- A significantly lower U.S. corn planted area estimate and a slightly lower U.S. wheat planted area estimate between USDA’s March and June acreage reports (see below) supported all U.S. wheat futures prices week-over-week. September CBOT soft red winter (SRW) futures added 16 cents to end at $4.92/bu. September KCBT hard red winter (HRW) futures gained 6 cents to close at $4.34/bu. September MGE hard red spring (HRS) futures added 1 cent to end at $5.10/bu. CBOT corn futures added 24 cents to close at $3.43/bu. CBOT soybean futures gained 33 cents to end at $8.90/bu.
- All U.S. Wheat Associates (USW) basis and FOB prices for all classes of wheat for July delivery are now over the September 2020 (U20) wheat futures contracts.
- Reduced export demand pressured Gulf SRW export basis for July and August deliveries. Higher protein results from the 2020 winter wheat harvest in central and western Kansas narrowed Gulf HRW protein premium spreads week-over-week. Beneficial precipitation and abundant old crop exportable supplies pressured Pacific Northwest (PNW) HRS basis for July delivery. The approaching 2020 HRW harvest in PNW tributary states pressured HRW export basis for nearby and deferred deliveries. Minimal farmer selling and increased export demand supported PNW soft white wheat (SW) prices for July and August deliveries.
- According to USDA’s June Acreage Report, all wheat planted area for harvest in 2020 totaled 44.3 million acres, down from its March estimate of 44.7 million acres. USDA reports U.S. farmers planted 21.5 million acres of HRW, 5.63 million acres of SRW and 3.42 million acres of white winter wheat, 11.5 million acres of HRS and 1.50 million acres of durum. USDA reduced its corn planted area estimate by 5% from its March report to 92.0 million acres in June. Estimates for soybean planted area were relatively stable between March and June at 83.8 million acres.
- Despite sustained dryness in the Southern Plains, total U.S. winter wheat ratings remained stable on the week at 52% good to excellent. Total crop ratings in Kansas improved from last week to 46% good to excellent. Montana winter wheat ratings increased two points from last week to 87% good to excellent. In Colorado, winter wheat rated as good to excellent increased 1 point from last week to 30% this week.
- The new crop U.S. HRW reached the Kansas and Nebraska border this week and the SRW harvest is well underway from Arkansas to Alabama. According to USDA, as of June 29, 41% of the country’s total winter wheat area is harvested. Click here to read more about the 2020 U.S. wheat harvest.
- Despite localized precipitation across the Northern Plains, the region remains extremely dry. U.S. spring wheat ratings fell 6 points from last week to 69% good to excellent. Total crop ratings in North Dakota fell from 69% good to excellent last week to 59% this week. Minnesota spring wheat ratings were relatively stable week-over-week at 80% good to excellent. In Montana, spring wheat rated as good to excellent fell 4 points from last week to 81%.
- This week’s commercial sales of 414,000 metric tons (MT) for delivery in 2020/21, through June 25, were down 20% from last week’s 519,000 MT but within trade expectations of 250,000 MT to 600,000 MT. Year-to-date commercial sales for delivery in 2020/21 total 7.27 million metric tons (MMT), 1% ahead of last year’s pace. USDA expects all 2020/21 U.S. wheat exports will total 25.9 MMT, down 2% from 2019/20, if realized.
- Click here to view the most recent USW Commercial Sales report.
U.S. Drought Monitor
- High winds and above normal temperatures have further degraded conditions in parts of Oklahoma and western Texas where wheat harvest is over. On the western side of Kansas, some areas received 1.5 inches of rain but for much of the High Plains including Nebraska, little to no rain increased the areas considered abnormally dry. In the Dakotas, rain helped reduce areas of moderate drought. Rain in eastern Washington and Oregon led to slight reductions in drought conditions while western Idaho saw its conditions rapidly improve following substantial rainfall there.
- Vedmosti Daily, a Russian publication, stated that if Russia’s grain harvest is more 125.0 MMT with an export potential of at least 45.0 MMT, the Russian government may not apply a grain export quota for the 2020/21 trade season.
- Ukraine’s government and unions have agreed to their annual grain trade rules. However, they did not agree on an export quota, instead agreeing to make that decision at their Aug. 10, 2020, meeting. Ukraine harvested 28.3 MMT of grain last year but, due to poor weather, expects to harvest 25.0 MMT of grain in 2020. Ukraine’s 2019/20 wheat exports were 20.5 MMT, 31 percent above the year before.
- A new grain export duty scheme put in place by Argentina’s government increases the tax burden on farmers. The overall tax burden takes 68.3 percent of the profits from the agriculture sector compared to the 56.9 percent farmers faced in June 2019. The export duties were authorized by Congress last year in an emergency law which entitles the government to raise duties by up to 15 percent for wheat.
- USDA reports that due to adverse weather, Morocco’s wheat harvest will be historically low. The wheat harvest is expected to be 60 percent below the 10-year average. The USDA added that the Moroccan government will suspend customs duties on common wheat for all of 2020.
- Stats Canada trimmed its estimate for the Canadian wheat crop. An increase in durum wheat sowing was offset by lower spring wheat sowing. Total wheat area is down 1.8 percent to slightly under 25 million acres, up 1.5 percent for the year but still below trade expectations. Spring wheat was cut by 4.5 percent to 17.9 million acres. Winter wheat was lowered 5 percent to 1.3 million acres while durum wheat was raised 5.7 million acres.
- Uruguay, Argentina and Brazil are closely watching a swarm of locusts currently in the northeast of Argentina, near their shared borders. Due to low temperatures the locusts are not moving but they were reported to have damaged corn crops in Santa Fe and Formosa provinces said Senasa, Argentina’s food safety and quality office. Brazil’s agriculture ministry declared a state of emergency in preparation for the swarm.
- India’s purchase of locally grown wheat in 2020 rose 13.7 percent compared to last year. Food Corporation of India (FCI) which buys grain from farmers on behalf of the Indian government purchased a record 38.8 MMT of wheat or almost 5.0 MMT more than last year; an FCI official said that could increase to 41 MMT this year. With record production spurred by excellent weather conditions and government subsidies that studies show exceed the levels India agreed to as a World Trade Organization member, USDA expects the Indian government to increase its wheat stocks from 53 million to 55 MMT compared to 41 MMT in 2019.
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 increased 3% on the week to close at 1,803.
- The U.S. Dollar Index fell from last week’s 97.43 to end at 97.26.
Source: US Wheat Associates