May 22, 2020
- Short-covering midweek supported hard red spring (HRS) and soft red winter (SRW) futures prices while new harvest pressure in Texas and Oklahoma pressured hard red winter (HRW) futures prices week-over-week. MGE HRS futures gained 8 cents to close at $5.09/bu. CBOT SRW futures added 7 cents to end at $5.13/bu. KCBT HRW futures lost 8 cents to close at $4.44/bu. CBOT corn futures fell 1 cent to end at $3.18/bu. CBOT Soybean futures lost 5 cents to end at $8.33/bu.
- Slow export demand and new harvest pressure softened SRW export basis for June and July deliveries. Beneficial precipitation in dry regions of the Pacific Northwest (PNW) (see below) pressured soft white wheat export prices from last week. HRS export basis in both the Gulf and PNW are unchanged week-over-week.
- Despite recent precipitation across parts of the Southern and High Plains (see below), USDA reduced the total U.S. winter wheat crop rated as good to excellent from last week’s 53% to 52% this week. Total crop ratings increased in Kansas from 38% good to excellent on May 11 to 40% on May 18. Colorado’s total crop rating fell significantly from 35% good to excellent last week to 28% this week. In Oklahoma, winter rated as good to excellent fell from 56% last week to 53% this week.
- Unfortunately, with concern over the COVID-19 pandemic, the annual Wheat Quality Council (WQC) Hard Winter Wheat tour was cancelled. Instead, Kansas Wheat and Kansas State University Research and Extension, in conjunction with the Kansas Department of Agriculture and other industry partners, held a virtual tour. Based on a limited sample size, on May 21, the tour participants estimated the 2020/21 Kansas HRW wheat crop potential at 7.73 MMT, 7% below USDA’s May 12 estimate of 8.33 MMT and 16% below last year’s production volume of 9.20 MMT. Persistent drought conditions and freeze damage across the state, particularly in the west were cited.
- U.S. spring wheat planting for fall 2020 harvest is only 60% complete, slightly behind last year’s 63% and well behind the 5-year average of 80% complete. Across much of the Northern Plains, cool temperatures, overly wet field conditions and delayed field work from the 2019 harvest are slowing farmers down.
- This week’s commercial sales of 176,000 metric tons (MT) for delivery in 2019/20, through May 14, were down 14% from last week’s 203,000 MT but in line with trade expectations of 100,000 to 250,000 MT. Year-to-date commercial sales for delivery in 2019/20 total 24.6 MMT, 3% ahead of last year’s pace. USDA’s latest forecast of total 2019/20 U.S. wheat exports is 26.4 MMT, up 3% from last year, if realized. Adjustments in commercial sales are often made as the marketing year ends.
- This week’s commercial sales for delivery in 2020/21, through May 14, totaled 254,000 MT. Year-to-date commercial sales for delivery in 2020/21 total 2.54 MMT, 24% behind last year’s new marketing year pace.
- The USW Commercial Sales Report now features new marketing year export sales information by class, destination and marketing year. USW will continue to publish new marketing year information until May 31, 2020.
- Click here to view the most recent USW Commercial Sales report.
U.S. Drought Monitor
- Beneficial precipitation fell in parts of eastern Colorado and western Kansas this week, but the Drought Monitor still shows severe to extreme drought across that region. Favorable rainfall was also reported in dry areas in eastern Washington and eastern Oregon, boosting yield potential in that region after an extremely dry spring. Moderate drought spread in southwestern Oklahoma and abnormal dryness spread into eastern Nebraska. Looking ahead, more beneficial precipitation is expected in areas across the central and southern Great Plains. Rainfall across the Northern Plains could continue to slow spring wheat planting.
- According to the Russian Ministry of Agriculture, Russian spring wheat planting is now 71% complete at 9.30 million hectares (23.0 million acres). IKAR, a Russian agriculture consultancy, cut its forecast of 2020 Russian wheat production from 77.2 MMT o 76.2 MMT on persistent dryness in several of the country’s southern provinces. USDA estimates Russia will produce 77.0 MMT of wheat this year, up 5% from 2019/20 and 6% more than the 5-year average, if realized.
- Kazakhstan’s Ministry of Agriculture is working to extend the list of regions able to export wheat to China, namely the central-western province of Aktobe and the eastern-most province of East Kazakhstan. According to Trade Data Monitor, Kazakhstan exported 507,000 MT of wheat to China in 2018/19.
- Dryness persists in northern France, northern Germany and England, countries where the most European Union (EU) wheat is grown. According to DTN, beneficial precipitation is expected to cover the region in the coming week.
- The State Statistical Service of Ukraine estimates the country’s wheat ending stocks have fallen to a nine-year low of 2.80 MMT following a significant uptick in exports for the month of April on worries of a possible export ban. Ukrainian wheat exports for the month of April totaled 1.2 MMT, up 33% year-over-year. Ukrainian wheat exports now total 19.1 MMT, up 34% from last year.
Baltic and U.S. Dollar Indices
- The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials like grains, coal and iron ore, gained 21% from last week to close at 494.
- The U.S. Dollar Index fell from last week’s 100 to end at 99.77.
Source: U.S. Wheat Associates