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August 21, 2020
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  • Technical short-covering supported all wheat futures prices week-over-week. CBOT September soft red winter (SRW) futures ended up 27 cents at $5.27/bu. KCBT September hard red winter (HRW) futures added 20 cents to close at $4.46/bu. MGE September hard red spring (HRS) futures gained 17 cents to end at $5.15/bu. CBOT corn futures added 2 cents to end at $3.27/bu. CBOT soybean futures gained 4 cents to close at $9.00/bu.

  • Gulf HRS and HRW and Pacific Northwest (PNW) HRS and HRW export basis levels jumped significantly week-over-week for September and October deliveries due to limited export elevation capacity as U.S. corn and soybean exports to China continue at a strong pace. Historically high domestic secondary rail rates (see below) add support. In the PNW, the expectation of a much smaller HRW harvest in Montana (see below) adds additional support to HRW export basis.
  • Secondary rail rates (paid to ship grain domestically on a secondary auction market in addition to the tariff rate) for October deliveries have jumped significantly since late July. USDA AMS data shows the average secondary rate for shuttle trains was up 50% between July 31 and Aug. 13 to $800/car, nearly four times greater than the previous 3-year average. Increased commodity exports to China and rail labor shortages due to COVID-19 furloughs have increased secondary rates.
  • According USDA’s August Crop Production report, total 2020 Montana HRW production may go down 21% to 2.05 MMT on significantly reduced planted area. However, HRW conditions remained strong and the state could see a record average yield per acre, weather permitting.
  • The 2020 U.S. winter wheat harvest is nearly complete. The SRW harvest is over and preliminary lab samples show strong end use qualities, with higher test weights and falling number values than last year. The HRW harvest is 90% complete with only crops in Montana and the PNW left to cut. PNW HRW conditions remain very strong and above-average yields are expected. The PNW soft white (SW) harvest made strong progress this week on favorable field conditions. Farmers in Washington have harvested 73% of the expected crop. Idaho’s SW crop is 60% harvested and Oregon’s SW harvest is 88% complete.
  • Total U.S. spring wheat crop ratings remained steady week-over-week at 70% good to excellent as of Aug. 17. Dry, favorable weather across the Northern Plains is helping advance the 2020 U.S. spring wheat harvest; approximately 40% of the U.S. spring wheat crop is now in the bin.
  • Click here to learn more about the 2020 U.S. wheat harvest.

Commercial Sales

  • This week’s commercial sales of 523,000 metric tons (MT) for delivery in 2020/21, as of Aug. 13, were 42% more than last week’s 368,000 MT and on the high end of trade expectations of 300,000 MT to 600,000 MT. Year-to-date commercial sales now total 11.1 million metric tons (MMT), 7% ahead of last year’s pace. USDA expects the United States will export 26.5 MMT of wheat in 2020/21, up 1% from last year, if realized.
  • Click here to view the most recent USW Commercial Sales report.

U.S. Drought Monitor

  • This week, abnormal dryness spread in western and central Montana, western North Dakota and central Nebraska. Looking ahead, scattered showers are expected across the Northern Plains, but overall dryness will could continue to accelerate the U.S. spring wheat harvest.

  • German farm cooperative, Deutscher Raiffeisenverband (DRV), estimates total German wheat production will fall 7% on the year to 21.0 MMT on significantly reduced planted area that more than offset increased average yields.
  • As of Aug. 18, Russian farmers have harvested 63.0 MMT of wheat, compared to the 53.7 MMT harvested this time last year. So far, official data from the country’s Ministry of Agriculture shows the average wheat yield at 54.2 bu/acre (3.64 MT/ha), 3% greater than last year. IKAR, a Russian agriculture consultancy, increased its total Russian wheat production forecast by 1.0 MMT to 82.0 MMT, 11% greater than last year and the second-largest on record, if realized.
  • According to the Buenos Aires Grain Exchange (BAGE), intense early frosts are challenging Argentina’s wheat yield potential.
  • Ukrainian wheat exports are trailing 20% behind last year’s pace at 5.10 MMT so far in 2020/21, said the country’s Ministry of Economy. USDA expects total Ukrainian production will fall 8% on the year to 27.0 MMT on severe dryness through the growing season.

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 fell slightly on the week to end at 1,518.
  • The U.S. Dollar Index increased slightly from last week to close at 93.20.