June 14, 2019
- Wheat futures prices ended mixed this week on varied weather conditions across the United States. Excessive rains in the Midwest and parts of the Southern Plains continue to delay winter wheat harvests and raise concerns over crop qualities while warm, dry conditions in the Northern Plains boosted spring wheat planting week-over-week. Soft red winter (SRW) July futures gained 34 cents over last week to close at $5.38/bu and hard red winter (HRW) July futures gained 27 cents to end at $4.76/bu. Hard red spring (HRS) futures lost 5 cents week-over-week to close at $5.63/bu. CBOT July corn futures gained 37 cents to end at $4.53/but on extremely wet planting conditions (see below). CBOT July Soybean futures gained 40 cents to close at $8.97/bu.
- Export basis for HRW and export prices for soft white (SW) wheat out of the Pacific Northwest remained high and steady week-over-week for June and July deliveries. Limited farmer selling offset limited export demand. Gulf HRS export basis for nearby and deferred deliveries remained high this week due to delayed rail shipments. Limited elevation capacity and delayed harvest conditions supported HRW export basis for July delivery out of the Gulf. 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 (see below) elevated Gulf SRW export basis for June and July deliveries.
- In its June World Agricultural Supply and Demand (WASDE) report, USDA raised its estimate of U.S. domestic wheat use from 30.5 MMT to 32.0 MMT. If realized, total domestic use in 2019/20 would jump 10% over 2018/19 levels on increased human consumption and feed wheat usage. Total global consumption is forecast to increase 4% year-over-year.
- USDA’s June 10 Crop Progress report rated 64% of U.S. winter wheat in good or excellent condition, up significantly from last year’s 38%. U.S. winter wheat harvest is only 4% complete compared to 13% last year and the 5-year average of 10%. U.S. spring wheat planting is 97% complete this week. U.S. corn planting made strong progress over last week, increasing to 83% complete, still below last year and the 5-year average of 99%.
- Net U.S. wheat sales as of June 6 of 325,000 metric tons (MT) for delivery in 2019/20 were down 35% from last week’s 502,000 MT but in line with trade expectations of 250,000 MT to 450,000 MT. Year-to-date commercial sales of 6.25 million metric tons (MMT) are 36% ahead of last year’s pace. USDA expects 2019/20 exports to total 24.5 MMT.
- Click here to view the most recent USW Commercial Sales report.
- The June 13 Drought Monitor reported another week of rains, flooding and overly-saturated soils in parts of the Midwest. According to the National Oceanic and Atmospheric Administration, the past 12 months have been the wettest on record for the Upper Midwest and regions of the Ohio Valley, where a significant portion of the country’s SRW is grown. Beneficial rains fell in the eastern plains of Colorado, Wyoming and Montana while excessive rainfall delayed harvest in south-central Kansas and north-central Oklahoma. Across the Northern Plains, abnormal dryness spread further west into northern Montana and further east into northern Minnesota. The area under moderate drought in northern North Dakota grew significantly this week. Looking ahead, cooler temperatures and moderate to heavy rainfall are expected across the parts of the Southern Plains and Midwest.
- On June 11, the Australian Bureau of Agricultural and Resource Economics (ABARES), reduced its 2019/20 wheat production estimate from 23.9 MMT to 21.2 MMT as eastern regions with low soil moisture suffer their third year of continuous drought.
- SovEcon, the leading agriculture consultancy in Russia, cut its wheat production forecast from 82.6 MMT to 82.2 MMT as dry conditions spread throughout the country. In its June WASDE report, USDA raised Russian wheat production in 2019/20 from 77.0 MMT to 78.0 MMT. According to the Russian Ministry of Agriculture, spring wheat planting is 98% complete at 11.9 million hectares (29.4 million acres).
- According to Stratégie Grains, European Union (EU) soft wheat (non-durum) exports are forecast at 22.1 MMT, down from the May estimate of 23.2 due to greater pressure from increased exportable supplies in Ukraine.
- Ukraine’s main agriculture consultancy, ProAgro, revised its 2019 grain (including corn, wheat and barley) harvest forecast from 70.6 MMT last month to 71.3 MMT this month on favorable growing conditions.
- Argentina’s grain exchange, the Rosario Board of Trade, increased its forecast for the country’s wheat harvest from 19.5 MMT to 22.0 MMT.
Baltic and U.S. Dollar Indices
- The Baltic Dry Index fell 6% from last week to close at 1,062.
- The U.S. Dollar Index increased from last week’s 96.54 to end at 97.07.
Source: U.S. Wheat Associates