The KC December contract closed at $5.09¾, up from $4.78, a contract high. On September 18, the KC December contract closed at $5.07½. The market is watching the planting and establishment of the 2021/22 marketing year world wheat crop. There are concerns about dry conditions in Russia and much of the U.S. hard red winter (HRW) wheat area.

In the U.S., drought conditions exist, south to north, from southern Texas through the western one-fourth of Oklahoma all the way up into Canada. Over the next three months, drought conditions are predicted to persist and spread eastward across most of Oklahoma and western Kansas, and into western Nebraska.

 For the entire U.S., the October through December weather forecast is for above-average temperatures, especially in Texas, Oklahoma, and Kansas. The forecast is also for below-average precipitation in Oklahoma, Texas, southern Kansas, and Colorado.

The market may be realizing that the U.S. cannot lose many more wheat acres. The HRW wheat 2020/21 marketing year ending stocks are projected to be 385 million bushels (mb), compared to a five-year average of 531 mb and 521 mb in 2019/20. This reduction in production is due to reduced planted and harvested acres, not lower yields. The U.S. may need more wheat planted acres.

Lest we get too optimistic, 2020/21 world wheat ending stocks are projected to be a record 28.3 billion bushels (bb). For the hard wheat exporting countries, wheat ending stocks are projected to be 1.571 bb compared to a five-year average of 1.681 bb. The ending stocks for the Black Sea exporting countries are projected to be 385 million bushels compared to a five-year average of 470 mb. These projections leave no room for reduced production in the Black Sea countries.

World wheat production and stocks are more than adequate. Conversely, U.S. HRW and soft red winter wheat stocks are declining. While stocks are adequate, there is little room for reduced production.