Friday, June 15, 2018
- Decreasing 2018/19 wheat production estimates for Russia, Ukraine and the European Union lent wheat futures support early this week, but profit-taking and a strong U.S. dollar pressured wheat futures lower during the second half of the week. Seasonal harvest pressure for hard red winter (HRW) and soft red winter (SRW) also weighed on futures. CBOT July wheat fell 20 cents to $4.99/bu, KCBT lost 18 cents to close at $5.20/bu, and MGEX dropped 27 cents to $5.71/bu. CBOT July corn decreased 16 cents to close at $3.61/bu and CBOT July soybeans plummeted 63 cents this week to $9.05/bu.
- Traders narrowed HRW protein premiums again this week due to continued reports of higher protein in the 2018/19 crop. Hard red spring (HRS) protein premiums also narrowed with traders noting the excellent condition of the 2018/19 HRS crop. Elevators are actively competing for bushels right now to fill their storage and secure storage revenue, supporting HRW export basis.
- USDA’s weekly Export Sales Report included net wheat sales of 302,300 metric tons (MT) for marketing year 2018/19. Total known outstanding sales and accumulated exports of all classes of wheat for the 2018/19 marketing year were 4.53 million metric tons (MMT), 35% behind last year’s year-to-date total of 6.98 MMT. USDA expects 2018/19 U.S. wheat exports to reach 25.9 MMT.
- On June 11, USDA reported winter wheat harvest was 14% complete, ahead of the 5-year average of 10%. USDA rated the winter wheat crop 38% good to excellent, up from 37% a week ago and 35% of the winter wheat is in poor or very poor condition. USDA reported U.S. spring wheat planting is complete, and 94% of spring wheat has emerged, ahead of the 5-year average of 89% emergence. USDA rated 70% of spring in good to excellent condition, compared to 45% this time last year.
- On June 12, USDA forecast 2018/19 world wheat production to fall for the first time in 5 years in its monthly World Agricultural Supply and Demand Estimate (WASDE). USDA expects global wheat production to fall to 745 MMT, down 2% from 2017/18. Global trade will reach a record 187 MMT in 2018/19, 8% above the 5-year average. 2018/19 global consumption will set a sixth consecutive record at 751 MMT. World ending stocks will fall to 266 MMT, down 2% from 2017/18, if realized. 2018/19 U.S. wheat production will total 49.7 MMT, up 5% from last year.
- The June 14 U.S. Drought Monitor reported scattered thunderstorms across the Great Plains slowed the rapid pace of harvest. Rain fell across Montana, North Dakota and South Dakota, providing beneficial moisture for spring wheat. Still, dryness remains a concern in North Dakota, where 82% of the state is abnormally dry or experiencing a moderate to severe drought. Temperatures remained well above average for a majority of the United States, exacerbating the need for additional rain. The current forecast expects additional rain across the U.S. Northern Plains.
- FranceAgriMer rated 76% of French common wheat in good to excellent condition, down from 79% good to excellent the week prior.
- According to the Saskatchewan weekly crop report, spring grains (including wheat) planting is complete. The driest areas in the south received beneficial rainfall this week. Topsoil moisture was rated 9% surplus, 73% adequate and 18% short or very short.
- Strategie Grains decreased its estimate for 2018/19 European Union common wheat production (excluding durum) to 140 MMT due to lower yields in the drought-stricken Baltic States, Germany and Poland. If realized, it would be 1% below 2017/18.
- Ukrainian consultancy UkrAgroConsult lowered its estimate for 2018/19 Ukrainian wheat production to 25.5 MMT due to extreme drought, which is expected to decrease yields. If realized, it would be 5% below 2017/18. Harvest is just beginning in Ukraine.
Baltic and U.S. Dollar Indices
- The Baltic Index increased to 1433, up from 1391 last Friday.
- The Dollar Index rose to an 11-month high of 94.97.
Source: U.S. Wheat Associates