August 9, 2019
- Technical selling pressured hard red spring (HRS) and hard red winter (HRW) futures prices week-over-week while concerns over global feed supply levels ahead of USDA’s World Agricultural Supply and Demand Estimates (WASDE) report supported soft red winter (SRW) futures prices. SRW futures gained 9 cents over last week to close at $4.99/bu. HRW futures lost 5 cents to end at $4.17/bu and HRS futures lost 2 cents from last week to close at $5.20. CBOT corn futures gained 11 cents to close at $4.10/bu. CBOT soybean futures gained 23 cents to end at $8.79/bu.
- News of a USDA tender for 130,000 metric tons (MT) of white wheat for shipment to Yemen supported soft white wheat export prices out of the Pacific Northwest for nearby and deferred delivery months. Minimal export demand pressured PNW HRS export basis for August deliveries. Gulf HRS export basis fell week-over-week on the expectation of large a spring wheat harvest in the Northern Plains. Minimal farmer and elevator selling supported Gulf HRW export basis and tight domestic supplies supported Gulf SRW export basis for August and September deliveries.
- On August 5, USDA reported winter wheat harvest at 82% complete compared to 89% last year and the 5-year average of 92%. Winter wheat harvest in Idaho and Washington, where a majority of the country’s SW wheat is grown, is significantly behind the normal harvest cadence. Idaho winter wheat is only 15% complete compared to 45% last year and the 5-year average of 46%. Washington winter wheat is only 35% complete compared to 58% last year and the 5-year average of 46%. U.S. spring wheat harvest is 2% complete compared to 12% last year and the 5-year average of 14%. USDA reported 73% of U.S. spring wheat in good to excellent condition, in line with last week’s estimate.
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Commercial Sales
- Net U.S. wheat sales as of August 1 of 488,000 MT for delivery in 2019/20 were 27% higher than last week’s 383,000 MT and in line with trade expectations of 250,000 to 500,000 MT. Year-to-date commercial sales of 9.34 million metric tons (MMT) are 25% ahead of last year’s pace. USDA forecasts 2019/20 U.S. wheat exports will total 25.9 MMT, 6% higher than 2018/19, if realized.
- Click here to view the most recent USW Commercial Sales report.
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- For the week ending on August 8, the U.S. Drought Monitor reported the significant expansion of abnormally dry areas across the southern half of the Great Plains and throughout the lower Ohio River Valley. Abnormally to moderately dry conditions persist in northern North Dakota, where much of the country’s spring wheat is grown. Looking ahead, moderate to heavy rainfall is expected across northern Montana, the Dakotas, the central Plains, and parts of the PNW. Extremely dry weather and warmer than average temperatures will continue across the Southern Plains from central Texas to central Kansas.
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- According to recent Egyptian General Authority for Supply Commodities (GASC) tender results, Russia’s lowest wheat FOB offers are increasing steadily as adverse weather conditions weigh on Russian wheat production estimates. Between June 11 and August 6, the lowest Russian wheat FOB offer increased 4% from $197/MT to $204/MT, respectively. You can read more about Russian wheat export prices in U.S. Wheat Associates (USW)’s recent Wheat Letter “Reduced Wheat Production Estimates Boost Russian Export Prices.”
- On August 5, Ukraine’s Agriculture Ministry reported the country’s wheat harvest stands at 25.8 MMT or 93% complete. Ukraine’s total 2019 grains harvest is expected to reach 70.0 MMT, in line with 2018/19 levels, if realized.
- According to Reuters, Morocco’s Agriculture Ministry recently reduced the country’ grains harvest forecast from 6.10 MMT in April to 5.20 MMT due to summer rainfall shortages. If realized, Moroccan production would fall 49% from 2018/19 levels. Moroccan farmers are now expected to harvest 2.68 MMT of soft (non-durum) wheat and 1.34 MMT of durum wheat in 2019. According to USDA, Moroccan wheat imports are expected to reach 4.80 MMT in 2018/19, 17% above last year’s levels and 11% higher than the 5-year average of 4.34 MMT, if realized.
- On August 6, France’s Farm Ministry raised its soft (non-durum) wheat harvest forecast by more than 3% from 37.0 MMT in July to 38.2 MMT in August. If realized, French soft wheat harvest would be 12% higher in in 2019 than in 2018, despite the country’s recent record-breaking heatwave.
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Baltic and U.S. Dollar Indices
- The Baltic Dry Index fell 4% from last week to close at 1,720.
- U.S. Dollar Index fell from last week’s 98.07 to end at 97.49.
Source: U.S. Wheat Associates