- March 1, 2019
- Stiff competition from cheap global supplies and an onslaught of technical selling pushed all wheat futures well below last week’s close. A stronger U.S. dollar enhanced losses. March soft red winter (SRW) futures lost 33 cents to end at $4.54/bu and March hard red winter (HRW) futures lost 18 cents to close at $4.41/bu. Hard red spring (HRS) futures fell 5 cents to close at $5.62/bu. CBOT March corn futures lost 11 cents [SM1] to close at $3.64/bu. CBOT March soybean futures fell 11 cents to close at $8.99.
- Abysmal snow storms across the country and high water suppressed all modes of grain transportation this week. Delays in wheat deliveries to the Pacific Northwest (PNW) and the Gulf, due to extreme weather, are expected to extend into the coming weeks. Export basis for HRS and HRW in the Gulf and HRS out of the Great Lakes jumped nearly 20 cents week over week for nearby and deferred delivery months. Export basis for HRS in the PNW climbed 5 cents from last week for nearby and deferred delivery months while export basis for HRW held high and steady for the same contract periods. Soft white prices fell sharply in the PNW following the sharp decline in wheat futures values and low farmer selling.
- According to the U.S. Department of Agriculture’s (USDA) weekly Export Sales Report, total known outstanding sales and accumulated exports of all classes of wheat for the 2018/19 marketing year, through Feb. 21, 2019, were 22.0 million metric tons (MMT), 2 percent above the 21.6 MMT reported this time last year. Total commercial sales to date (of wheat and wheat products) comprise 81 percent of USDA’s final expected export volume of 27.2 MMT.
- This week’s net sales of 476,400 metric tons (MT) were reported for delivery in 2018/19, down 20 percent from last week’s 600,000 MT (3.57 MMT divided by 6 weeks), but up 149 percent over reported export sales for the same week in 2018. Sales were in line with trade expectations of 200,000 to 500,000 MT. Increases were reported for Indonesia (100,000 HRW, 30,000 HRS, 40,000 white), The Philippines (26,575 HRS, 47,545 white), Japan (31,575 HRW, 14,647 HRS, 10,409 SRW, 15,580 white), South Korea (749 HRW, 545 HRS, 60,000 SRW, 1,298 white), and Taiwan (19,198 HRW, 26,692 HRS, 7,674 white).
- Click here to view the most recent USW Commercial Sales report.
- Abnormally dry conditions eased in the Pacific Northwest this week. A blizzard in portions of the northern and central Plains and upper Midwest left North Dakota with no more drought concerns. Abnormal dryness continues in the Nebraska Panhandle, central Colorado, western Oklahoma and the Texas Panhandle. High winds raked the southern Plains with no significant precipitation, compounding the effects of short-term dryness on winter wheat. The entire eastern half of the continental United States has no dryness or drought concerns, with new rainfall predicted for the Southeast and light snow in portions of the Plains and Midwest. A strong surge of cold air will move into the Plains and Midwest, with sub-zero temperatures expected as far south as northern Kansas.
- According to Reuters, meager soil moisture conditions in Australia’s New South Wales and Queensland could inhibit wheat yields for a third straight year. If the severe drought continues, producers may reduce the amount of winter wheat they seed in April to minimize financial losses.
- Russia’s Agriculture Ministry dismissed rumors this week that it would impose restrictions on grain exports. SovEcon, a Russian agriculture consultancy, raised its 2018/19 wheat export estimates from 35.6 MMT to 35.9 MMT.
Baltic and U.S. Dollar Indices
- The Baltic Dry Index (BDI) continues its modest climb from February’s historic low. The BDI closed at 658, up 4 percent week over week.
- The Dollar Index closed slightly up week over week at 96.54, compared to last week’s 96.50.
Source: U.S. Wheat Associates