June 7, 2019
- All futures prices rallied at the end of the week on dry weather concerns in Russia, Australia and Canada. Week-over-week, hard red spring (HRS) and soft red winter (SRW) futures increased while hard red winter (HRW) futures fell on better-than-expected ratings from the USDA’s Crop Progress report despite heavy rains across the Southern and Northern Plains (see below). SRW July futures gained 1 cent to close at $5.04/bu. HRW July futures lost 24 cents to end at $4.49/bu. HRS July futures jumped 17 cents to close at $5.69/bu. CBOT July corn futures lost 11 cents to end at $4.15/bu. CBOT soybean futures lost 21 cents to close at $8.56/bu.
- Limited elevation capacity due to high export demand increased Gulf export basis for HRS and HRW for June and July deliveries. Reduced inland barge movement due to localized flooding on the Mississippi River and its tributaries and concerns about new crop SRW quality due to excessive rain in Ohio and Illinois kept Gulf export basis steady and high week-over-week. Out of the Pacific Northwest, more farmer selling pressured HRW export basis while tight ending stocks and minimal elevation capacity kept SW export prices steady and high for nearby and deferred deliveries.
- USDA’s June 3 Crop Progress report rated 64% of U.S. winter wheat in good or excellent condition, up from last week’s 61% and up significantly from last year’s 37%. U.S. spring wheat planting made strong progress this week, increasing to 93% complete, only slightly below last year and the 5-year average of 96%. U.S. corn planting is only 67% complete, significantly below last year and the 5-year average of 96%.
- Reductions in commercial sales for delivery in 2018/19 offset increases this week and net U.S. wheat sales as of May 30 fell to -26,000 metric tons (MT). Year-to-date commercial sales of 25.8 million metric tons (MMT); the official 2018/19 total will be available soon.
- USDA also reported net sales of 502,000 MT for delivery in 2019/20, well above trade expectations of 100,000 to 400,000 MT. To date, commercial sales for delivery in 2019/20 total 4.23 MMT, double the total amount of new marketing year commercial sales booked at the same time last year.
- Click here to view the most recent USW Commercial Sales report.
- The June 6 Drought Monitor reported another week of heavy rains and localized flooding across parts of the Southern and High Plains to the Midwest, increasing concerns over HRW and SRW crop yields and quality. Excess rainfall continues to delay corn planting in many Midwestern states (see below). Moderate drought emerged in northern North Dakota and abnormally dry conditions impacted northwestern Minnesota and northeastern Montana. Looking ahead, moderate rains and cooler temperatures are expected from the Southern Plains to the Mid-Atlantic states while little to no rain is expected across most of the Northern Plains.
- According Agriculture and Agri-Food Canada, precipitation over the past 30 days in Saskatchewan, the country’s main wheat-growing province, was less than 40% of normal levels. Southern Alberta and Manitoba are also experiencing abnormally dry conditions which could negatively impact Canada’s 2019/20 wheat harvest.
- As of June 3, Ukraine’s Ministry of Agriculture reported spring grains planting at 100% complete. Total planted area reached 14.8 million hectares (36.6 million acres), in line with 2018 levels. Ukraine’s 2019 grain harvest could exceed last year’s record of 70.0 MMT if favorable weather continues through the summer.
- Despite recent trade tensions, China imported more wheat from Canada in marketing year 2018/19 than it has in the past 14 years. According to Canadian Grain Commission data, Canada shipped 1.5 MMT of wheat to China between August 2018 and April 2019, more than double the export pace in 2017/18. Retaliatory tariffs have all but closed the Chinese market for U.S. wheat and opened new opportunities for Canadian wheat exports.
Baltic and U.S. Dollar Indices
- This week, the Baltic Dry Index (BDI) climbed 42 points to close at 1,138. This marks the BDI’s highest value since mid-January.
- Week-over-week, the U.S. Dollar Index fell from 97.75 to 96.56.
Source: U.S. Wheat Associates