- Higher than expected weekly export sales, USDA’s reduced global ending stocks forecast and news that Russia is considering a wheat export tax (see below) supported all wheat futures prices week-over-week. CBOT March soft red winter (SRW) futures gained 39 cents to end at $6.14/bu. KCBT March hard red winter (HRW) futures added 38 cents to close at $5.18/bu. MGE March hard red spring (HRS) futures jumped 19 cents to end at $5.70/bu. CBOT March corn futures gained 3 cents to close at $4.23/bu. CBOT March soybean futures added 1 cent to end at $11.66/bu.
- Increased elevation capacity, smooth inland logistics and lower secondary rail rates reduced Pacific Northwest (PNW) and Gulf HRS export basis for January and February deliveries. Gulf and PNW HRS and HRW export basis for March and forward deliveries also fell significantly on the week. Click here to read more about the relationship between U.S. export elevation availability and wheat export basis. The Great Lakes – St. Lawrence Seaway System will be closed from early January to mid-March 2021.
- In its December World Agricultural Supply and Demand Estimates (WASDE) report, USDA increased its total 2020/21 U.S. wheat exports forecast from 26.5 million metric tons (MMT) to 26.8 MMT, 2% greater than last year, if realized. Between November and December, USDA reduced its HRW exports forecast by 2% to 10.8 MMT and increased its white wheat exports forecast by 10% to 5.85 MMT.
- USDA forecasts total global wheat consumption in 2020/21 will jump to a record 758 MMT, 1% more than last year and 4% more than the 5-year average on higher feed and residual use in China, Australia and the European Union. December’s world wheat ending stocks estimate fell commensurately to 316 MMT, still 5% more than last year and 14% more than the 5-year average on significantly larger harvests in Canada, Russia and Australia.
- This week’s commercial sales of 616,000 metric tons (MT) for delivery in 2020/21 were up 38% from last week’s 446,000 MT and well above trade expectations of 200,000 MT to 550,000 MT. Year-to-date commercial sales now total 19.1 million metric tons (MMT), 13% ahead of last year’s pace.
- Click here to view the most recent USW Commercial Sales report.
- Moderate to extreme drought still covers nearly all the U.S. Plains. Extreme dryness continues to plague winter wheat producers in western Nebraska, eastern Colorado and northwestern Kansas. This weekend, moderate snow is expected to improve soil moisture levels across the Southern Plains.
- Between November and December, USDA increased its 2020/21 Australian wheat production estimate by 1.50 MMT to 30.0 MMT, which would nearly double last year’s output, if realized. However, Australia’s Bureau of Agriculture and Resource Economics (ABARES) currently forecasts the country will produce 31.2 MMT this year.
- According to Reuters, the Russian government is considering imposing a grain export quota and wheat export tax for February to June 2021 deliveries following President Vladimir Putin’s public criticism of rising domestic food prices. “We must take concrete measures to effectively stabilize the prices of products that are important for people – in line with the instructions of the head of state,” said Prime Minister Mikhail Mishustin on Dec. 10.
- On Dec. 11, SovEcon, a Russian agriculture consultancy, reduced the country’s 2021 wheat production forecast by 5% to 76.8 MMT on overly dry conditions during planting and early germination. “Wheat entered this winter in the worst shape since 2009/10,” SovEcon said, adding that about 3.20 million hectares (7.90 million acres) could be lost after this winter compared with 1.8 million hectares (4.45 million acres) lost a year ago.
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 increased 1% on the week to end at 1,211.
- The U.S. Dollar Index increased from last week’s 90.47 to close at 90.95.