July 2, 2019
- All wheat futures prices fell between Friday June 28 and Tuesday July 2 in the holiday-shortened week due to beneficial U.S. winter wheat harvest weather and spillover pressure from the drop in CBOT corn futures prices following USDA’s unexpectedly high June estimate for U.S. corn planted area. Soft red winter (SRW) September futures fell 24 cents from Friday to close at $5.03/bu and hard red winter (HRW) September futures fell 29 cents to end at $4.32/bu. Hard red spring (HRS) September futures fell 18 cents to close at $5.36/bu. CBOT September corn futures lost 6 cents to end at $4.19/bu. CBOT August Soybean futures lost 25 cents to close at $8.86/bu.
- This week, domestic rail shipment delays supported HRS export basis out of the Gulf and Lakes for July delivery. Limited elevation capacity kept Gulf SRW export basis for July delivery high but steady, while strong harvest progress and better inland waterway logistics pressured SRW export basis for August and September deliveries. Minimal farmer selling offset limited export demand in the Pacific Northwest, holding HRS export basis, HRW export basis and soft white wheat (SW) export prices constant week-over-week.
- USDA’s July 1 Crop Progress report rated 63% 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. winter wheat harvest is only 30% complete compared to 50% at the same date last year and the 5-year average of 48%. U.S. spring wheat is only 25% headed compared to 55% last year and the 5-year average of 52%. USDA reported 75% of U.S. spring wheat in good to excellent condition, down slightly from last year’s 77%.
- IKAR, a Russian agriculture consultancy, reduced its 2019 Russian wheat production estimate from 80.0 million metric tons (MMT) to 79.3 MMT following three weeks of hot, dry weather in the country’s southern region. Based on dry weather concerns, Russian FOB prices for 12.5% protein wheat (dry moisture basis) increased to $195/MT at the end of last week compared to $194/MT the week prior.
- According to Russia’s Ministry of Agriculture, the country harvested 5.30 MMT of wheat by June 28 compared to 3.0 MMT the year prior. Russian wheat yields average 4.38 MT/ hectare (65.2 bu/acre) compared to 4.03 MT/hectare (60.0 bu/ acre) in 2018.
- Stratégie Grains predicts 2019 European Union (EU) soft (non-durum) wheat production will reach 143 MMT. That is slightly less than the May estimate of 144 MMT due to drought stress in Northeast Europe but significantly higher than the 2018 harvest of 127 MMT.
- According to APK-Inform, a Ukrainian agriculture consultancy, the country’s wheat exports are expected to rise to 16.2 MMT from the previous estimate of 15.8 MMT on increased production due to favorable growing conditions.
Baltic and U.S. Dollar Indices
- The Baltic Dry Index (BDI) jumped 41 points from Friday’s close to end at 1,381. This marks the BDI’s highest value in 7 months.
- U.S. Dollar Index rose from 96.13 on June 28 to 96.75 on July 2.
Source: U.S. Wheat Associates