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U.S. Wheat Associates Price Report

U.S. Wheat Associates Price Report

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  • Earlier today, President Trump announced a deal to reopen the federal government for three weeks while border security is negotiated. Assuming Congress approves, the entire wheat industry looks forward to updated commercial export sales and supply and demand reports from USDA. It is too soon to know when those missing reports will be issued. USDA did publish its weekly export inspections for wheat, which totaled 516,643 metric tons (MT), down 5% from last week’s inspection volume of 545,804 MT.
  • Continued reports of elevated Russian wheat prices and potential governmental export controls along with circulating news of increased Chinese interest in U.S. wheat (see below) boosted all U.S. wheat futures week over week. A softer U.S. dollar supported gains. CBOT March futures closed 3 cents up from last week at $5.20/bu. KCBT ended 3 cents up at $5.09/bu. MGEX held firm at $5.74/bu. CBOT March corn futures closed 1 cent down at $3.80/bu. CBOT January soybean futures closed 9 cents up at $9.25/bu.
  • Competitive pricing and increased potential demand from Southeast Asian markets supported HRS export basis and soft white (SW) prices in the PNW for nearby and deferred delivery months, while HRW export basis in the PNW remains unchanged week over week due to steady export demand. Export basis for nearby and deferred HRS delivery months came down in the Gulf, signaling some incentive for potential buyers. Strong indications of increased future demand from west African, south African, and Central American export markets substantially boosted HRW export basis in the Gulf for nearby and deferred delivery months.
  • “Buy the rumor, sell the news” as the old saying goes. No adage could better capture the U.S. – China wheat situation. Earlier this week, prominent sources reported that China is interested in buying 7 million metric tons (MMT) of U.S. wheat in the coming months. In fact, it was confirmed this week that an unknown buyer purchased 40,000 MT of HRS bound for China – welcome news, but certainly not proof that the political struggle over tariffs has ended.

U.S. Drought Monitor

  • Much of the High Plains recorded precipitation, especially Colorado, North Dakota and South Dakota. Pockets of dryness persist over portions of eastern Colorado and the Dakotas. Eastern Oregon and Washington have had enough precipitation to improve what were extreme drought in eastern Oregon and moderate drought and abnormally dry conditions over eastern Washington. Looking ahead, the Southeast and the northern Rocky Mountains into the Great Lakes are likely to see the most precipitation.

  • Ukraine’s Ministry of Agriculture reports that 11.2 MMT of the agreed 16 MMT of wheat for market year (MY) 2018/19 has already been shipped.
  • IGC estimates that MY 2018/19 world production will decrease 4% year over year. Major decreases come from Russia (down 15%), the EU (down 9%), Ukraine (down 7%), and Australia (down 22%). IGC estimates U.S. production will increase 8% over last year. The report predicts total global consumption will hold steady, if not decrease by about 1% year over year.

Baltic and U.S. Dollar Indices

  • The Baltic Index took a dramatic hit to close at 939, its lowest point since April. This marks a 13% drop from last week’s 1,077.
  • The Dollar Index closed slightly down week over week at 95.77, compared to last week’s 96.38.

Source: U.S. Wheat Associates