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- Wheat futures ended mixed week-over-week as limited export demand pressured hard red winter (HRW) and hard red spring (HRS) futures prices while short-covering supported soft red winter (SRW) futures prices. HRW December futures lost 3 cents to close at $4.04/bu. HRS December futures fell 11 cents from last week to end at $5.36/bu. SRW December futures gained 3 cents to close at $4.90/bu. CBOT December corn futures gained 13 cents to close at $3.85/bu. CBOT January soybean futures gained 3 cents to end at $9.30/bu.
- Crop quality concerns due to rain on late harvested and unharvested HRS fields and minimal farmer selling kept Pacific Northwest (PNW) and Gulf HRS export basis steady and high week-over-week. Minimal farmer selling due to low futures values supported PNW and Gulf HRW export basis for October and November deliveries. News of an unexpected white wheat sale to China (see below) boosted soft white (SW) wheat export prices in the PNW for nearby and deferred delivery months.
- Heavy, persistent rain has severely delayed the 2019 HRS harvest. On Sept. 30, USDA reported spring wheat harvest at 90% complete, compared to 100% last year and the 5-year average of 99%. U.S. winter wheat is 39% planted compared to 41% last year and the 5-year average of 38%.
- USDA released its Small Grains Summary on Sept. 30 noting that 2019/20 U.S. wheat production increased to 53.3 million metric tons (MMT), up 4 percent from last year due to significant improvements in yield despite lower planted area. Total area planted to wheat decreased 6% year-over-year to 45.2 million acres (18.3 million hectares) while the national average yield increased 8% from 2018/19 levels to 51.6 bu/acre (3.47 MT/hectare) in 2019/20.
- On Oct. 3, USDA confirmed sales of 130,000 MT of “white wheat to China.” It is not yet confirmed whether the buyer is a government agency or a private buyer. “We are glad for this purchase ahead of the latest round of trade discussions between the U.S. and China,” said Doug Goyings, USW Chairman and a wheat farmer from Paulding, Ohio. “It remains to be seen if this is the start of a return to steady purchases by China. In the long run, that is what our farmers need, along with good progress toward an agreement and continued support for the rules-based trading system that has given them access to more markets.”
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Commercial Sales
- Net U.S. wheat sales of 328,000 metric tons (MT) as of Sept. 26 were 16% greater than last week’s 283,000 MT and in line with trade expectations of 200,000 MT to 600,000 MT. Year-to-date commercial sales of 12.9 million metric tons (MMT) are 14% ahead of last year’s pace. USDA currently forecasts 2019/20 U.S. wheat exports will total 26.5 MMT, 4% more than 2018/19, if realized.
- Click here to view the most recent USW Commercial Sales report.
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- The U.S. Drought Monitor indicates that ongoing heat in the Southeast and southern Midwest SRW production regions is increasing drought conditions. Warm and dry conditions continued in the western Great Plains and areas under abnormal dryness spread in southwestern Kansas and southeastern Colorado while cooler temperatures and heavy precipitation were reported in the eastern Great Plains. Steady showers continue to eliminate drought conditions in western Washington and western Oregon. Looking ahead, precipitation and cooler than average temperatures are expected across the Pacific Northwest (PNW) and Great Plains.
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- According to Eduardo Sierra, meteorologist consultant to the Buenos Aries Grain Exchange, dry weather in Argentina could hurt the country’s 2019/20 wheat production. Sierra believes dryness impacting as much as 30% of the country’s wheat area could reduce Argentina’s wheat harvest 13% year-over-year to 17.0 MMT in 2019/20.
- Ukraine’s Ministry of Agriculture reported Ukrainian total wheat exports, as of Oct. 1, at 8.62 MMT, 61% higher than export levels a year ago. USDA estimates Ukraine will export 19.0 MMT of wheat in marketing year 2019/20, up 21% from 2018/19 levels, if realized. So far, all Ukrainian grain exports total 13.6 MMT, up 49% from this time last year. Ukrainian farmers have sown 8.69 million acres (3.52 million hectares) of winter grains for harvest in 2020, 48% of the total expected area.
- As of Oct. 4, Russia’s Ministry of Agriculture reported the country’s wheat harvest now totals 75.6 MMT compared to 69.7 MMT this time last year. The Ministry estimates Russia will harvest 78.0 MMT of wheat in 2019. Russian farmers have sown 25.4 million acres (10.3 million hectares) of winter grains for harvest in 2020, or 77% of total expected planted area.
- According to Reuters, wet weather delayed winter wheat planting in France this week. By Oct. 4, French farmers have only sown 1% of expected soft (non-durum) wheat area, unchanged from last week.
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Baltic and U.S. Dollar Indices
- The Baltic Dry Index fell 6% week-over-week to close at 1,757.
- The U.S. Dollar Index fell from last week’s 99.11 to close at 98.83.
Source: U.S. Wheat Associates