.

futures were down 95 cents, or 1.3%, at $70.89 a barrel by 1214 GMT. U.S. West Texas Intermediate crude lost 96 cents, or 1.4%, to $67.75.

Both benchmarks had risen about 1% on Monday.

The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report on Tuesday that global oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from previously projected growth of 2.11 million bpd.

OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd.

The weakening global demand prospects and expectations of oil oversupply kept the market suppressed.

Chinese data on Monday showed consumer inflation accelerated in August to its fastest in half a year, though domestic demand remained fragile, and producer price deflation worsened.

And while data released on Tuesday showed China’s exports grew at their fastest in nearly 1-1/2 years in August, imports disappointed against a backdrop of depressed domestic demand.

“The message from China is simple but loud and reverberates throughout the globe,” said PVM Oil analyst Tamas Varga, adding that the country is struggling to encourage spending and boost sluggish demand.

Meanwhile, the U.S. Coast Guard ordered the closure of all operations at Brownsville and other small Texas ports on Monday evening as Tropical Storm Francine barrelled across the Gulf of Mexico. Corpus Christi port remained open with restrictions.

The tropical storm is forecast to strengthen significantly and become a hurricane on Tuesday, according to the National Hurricane Center (NHC).

Exxon Mobil (NYSE:) said it shut in output at its Hoover offshore production platform while Shell (LON:) paused drilling operations at two platforms. Chevron (NYSE:) also began shutting in oil and gas output at two of its offshore platforms.

The U.S. Energy Information Administration is due to publish its short-term energy outlook, with forecasts for the global market and oil output.