May 31, 2019
- All wheat futures prices climbed week-over-week on technical buying, worries of heavy rains and floods impacting U.S. winter wheat crop quality and significantly delayed corn planting due to wet field conditions in the Midwest and High Plains (see below). A stronger U.S. dollar limited gains. July soft red winter (SRW) futures gained 13 cents from last week to close at $5.03/bu and July hard red winter (HRW) futures closed up 31 cents at $4.73/bu. July hard red spring (HRS) futures gained 4 cents to end at $5.52/bu. CBOT July corn futures increased by 23 cents to close at $4.27/bu. CBOT July soybean futures gained 48 cents to close at $8.78/bu.
- News of a USDA tender for 117,000 metric tons (MT) of white wheat for shipment to Yemen supported soft white wheat export prices out of the Pacific Northwest (PNW) for nearby and deferred delivery months. Increased farmer selling due to rallies in the U.S. futures market pressured PNW export basis for HRW and HRS for June and July deliveries. Difficult inland waterway logistics due to localized flooding on the Mississippi River and its tributaries and concerns over milling quality due to excessive rain in Ohio and Illinois elevated Gulf SRW export basis for July deliveries onward. Slow demand pressured Gulf HRW export basis for nearby and deferred deliveries. Despite increased farmer selling, Gulf HRS export basis stayed high this week due to logistical challenges.
- USDA’s May 28 Crop Progress report rated 61% of U.S. winter wheat in good or excellent condition, down from last week’s 66% but up significantly from last year’s 38%. U.S. spring wheat planting made strong progress this week, increasing to 84% complete, slightly below last year’s 89% and the 5-year average of 91%. U.S. corn planting is only 58% complete, significantly below last year and the 5-year average of 90%.
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Commercial Sales
- Net U.S. wheat sales as of May 23 of 153,000 MT for delivery in 2018/19 were up significantly from last week’s 48,400 MT. Year-to-date commercial sales of 25.9 million metric tons (MMT) are more than USDA’s expected export volume of 25.2 MMT.
- In addition to net and total commercial sales for 2018/19 delivery, USDA also reported net sales of 412,000 MT for delivery in 2019/20, well above trade expectations of 150,000 to 350,000 MT.
- Click here to view the most recent USW Commercial Sales report.
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- The May 28 Drought Monitor reported another week of heavy rains and flooding across parts of the Southern and High Plains to the Midwest, causing concern over HRW and SRW crop yields and quality. Abnormally dry conditions impacted wheat-growing regions in northwestern Minnesota, northern North Dakota, northwestern Montana, central Georgia and central South Carolina. Looking ahead, heavy rains and warmer temperatures are expected across the Plains from northern Texas to the central Midwest.
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- The Buenos Aries Grain Exchange reports Argentine wheat planting at 8% complete. Total planted area for 2019/20 is expected to reach 15.8 million acres (6.4 million hectares).
- According to IKAR, a leading agriculture consultancy, Russian farmers have planted 26.7 million acres (10.8 million hectares) of spring wheat so far in 2019, compared to 19.8 million acres (8.0 million hectares) this time in 2018 due to warm weather and favorable soil moisture levels.
- Stratégie Grains expects Ukrainian average yields to increase 8% year-over-year to 61.0 bu/acre (4.15 MT/hectare) on warm weather and adequate spring rainfall. Reuters reports Ukrainian spring grains planting as 97% complete as of May 31.
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Baltic and U.S. Dollar Indices
- The Baltic Dry Index (BDI) climbed 31 points from last week to 1,097. This marks the BDI’s highest value in 5 months.
- U.S. Dollar Index increased slightly week-over-week from 97.61 to 97.95.
Source: U.S. Wheat Associates