June 21, 2019
- All wheat futures prices fell week-over-week following losses in the corn market on profit-taking and expectations of much needed warmer, dryer weather in the Midwest. Soft red winter (SRW) July futures lost 12 cents week-over-week to end at $5.26/bu and hard red winter (HRW) July futures lost 24 cents to close at $4.52/bu. Hard red spring (HRS) July futures lost 27 cents to end at $5.36/bu. CBOT July corn futures lost 11 cents to close at $4.42/bu. CBOT July soybean futures gained 6 cents to end at $9.03/bu.
- Beneficial rains in spring wheat-producing states pressured HRS export basis and limited export demand pressured HRW export basis for July and August deliveries out of the Pacific Northwest (PNW). Out of the Gulf, limited elevation capacity supported HRW export basis for nearby and deferred deliveries. The protein premium spread between HRW 11.0 and HRW 12.0 (12% moisture basis) increased week-over-week in both the PNW and the Gulf on the expectation of a low protein harvest. 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) kept Gulf SRW export basis steady and high for July and August deliveries.
- USDA’s June 17 Crop Progress report rated 65% of U.S. winter wheat in good or excellent condition, up significantly from last year’s 39%. U.S. winter wheat harvest is only 8% complete compared to 25% last year and the 5-year average of 20%. U.S. spring wheat planting is complete. 95% of U.S. spring wheat has emerged and 77% of it is in good to excellent condition compared to 78% last year. U.S. corn planting made strong progress over last week, increasing to 92% complete, still below last year and the 5-year average of 100%.
- Net U.S. wheat sales as of June 13 of 188,000 metric tons (MT) for delivery in 2019/20 were down 42% from last week’s 325,000 MT and below trade expectations of 200,000 to 500,000 MT. Year-to-date commercial sales of 6.34 million metric tons (MMT) are 27% 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 20 Drought Monitor reported another week of heavy rain across HRW-producing regions in the Central and Southern Plains and SRW-producing regions in the upper Mississippi River Valley and the Ohio River Valley. Across the Northern Plains, where durum and spring wheat are grown, abnormal dryness spread further west into north-central Montana and further east across northern Minnesota. This week, severe drought was introduced in north central North Dakota and areas under abnormal dryness and moderate drought spread across the state. Looking ahead, moderate to heavy rainfall is expected in northeastern Montana, north central North Dakota and across parts of the Southern Plains through the Midwest to the Ohio River Valley.
- On June 20, Russian agriculture consultancies, IKAR and SovEcon, reduced their forecasts for 2019/20 wheat production and exports on hot, dry growing conditions. Both expect production to reach 80.0 MMT compared to previous estimates of 80.2 MMT, still 11% higher than the 72.0 MMT produced in 2018/19. IKAR expects Russian exports to total 36.5 MMT, down from its previous estimate of 37.0 MMT. SovEcon reduced its export forecast from 38.2 MMT to 37.6 MMT.
- The Australian Bureau of Agricultural and Resource Economics reduced its wheat exports forecast from 14.2 MMT in March to 11.7 MMT on June 17 as drought persists in the country’s eastern territories.
- MARS, the European Union’s (EU) crop monitoring service, increased its soft (non-durum) wheat yield forecast from 6.05 MT/hectare (90.0 bu/acre) last month to 6.10 MT/hectare (90.8 bu/acre) this month due to beneficial rains across most wheat-producing regions in the EU. The new yield forecast for 2019/20 is 9% higher than the average yield in 2018/19 and 3% higher than the five-year average.
Baltic and U.S. Dollar Indices
- The Baltic Dry Index (BDI) jumped 10% week-over-week to end at 1,194. This marks the BDI’s highest value since early January.
- U.S. Dollar Index fell from last week’s 97.57 to 96.22.
Source: U.S. Wheat Associates