- Technical selling pressured the markets late in the week in spite of speculation about upside Brazilian business and a weaker U.S. dollar. All wheat futures contracts ended down week-over-week. CBOT soft red winter (SRW) futures fell 8 cents to close at $5.31/bu. KCBT hard red winter (HRW) futures lost 7 cents to end at $4.42/bu. MGE hard red spring (HRS) futures lost 1 cent to close at $5.14/bu. CBOT corn futures fell 10 cents to close at $3.16/bu. CBOT soybean futures lost 8 cents to end at $8.90/bu.
- This week, extremely limited elevation capacity and higher rail rates in the secondary market supported wheat basis levels in the Gulf and Pacific Northwest (PNW). Gulf HRW and SRW export basis climbed week-over-week for August and September deliveries. Gulf HRW protein premiums narrowed on the week due to a higher protein harvest and increased export demand for lower protein HRW. Gulf HRS export basis fell slightly on commercial elevator selling at the beginning of the 2020 HRS harvest. PNW HRS and HRW export basis jumped for nearby and deferred deliveries on limited elevation capacity as China imports more U.S. soybeans and corn. PNW soft white wheat export prices also jumped this week for August and September deliveries.
- Vessel freight rates from the Great Lakes to Spain and Italy jumped significantly this week due to increased demand for ocean freight and higher elevation prices due to limited capacity in Chicago and Great Lakes export terminals.
- Good weather is helping speed the 2020 HRW harvest. South Dakota is close to 80% complete, Montana 17%, Idaho 18% and Washington 25%, with favorable conditions ahead to build momentum. Industry is pleased with the overall quality of this crop. Read the U.S. Wheat Associates (USW) July 31 Harvest Report to learn more about the 2020 U.S. wheat harvest.
- HRW conditions in Minnesota are 75% good to excellent; North Dakota HRS improved to 72% good to excellent from 62% last week; Montana is up to 80%; South Dakota held steady at 63%. Harvest is underway, now at 8% in South Dakota and just starting in Minnesota. Overall crop development is behind the 5-year average this year.
- Soft white (SW) winter and spring wheat conditions remain generally good to excellent and the entire PNW spring SW crop has fully headed. Winter crop harvest is underway with at least 19% harvested in Washington, 10% in Idaho and 28% in Oregon. Warm weather is pushing the SW crop toward maturity and harvest.
- This week’s commercial sales of 677,000 metric tons (MT) for delivery in 2020/21, as of July 23, were 10% greater than last week’s 617,000 MT and above trade expectations of 250,000 MT to 650,000 MT. Year-to-date commercial sales now total 9.62 million metric tons (MMT), 8% ahead of last year’s pace. USDA expects all 2020/21 U.S. wheat exports will total 25.9 MMT, down 2% from last year, if realized.
- Click here to view the most recent USW Commercial Sales report.
- This week, beneficial precipitation alleviated dryness in western North Dakota, eastern Kansas and north central Oklahoma, the Texas Panhandle and eastern Colorado. Severe drought spread in eastern Wyoming and western Nebraska. Drought persists in Indiana and Ohio, predominant SRW-producing states. Looking ahead moderate rainfall is expected to reach from the central Great Plains to the East Coast.
- French soft (non-durum) wheat production is expected to drop to its lowest level in 25 years at 29.2 MMT, said World Grain. “Abundant autumn rainfall over a large part of the territory made sowing conditions extremely difficult or even impossible” said Michael Portier, director of French agriculture consultancy Agritel. An unusually hot, dry growing season added pressure to the crop. If realized, French soft wheat production would fall 26% from 2019.
- According to Stratégie Grains, Canadian durum production in 2020/21 is expected to reach 6.16 MMT, up 24% on the year due to significantly increased planted area and slightly increased average yields. Stratégie Grains expects total U.S. durum production will jump 14% on the year to 1.67 MMT as more planted area should offset reduced average yields.
- Between June and July, USDA reduced its Argentinian wheat production forecast by 1.0 MMT to 20.0 MMT as dry weather pressures total wheat planted area at the end of the country’s planting season. According to the Buenos Aires Grain Exchange (BAGE), 26% of the Argentina’s wheat is in good to excellent condition.
- The Russian wheat harvest is well underway. Data from Russia’s Ministry of Agriculture shows that 41.8 MMT of wheat have been harvested so far in 2020/21, slightly ahead of this time last year. So far, the average wheat yield is 53.1 bu/acre (3.57 MT/hectare), down 3% from the same period 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 2% this week to 1,348.
- The U.S. Dollar Index fell from last week’s 94.43 to end at 93.43.