U.S. Wheat Weekly Report

May 29, 2020

Short covering, forecasts for hot, dry weather across the Great Plains and broader strength in the grain matrix supported all wheat futures prices week-over-week. CBOT soft red winter (SRW) wheat futures gained 12 cents to close at $5.21/bu. KCBT hard red winter (HRW) wheat futures gained 26 cents to end at $4.70/bu. MGE hard red spring (HRS) wheat futures added 12 cents on the week to close at $5.25/bu. CBOT corn futures added 8 cents to end at $3.23/bu. CBOT soybean futures gained 7 cents to close at $8.41/bu.

Beneficial precipitation across the High and Southern Plains supported total U.S. winter wheat crop ratings this week. As of May 26, 54% of the country’s winter wheat is in good to excellent condition, up from last week’s 52%. Total crop ratings in Kansas were steady week-over-week at 40% good to excellent. Colorado crop ratings increased from 28% good to excellent last week to 32% this week. In Oklahoma, winter wheat rated as good to excellent jumped from 53% last week to 60% this week.

Minimal commercial elevator selling supported Gulf HRW export basis for June and July deliveries. Gulf and Pacific Northwest (PNW) HRW export basis remained steady week-over-week.

Dry weather across the Northern Plains helped boost U.S. spring wheat planting week-over-week. Farmers have now planted 81% of intended spring wheat area, up significantly from last week’s 60% but behind the 5-year average of 90%.

The new crop U.S. wheat harvest is underway in south Texas and U.S. Wheat Associates (USW) will publish its first “Harvest Report” for marketing year 2020/21 on Friday, May 29. USW Harvest Reports are published every Friday afternoon, Eastern Daylight Time, throughout the season with harvest progress, crop conditions and current crop quality for U.S. HRW, SRW, HRS, SW and durum.

This week’s commercial sales of 210,000 metric tons (MT) for delivery in 2019/20, through May 21, were up 19% from last week’s 176,000 MT and within trade expectations of 50,000 MT to 300,000 MT. Year-to-date commercial sales for delivery in 2019/20 total 24.8 million metric tons (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.

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 June 11, 2020.

This week’s commercial sales for delivery in 2020/21, through May 21, totaled 496,000 MT. Year-to-date commercial sales for delivery in 2020/21 total 3.03 MMT, 19% behind last year’s new marketing year pace.

Rain across parts of the High and Southern Plains helped some HRW production areas but missed the Oklahoma Panhandle, areas of eastern Colorado and northwestern Kansas. Some storms kept moderate to extreme drought from worsening in southwest Kansas. Short-term moderate drought persisted this week in southwest North Dakota and far northwest South Dakota. Precipitation fell across much of Montana and in Idaho, northeast Oregon and southeast Washington to help reduce moisture deficits.

The European Commission sharply lowered its forecast for non-durum wheat production in the European Union 27 in 2020/21 to 121.5 MMT from 125.8 million estimated a month ago. If realized that would be 7% less than the EU’s 130.8 MMT produced in 2019/20. Reports cited very dry, warm weather. For example, France AgriMer reported on May 25 that 56% of soft wheat was rated good or excellent, the poorest since 2011 when the same ratings stood at 24% during a severe spring drought. The Commission also lowered its expectation for EU-27 exports for 2020/21 by 5% to 26.5 MMT.

The dry conditions in the EU extend to Ukraine and traders there now expect less wheat production and, as a result, expect exports to decline from 20.5 MMT in 2019/20 to about 18 MMT in 2020/21.

Russian agricultural consultancy SovEcon recently pegged the country’s 2020/21 wheat export potential at 36.8 MMT based on strong crop conditions there and lower expected EU-27 production. If realized that would the second largest annual export volume since Russia exported 40.5 MMT of wheat in 2017/18.

Stats Canada’s May production report estimates Canadian farmers will plant 25.4 million acres (1.03 million hectares) of wheat including durum in 2020, up 3.3% from 2019. The government agency expects spring wheat planted area to remain steady at 18.8 million acres (7.6 million hectares) and durum area to reach 5.2 million acres (2.1 million hectares), which is a 7% increase over 2019/20.

Argentine wheat planting for the 2020/21 season stands at 13.4%, the Buenos Aires Grains Exchange said in its weekly crop report. Production is now estimated at 21.0 MMT from a planted area of 6.8 million hectares (16.8 million acres). However, farmers there are racing a dry spell to seed their wheat.

The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials like grains, coal and iron ore, fell slightly from last week’s close to end at 489.