July 12, 2019
- All wheat futures prices rose week-over-week after USDA reduced its global wheat production and ending stocks estimates in its monthly supply and demand report (see below). Soft red winter (SRW) September futures gained 20 cents to close at $5.23/bu and hard red winter (HRW) September futures jumped 35 cents to end at $4.67/bu. Hard red spring (HRS) September futures rose 6 cents to close at $5.43/bu. CBOT September corn futures gained 35 cents to end at $4.54/bu. CBOT August soybean futures gained 33 cents to close at $9.19/bu.
- Minimal farmer selling supported HRS and HRW export basis out of the Pacific Northwest (PNW) while limited export demand pressured HRS and HRW export basis out of the Gulf for August and September deliveries.
- USDA’s July 8 Crop Progress report rated 64% of U.S. winter wheat in good to excellent condition, up significantly from last year’s 37%. U.S. winter wheat harvest is only 47% complete compared to last year and the 5-year average of 61%. U.S. spring wheat is only 56% headed compared to 78% last year and the 5-year average of 73%. USDA reported 78% of U.S. spring wheat in good to excellent condition, up slightly from last week’s 75%.
- In the July World Agricultural Supply and Demand Estimates (WASDE) report, USDA increased its 2019/20 U.S. wheat production estimate from 51.2 million metric tons (MMT) in June to 52.2 MMT. The U.S. wheat exports forecast increased from 24.5 MMT in June to 25.9 MMT in July. HRW exports are expected to increase 18% over 2018/19 levels to 10.6 MMT.
- Net U.S. wheat sales as of July 4 of 284,000 metric tons (MT) for delivery in 2019/20 were 3% higher than last week’s 277,000 MT and in line with trade expectations of 250,000 to 500,000 MT. Year-to-date commercial sales of 7.51 million MMT are 23% ahead of last year’s pace.
- Click here to view the most recent USW Commercial Sales report.
- According to the July 11 Drought Monitor, abnormal dryness spread into southeastern Washington and north-central Oregon where much of the country’s soft white (SW) wheat is grown. Moderate rainfall alleviated areas under abnormal dryness in northeastern Montana and northwestern Minnesota while dry conditions, including moderate to severe drought, continued to impact north central North Dakota. Looking ahead, a tropical storm system is forecast to develop in the Gulf of Mexico. The storm system is expected to lower temperatures and increase rainfall across the southeastern region of the Southern Plains to the lower half of the Mississippi River Valley. Moderate rainfall is also expected across parts of the Northern Plains.
- The July WASDE report decreased its 2019/20 global ending stocks forecast from 294 MMT in June to 286 MMT on reduced production forecasts due to hot, dry weather in major exporting countries (see below). Global production is expected to reach 771 MMT, the highest on record, if realized, but slightly below the June estimate of 780 MMT.
- USDA reduced its 2019/20 Russian, Ukrainian and Australian wheat production estimates from its June WASDE report. USDA expects Russian production to reach 74.2 MMT, down from 78.0 MMT in June. Ukrainian wheat production is expected to total 29.0 MMT, down from June’s estimate of 30.0 MMT. USDA forecasts Australian wheat production at 21.0 MMT, down from its estimate of 22.5 MMT in June.
Baltic and U.S. Dollar Indices
- The Baltic Dry Index (BDI) jumped 26% from last week to close at 1,816. This marks the BDI’s highest value in more than 5 years.
- The U.S. Dollar Index increased from last week’s 96.73 to end at 96.80.
Source: U.S. Wheat Associates