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U.S. Wheat Associates Price Report

U.S. Wheat Associates Price Report

Friday, June 22, 2018

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  • A strong U.S. dollar, seasonal harvest pressure and technical selling pressured wheat futures lower this week. Reduced wheat production forecasts for Russia, Ukraine and the European Union (EU) lent limited support. CBOT July wheat fell 8 cents to $4.91/bu, KCBT lost 31 cents to close at $4.89/bu, and MGEX dropped 22 cents to $5.49/bu. CBOT July corn decreased 4 cents to close at $3.57/bu and CBOT July soybeans closed 11 cents lower this week at $8.94/bu.
  • Farmer selling in the Pacific Northwest remained slow, supporting export basis. Conversely, farmer selling tributary to the Gulf has been brisk, but elevators in that area are actively competing for bushels right now to fill their storage and secure storage revenue, supporting HRW and SRW export basis. Exporters noted that U.S. wheat demand remains slow at least in part because overseas buyers are uncertain about what might happen next with trade negotiations.
  • USDA’s weekly Export Sales Report included net wheat sales of 461,600 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 4.99 million metric tons (MMT), 34% behind last year’s year-to-date total of 7.52 MMT. USDA expects 2018/19 U.S. wheat exports to reach 25.9 MMT.
  • On June 18, USDA reported winter wheat harvest was 27% complete, ahead of the 5-year average of 19%. USDA rated the winter wheat crop 39% good to excellent, up from 38% a week ago and 32% of the winter wheat is in poor or very poor condition. USDA reported 97% of U.S. spring wheat has emerged, ahead of the 5-year average of 95% emergence. USDA rated 78% of spring in good to excellent condition, up from 70% last week.

U.S. Drought Monitor

  • The June 21 U.S. Drought Monitor reported storms brought localized heavy rain and, in some places, hail to Kansas, Nebraska and Colorado, slowing harvest progress. Rain also fell across the U.S. Northern Plains, boosting crop conditions and soil moisture. While a majority of North Dakota remains abnormally dry, the area experiencing moderate to severe drought shrunk to 9%. The current forecast expects cooler temperatures and additional rain across the United States, which will benefit spring wheat development but likely slow HRW and SRW harvest progress.

  • FranceAgriMer rated 75% of French common wheat in good to excellent condition, down from 76% good to excellent the week prior.
  • Following a Russian crop tour, French consultancy Agritel forecast 2018/19 Russian wheat production at 67.4 MMT. If realized, that would be 21% below 2017/18 levels, but still 2% above the 5-year average.
  • According to Reuters, drought in Shandong and Hebei provinces and heavy rain in Henan and Anhui provinces hurt yield potential in the key Chinese wheat producing regions and could decrease 2018/19 Chinese wheat production by as much as 20% year over year. If realized, that would put Chinese wheat production at 104 MMT, the lowest level since 2005/06.
  • MARS, the EU crop monitoring service, lowered its forecast for 2018/19 EU common wheat (excluding durum) yields to 89.8 bu/acre (6.04 MT per hectare), down 1% from 2017/18 but still 1% above the 5-year average. Heavy rain in France and parts of Italy and hot, dry conditions in northern EU countries have reduced yield potential.
  • The Ukraine Agriculture Ministry reported wheat harvest began two weeks earlier than last year due to the severe drought that has impacted the country. As of June 22, Ukrainian farmers harvested 211,000 MT of wheat with an average yield of 43.3 bu/acre (2.91 MT per hectare).

Baltic and U.S. Dollar Indices

  • The Baltic Index fell to 1347, down from 1445 last Friday.
  • The Dollar Index decreased to 94.53, down from the 11-month high of 94.97 last Friday.

Source: U.S. Wheat Associates