This week, harvest progress pressured soft red winter (SRW) and hard red winter (HRW) futures prices while concerns of increasing dryness in North Dakota and southern Canada (see below) supported hard red spring (HRS) futures prices. CBOT SRW futures fell 21 cents to close at $4.81/bu. KCBT HRW futures lost 21 cents to end at $4.28/bu. MGE HRS futures gained 11 cents to close at $5.24/bu. CBOT corn futures added 2 cents to end at $3.32/bu. CBOT soybean futures gained 5 cents to close at $8.76/bu.
Minimal elevation capacity in the Center Gulf due to increased export demand for corn, soybeans and sorghum supported Gulf SRW, HRW and HRS export basis for July and August deliveries. Pacific Northwest (PNW) HRW and HRS export basis are unchanged on the week, but PNW HRW protein premiums narrowed from last week. PNW soft white wheat (SW) export prices fell for nearby and deferred deliveries on reduced export demand.
Total U.S. winter wheat ratings fell slightly from last week to 50% good to excellent on persistent dryness across the Southern Plains (see below). Total crop ratings in Kansas remained the same at 42% good to excellent. Nebraska crop ratings fell significantly from last week’s 66% good to excellent to 43% this week. In Colorado, winter wheat rated as good to excellent fell slightly from last week to 31% good to excellent.
The new crop U.S. HRW harvest is in full swing from Texas to central Kansas and the SRW harvest is well underway from Alabama to Virginia. According to USDA, as of June 15, 15% of the country’s total winter wheat area is harvested. Click here to read more about the 2020 U.S. wheat harvest.
Total U.S. spring wheat ratings fell slightly from last week to 81% good to excellent on worsening dryness across the Northern Plains. Total crop ratings in North Dakota fell from 84% good to excellent last week to 78% this week. Minnesota crop ratings increased 5 points from last week to 88% good to excellent this week. In South Dakota, spring wheat rated as good to excellent increased 6 points from last week to 70%.
This week’s commercial sales of 505,000 metric tons (MT) for delivery in 2020/21, through June 11, were up 87% from last week’s 270,000 MT and above trade expectations of 250,000 MT to 500,000 MT. Year-to-date commercial sales for delivery in 2020/21 total 6.33 million metric tons (MMT), , in line with last year. USDA expects all 2020/21 U.S. wheat exports will total 25.9 MMT down 2% from 2019/20, if realized.
Hot, dry weather increased drought stress across the western Great Plains. Abnormal dryness spread in western South Dakota, western Nebraska, central Kansas and western Oklahoma. In the Northern Plains, abnormal dryness spread in eastern Montana, western South Dakota and central North Dakota. Moderate drought spread in central Minnesota. Looking ahead, moderate to heavy showers are expected across parts of the Southern Plains which could delay the winter wheat harvest in some areas. Beneficial precipitation is forecast to alleviate dryness across North and South Dakota.
According to the Canadian Drought Monitor, as of May 31, abnormal dryness and moderate drought persist in spring wheat producing areas in southeastern Saskatchewan. Looking ahead, DTN predicts beneficial precipitation will help emerging crops in Alberta and Saskatchewan. USDA expects total Canadian wheat production will reach 34.0 MMT in 2020/21, up 5% from last year and 10% more than the 5-year average.
Argentinian wheat planting for the 2020/21 season jumped from last week to 58% complete, 11 points ahead of the 5-year average. The Buenos Aires Grain Exchange cut Argentina’s total wheat planted area estimate by 2% to 6.7 million hectares (16.5 million acres) on abnormally dry weather in the country’s northern regions. If realized, total wheat planted area would still surpass last year by 2%.
On June 17, Germany’s association of farm cooperatives reduced the country’s total wheat production forecast to 22.2 MMT, down 4% from last year, if realized, on persistent spring dryness.
Russia’s Ministry of Agriculture announced it would not impose grain export quotas for the first half of marketing year 2020/21, but that it plans to implement quotas from January to June 2021. The extent of these grain export quotas for the second half of the marketing year is unknown.
The Australian Bureau of Agriculture and Resource Economics (ABARES) increased the country’s 2020/21 wheat production estimate to 26.1 MMT, 13% more than the 10-year average, if realized, as beneficial moisture through the planting season pulled the country out of a three-year drought. ABARES forecasts total Australian wheat exports will reach 16.5 MMT in 2020/21, up 79% on year, if realized.
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, jumped 65% on the week to end at 1,527, the highest since early December 2019.
The U.S. Dollar Index increased from last week’s 97.31 to close at 97.62.