August 10, 2018
- After a week that recorded 3-year U.S. wheat futures highs, wheat futures closed lower on Friday due to profit-taking and spillover weakness from corn and soybeans. USDA estimates for shrinking global wheat production and increasing global wheat consumption limited losses. Mediocre export demand and a strong U.S. dollar continue to limit gains. CBOT September wheat fell 9 cents to $5.47bu, KCBT decreased 7 cents to $5.60/bu and MGEX lost 4 cents to close at $6.09/bu. CBOT September corn declined 12 cents to $3.58/bu and CBOT August soybeans plummeted 40 cents to $8.46/bu.
- Seasonal harvest pressure softened nearby export basis for hard red spring (HRS) across the United States. Pacific Northwest (PNW) hard red winter (HRW) and hard red spring (HRS) export basis continued to soften this week pressured by increased farmer selling. Slow export demand for other wheat classes continues to pressure U.S. export basis.
- USDA’s weekly Export Sales Report included net wheat sales of 317,100 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 7.51 million metric tons (MMT), 29% behind last year’s year-to-date total of 10.5 MMT. USDA expects 2018/19 U.S. wheat exports to reach 27.9 MMT.
- On August 10, USDA forecast 2018/19 world wheat consumption to exceed world wheat production by 14.1 MMT due to the first decline in world wheat production in 5 years. USDA expects global wheat production to fall to 730 MMT, down 4% from 2017/18. Global trade will reach a record 184 MMT in 2018/19, 6% above the 5-year average. 2018/19 global consumption will set a sixth consecutive record at 744 MMT. World ending stocks will fall to 259 MMT, down 5% from 2017/18, if realized. 2018/19 U.S. wheat production will total 51.1 MMT, up 8% from last year.
- On August 6, USDA reported winter wheat harvest was 90% complete, slightly behind the 5-year average of 92%. USDA reported U.S. spring wheat harvest is 13% complete, slightly behind the 5-year average, and rated 74% of spring wheat in good to excellent condition, down from 78% last week.
- The August 9 U.S. Drought Monitor reported warm, dry conditions continued this week for the PNW and U.S. Northern Plains allowing harvest to progress. Some beneficial moisture fell across the U.S. Central Plains, lessening drought conditions in Kansas, parts of Oklahoma, Colorado and Wyoming ahead of the fall planting season. The current forecast expects above normal temperatures across most of the United States with rain forecast for most areas.
- On August 9, FranceAgriMer reported preliminary harvest quality tests show the 2018/19 French common wheat (excluding durum) production has an average protein content of above 11.5% on a dry matter basis. Average test weight is above 76.0 kg per hectoliter.
- Stratégie Grains cut its estimate for 2018/19 European Union (EU) common wheat production to 128 MMT, down 10% from the year prior, if realized. Hot, dry conditions led to “catastrophic” low yields in Germany, Poland, the Baltics and Scandinavia.
- Ukraine will limit 2018/19 wheat exports to 16.0 MMT, including 8.0 MMT of milling wheat. In 2017/18, Ukraine exported 17.2 MMT of wheat, including 10.0 MMT of milling wheat according to Reuters.
- Bolsa de Cereales, the Buenos Aires Grain Exchange, reported Argentina wheat planting is 99% complete as of August 9, significantly ahead of last year’s pace.
- The drought-stricken east coast of Australia received 1 cm of rain on August 6, bringing short-term relief to the region. Still, additional rain is needed as New South Wales, a dominant wheat-growing area, received just 1 cm of rain throughout all of July and received less than 20% of normal rainfall over the past 90 days.
Baltic and U.S. Dollar Indices
- The Baltic Index fell to 1694, down from 1756 the week prior.
- The Dollar Index rose to a one-year high of 96.39.
Source: U.S. Wheat Associates