March 29, 2019
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Export optimism, short-covering, and weather concerns early in the week supported all wheat futures prices for the May contract period. However, technical selling, a stronger U.S. dollar and USDA’s report of high March 1 ending stocks (see below) pressured all Friday wheat futures prices below last week’s close. May soft red winter (SRW) futures lost 8 cents to close at $4.58/bu and May hard red winter (HRW) futures lost 15 cents to end at $4.30/bu. May hard red spring (HRS) futures fell by 17 cents to close at $5.55/bu. CBOT May corn futures lost 22 cents to end at $3.56/bu. CBOT May soybean futures lost 19 cents to close at $8.84/bu.
Slightly improved rail logistics helped lower HRS and HRW export basis for nearby and deferred delivery months out of the Pacific Northwest (PNW) and HRS export basis for April and May delivery out of the Gulf. PNW soft white prices came down from last week on softer export demand. Gulf HRW and SRW basis for nearby and deferred delivery months increased over last week on inland waterway flooding and increased export demand.
USDA’s March 2019 Prospective Plantings report estimated all U.S. wheat planted area for 2019 harvest at 45.8 million acres, 4 percent below the total planted area for 2018 harvest and the lowest planted area on record since 1919, if realized.
USDA’s March 2019 Quarterly Grain Stocks report pegged March 1 U.S. wheat ending stocks at 43.3 MMT (1.59 billion bushels), up 6 percent from last year and the second largest March ending stocks estimate in 31 years.
This week, net commercial U.S. wheat sales of 475,700 metric tons (MT) for delivery in 2018/19 were up 59 percent from last week’s 299,000 MT and 15 percent from the estimated previous 4-week average of 451,000 MT.
Year-to-date commercial sales of 23.6 million metric tons (MMT) make up 90% of the USDA’s expected 2018/19 export volume of 26.3 MMT.
In addition to net and total commercial sales for 2018/19 delivery, USDA also reported net sales of 35,400 MT for delivery in 2019/20.
U.S. Drought Monitor
Significant flooding continued this week from the Missouri River Basin down the Mississippi River and its tributaries. The March 26 Drought Monitor reported heavy showers across northern Texas and western Oklahoma which reduced “abnormal dryness” there. Looking ahead, wheat growing areas between the Cascades and northern Rockies should get much needed precipitation. Unusually low temperatures, rain and snow are expected in the central Plains and upper Midwest.
Ukraine’s Agriculture Ministry estimates its farmers will plant 172,000 hectares of spring wheat for 2019 and reported that seeding is 48 percent complete.
Russia’s agriculture consultancy, SovEcon, expects total Russian wheat exports in 2018/19 to fall to 35.1 MMT, 2 MMT below USDA’s March estimate for Russian exports and 15 percent below the country’s 2017/18 wheat export level, if realized.
Baltic and U.S. Dollar Indices
The Dollar Index closed at 97.25, up slightly from last week’s 96.62.
The Baltic Index fell slightly from last week’s 695 to close at 692.