March 22, 2019
- All wheat futures prices for the May contract period closed up from last week. Technical buying, short-covering, China’s purchase of more than 300,000 metric tons (MT) of corn for the first time in 5 years, and increased risk of spring wheat planting delays contributed. A firmer U.S. dollar partially offset gains. May soft red winter (SRW) futures gained 4 cents from last week to end at $4.66/bu and May hard red winter (HRW) futures gained 2 cents to close at $4.45/bu. May hard red spring (HRS) futures increased by 17 cents to land at $5.72/bu. CBOT May corn futures gained 5 cents to end at $3.78/bu. CBOT May soybean futures lost 5 cents to close at $9.04/bu.
- Record snowpack and flooding in the upper Midwest blocked grain transportation systems this week, supporting export basis for all wheat classes out of the Pacific Northwest (PNW) and the Gulf. HRS and HRW export basis for nearby and deferred delivery months increased week over week out of the PNW. Export basis for HRS and HRW for April delivery in the Gulf held at last week’s levels, while export basis for both classes for May delivery increased over last week as record flooding is expected to disrupt Mississippi River transportation in the coming weeks (see NOAA flood map below).
- The Great Lakes – St. Lawrence Seaway System closed on Dec.31, 2018, and is scheduled to reopen this month. The Columbia-Snake River System is closed for annual, planned maintenance until March 24, 2019.
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Commercial Sales
- This week, net sales of 299,000 metric tons (MT) were reported for delivery in 2018/19, up 14 percent from last week’s 263,000 MT, but down 48 percent from the estimated previous 4-week average of 502,000 MT.
- Year-to-date commercial sales of 23.1 million metric tons (MMT) make up 88% of the USDA’s expected 2018/19 export volume of 26.3 MMT.
- Click here to view the most recent USW Commercial Sales report.
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- More rain, snowmelt and flooding continued this week in much of the Midwest and Central Plains. The March 19 Drought Monitor reported heavy precipitation in the wheat growing regions of western Oklahoma and northern Texas which significantly reduced drought conditions across both states. Looking forward, much of the central United States will experience warmer than average temperatures and higher than average precipitation but likely not at the same severity as recent storms.
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- The European Union’s crop monitoring service, MARS, expects the average non-durum wheat yield in the EU to increase 7.4 percent from 2018 to 6.04 tons per hectare (90 bushels/ acre) in 2019, 2 percent higher than the 5-year average, if realized.
- Meteorologists at Radiant Solutions, an American geospatial analytics company, expect dry conditions to continue across Australia’s eastern wheat producing states into the 2019 planting season, which could hurt the country’s wheat yields for the third straight year. According to Reuters, Australian farmers are trying to minimize input costs by delaying fertilizer and crop protection purchases amid fears of yet more drought-driven crop losses in 2019/20.
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Baltic and U.S. Dollar Indices
- The Dollar Index closed at 96.62, slightly up from last week’s 96.59.
- The Baltic Dry Index tumbled 5 percent from last week’s 730 to close at 695.
Source: U.S. Wheat Associates