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Crop Report: USA spring wheat production up over 50%, record high for soybeans

158 points| Kon-Peki | 3 years ago |release.nass.usda.gov | reply

67 comments

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[+] cwal37|3 years ago|reply
Strong recommendation for Mastering Grain Markets[0] if the discussion in this thread around why spring wheat is up interests you. Global ag commodities like this are keyed off of so many events, it’s really interesting to dive into the history and mechanisms that exist in the space to deal with volatility. I read this book when interviewing with a geospatial intelligence company in this space and I learned way more than I expected (having some previous mix of academic training in the Midwest that frequently touched on ag).

Also the podcast Escaping 1980[1] if you want an example of a global event that drastically altered US ag production, leading to a decline/crisis that plenty of farmers still have as a pivotal event in their memory.

[0] https://www.goodreads.com/en/book/show/15891377-mastering-th...

[1] https://aei.ag/escaping1980/ (not that AEI)

[+] jmoak3|3 years ago|reply
Thank you for the recommendation, adding it to my list.

Meta, but my favorite part of HN is the exposure to books I'd never come across otherwise.

[+] bryanlarsen|3 years ago|reply
Wheat prices were up because of the Ukraine war so farmers planted more wheat and less corn. But wheat prices have already returned to pre-war levels, and this report will depress them even further.

OTOH, fertilizer prices at the time of planting were crazy high.

Expenses up, revenue down. Farmers are going to be in a world of hurt this year.

[+] elgenie|3 years ago|reply
If farming worked like this comment presumes, the simple fact that growing things takes time would be a road to financial ruin and nobody could feasibly earn a living doing it. Since there exist both farmers and food, one can conclude that this isn't how things work.

Instead, rather than planting today and selling "here's X bushels of wheat I've harvested" months in the future and hoping for the best, farmers sell futures (that is: "in <growing time> months, I shall deliver X bushels of wheat") for most of their expected yield.

Lo' and behold, here's what the futures prices looked like around planting time [1: look at YTD]: high due to demand from those that had expected to have Ukrainian wheat to buy after the harvest, and then back down when that price signal resulted in sufficient wheat being planted to satisfy demand and thus an increased supply of farmers writing futures on it.

[1] https://www.nasdaq.com/market-activity/commodities/zw

[+] acchow|3 years ago|reply
Futures were invented so farmers could sell at known prices before committing to production.
[+] cwal37|3 years ago|reply
That’s why you hedge though. Quite a lot of exposure should already be handled well before we get to this point in the season. Ag commodities can be brutal and few people know that more personally than farmers.
[+] pragmatic|3 years ago|reply
No, government payments and the ridiculously generous crop insurance will "insure" they won't. You ready have to be a poor operator in this day and age to go broke farming.
[+] throwawaymaths|3 years ago|reply
Is it not the case that wheat requires less chemical inputs than competing crops like corn? I would have expected farmers to see what was happening in Ukraine early on and nope out of input-heavy crops?
[+] Moto7451|3 years ago|reply
My understanding is that there are subsidies and government purchase programs that cover these situations. Is my understanding correct?
[+] WaitWaitWha|3 years ago|reply
>Corn Production Down 5 Percent from 2021

>Soybean Production Up 2 Percent from 2021

>Cotton Production Down 28 Percent from 2021

>Winter Wheat Production Down Less Than 1 Percent from July Forecast

This is directly from the first paragraph of the release referenced.

[+] ars|3 years ago|reply
> Other spring wheat: Production is forecast at 512 million bushels, up 2 percent from the previous forecast and up 55 percent from 2021.

Spring what is different from Winter wheat.

[+] jerkstate|3 years ago|reply
It looks like an increase from 330 million bushels "other spring wheat" in 2021 to 511 million bushels in 2022. This is out of a total of 1.65 billion bushels in 2021 and 1.78 billion bushels in 2022.

for comparison, Ukraine exports about 900 million bushels per year and Russia exports about 1.5 billion bushels per year.

[+] yosito|3 years ago|reply
If wheat production is up due to over planting, and that drives the price down, is that actually going to end up hurting Ukraine because now they can't export their wheat at the same price as before?
[+] jesuscript|3 years ago|reply
Ukraine exports mostly to the Middle East and other nearby Asian/African countries. I don’t know if the US has plans to divert our wheat to those places.

The optics of the war seem a little staged. Gas prices down, wheat exports … up? It almost makes sense for Russia to dig in and prolong the war beyond a year to show that such optics are not sustainable by the US.

Strategically, if I were Russia, I wouldn’t even consider a ceasefire until winter passes and Europe gets hit with heating costs, just to make my point. It’s the only point of leverage left.

[+] hattmall|3 years ago|reply
Didn't Russia take control of most of the Ukrainian grain export capabilities?
[+] bluGill|3 years ago|reply
I'm amused that there is so much Ukraine talk, and no weather talk. Last year harvest was way below normal because if drought, so of course this year harvest is way up.

War is a factor, but weather is bigger

[+] stjohnswarts|3 years ago|reply
yeah I much prefer having both numbers "% over running average over _ years" and "% over last year" both are important and most likely available to whomever is writing the article, but we get a clickbait title :)
[+] MonkeyMalarky|3 years ago|reply
It's because of the war right? Farmers looked at the price of wheat futures and chose to plant wheat over crops like corn?
[+] tekno45|3 years ago|reply
I had no idea wheat grew in 4ish months. Definitely thought responding to this war was gonna be a nightmare for farmers.
[+] bluGill|3 years ago|reply
Most of it is because last year the major wheat areas were in a severe drought and had a bad harvest. Farmers did plant a bit more wheat because of the war, but not near enough to explain the increase
[+] hulitu|3 years ago|reply
"The president made a work visit to a wheat field to congratulate the farmers. Pictures of the best Farmers appered on the front page of Washington Post". /s Some things never die.
[+] tomohawk|3 years ago|reply
> All wheat production for grain is forecast at 1.78 billion bushels, up less than 1 percent from the previous forecast and up 8 percent from 2021.

How is that up 50%?

[+] stjohnswarts|3 years ago|reply
I'm more impressed this is distributed as good old text :)
[+] wbc|3 years ago|reply
Yeah but how's gourd production doing?
[+] dirtyid|3 years ago|reply
I like the nicely formated txt file, but why is it in a txt file? Could use a nice warez .nfo header... wonder if there's an official gov ASCII file header.
[+] chaps|3 years ago|reply
I'd be willing to bet it's because some trader's tooling written 20 years ago broke after a format change so they successfully raised hell to make sure it would stay the same format forever. Probably perl.
[+] TheRealPomax|3 years ago|reply
Soybeans, or Monsanto soy? Because just because Bayer bought Monsanto doesn't mean they stopped their underhanded ways to force farmers to either buy into Monsanto, or not grow soy at all.