October 11, 2019
- All wheat futures prices rose week-over-week on short covering and market optimism about U.S.-China trade talks involving more Chinese imports of U.S. agricultural products. Soft red winter (SRW) December futures gained 17 cents from last week to close at $5.08/bu and hard red winter (HRW) December futures gained 15 cents to close at $4.19/bu. Hard red spring (HRW) December futures gained 12 cents to end at $5.48/bu. CBOT December corn futures gained 13 cents over last week to close at $3.98/bu. CBOT January soybean futures gained 20 cents to end at $9.50/bu.
- Crop quality concerns due to excessive rainfall at harvest and minimal farmer and elevator selling supported Pacific Northwest (PNW) and Gulf HRS export basis week-over-week for October and November deliveries. Gulf HRW export basis rose over last week on minimal farmer selling and the potential for increased high protein winter wheat demand due to HRS crop quality concerns. The protein premium spread between HRW 11.0 (12% moisture basis) and HRW 12.0 out of the Gulf increased from 35 cents last week to 45 cents this week. News of reduced 2019 SRW production from the October World Agricultural Supply and Demand Estimates (WASDE) report (see below) and crop quality concerns supported SRW export basis for nearby deliveries. News of reduced club wheat planted area and crop quality concerns on unharvested club wheat supported western white (WW) wheat premiums week-over-week.
- Heavy, persistent precipitation, including significant snowfall this week in North Dakota and Montana, has all but ended the 2019 HRS harvest. On Oct. 7, USDA reported spring wheat harvest at 91% complete, compared to 90% last week and the 5-year average of 99%. U.S. winter wheat is 52% planted compared to 55% last year and the 5-year average of 53%.
- In its October WASDE report USDA reduced its 2019/20 HRW exports forecast by 400,000 MT to 10.0 MMT and its HRS exports forecast by 270,000 MT to 9.94 MMT. The 2019/20 SRW production forecast fell 7% from the September forecast to 6.5 MMT in October.
- Net U.S. wheat sales of 522,000 metric tons (MT) as of Oct. 3 were 59% greater than last week’s 328,000 MT and in line with trade expectations of 300,000 to 600,000 MT. Year-to-date commercial sales of 13.4 million metric tons (MMT) are 15% ahead of last year’s pace. USDA currently forecasts 2019/20 U.S. wheat exports will total 25.9 MMT, 1% more than 2018/19, if realized.
- Click here to view the most recent USW Commercial Sales report.
- The U.S. Drought Monitor indicates that drought is increasing in the Southeast and southern Midwest SRW production regions. Warm, dry weather continued in the western Great Plains and areas under abnormal dryness and moderate drought spread in southwestern Kansas and southeastern Colorado. Cooler temperatures, widespread precipitation and the first freeze of the season were reported across the northern and eastern Great Plains. Recent precipitation alleviated areas under abnormal dryness and moderate drought from the Idaho Panhandle to northeast Washington, where much of the country’s soft white wheat is grown.
- On Oct. 10, the Buenos Aires Grains Exchange reduced Argentina’s 2019/20 wheat harvest estimate from 21.0 MMT to 19.8 MMT on dry weather concerns in the central and southern regions of the country’s agricultural belt. On Oct. 10, USDA estimated Argentina will produce 20.5 MMT in 2019/20, unchanged from its September forecast.
- As of Oct. 7, Russia’s Ministry of Agriculture reported the country’s 2019 wheat production now totals 76.3 MMT and is 96% complete at 66.4 million acres (26.9 million hectares) harvested. The Ministry estimates Russia will harvest 78.0 MMT of wheat in 2019. Russia’s Grain Union, a farmer lobbying group, estimates the country’s 2019/20 wheat exports will total 34.0 MMT, down 5% from last year but 11% higher than the 5-year average of 30.7 MMT, if realized. Russian farmers have sown 33.1 million acres (13.4 million hectares) of winter grains for harvest in 2020, 77% of the total expected area.
- According to Reuters, European Union (EU) 2019/20 soft (non-durum) wheat exports totaled 6.65 MMT as of Oct. 6, 38% higher than this time last year. USDA currently forecasts total 2019/20 EU wheat exports will reach 28.0 MMT, 17% higher than 2018/19 levels but 3% below the 5-year average of 28.9 MMT, if realized.
Baltic and U.S. Dollar Indices
- The Baltic Dry Index rose 9% over last week to close at 1,929.
- The U.S. Dollar Index fell from last week’s 98.81 to 98.66 this week.
Source: U.S. Wheat Associates