U.S. Wheat Associates Price Report

Navigating U.S. export markets and making purchasing decisions is a complicated, risk-involved process, especially when wheat customers have so many options for sourcing their supplies. In this video, USW Market Analyst Claire Hutchins shares a detailed review of the USW Price Report, how it is assembled and how to understand and utilize the data.

All wheat futures prices fell on the week due to lower global wheat prices and the anticipation of significant, much-needed precipitation across most winter and spring wheat-producing regions in the Great Plains (see below). CBOT May soft red winter (SRW) futures prices fell 14 cents to end at $6.38/bu. KCBT hard red winter (HRW) futures slipped 23 cents to close at $6.03/bu. MGE hard red spring (HRS) futures dropped 11 cents to end at $6.34/bu. CBOT corn futures fell 6 cents to close at $5.39/bu. CBOT soybean futures slipped 17 cents to end at $14.13.

Lower country wheat basis values, ample commercial ownership and increased export elevation capacity pressured Pacific Northwest (PNW) HRW export basis for nearby and deferred deliveries. Lower futures prices pressured soft white (SW) prices for all delivery periods.
In its March World Agriculture Supply and Demand Estimates (WASDE) report, USDA increased its global wheat consumption estimate by 7.0 million metric tons (MMT) to 776 MMT on increased feed wheat use in China. USDA now pegs total global production in 2020/21 at 777 MMT, up from the February estimate on increased production estimates for Australia. The global ending stocks estimate fell 3.0 MMT this month to 301 MMT, still a world record and up 9% from the 5-year average, if realize.

Commercial Sales

This week’s commercial sales of 329,000 metric tons (MT) for delivery in 2020/21 were up 50% from last week’s 219,000 MT and on the high end of trade expectations of 150,000 MT to 350,000 MT. Year-to-date sales of 24.1 MMT are 2% ahead of last year’s pace. USDA forecasts total U.S. wheat exports will reach 26.8 MMT in 2020/21, 2% ahead of last year, if realized.
View the most recent USW Commercial Sales report here.

Moderate to heavy precipitation is expected over the weekend across most of the Southern to Northern Plains. While several feet of snow are expected in some areas, temperatures are not expected to reach levels that could damage winter wheat, said DTN. The much-needed precipitation will replenish soil moisture levels across much of the country’s wheat growing regions.

USDA now expects China’s 2020/21 domestic wheat consumption will reach a record 145 MMT, up 5.0 MMT from the February estimate, 15% more than last year and 19% more than the 5-year average on record wheat feed use at 35.0 MMT. USDA thinks China’s feed sector will use more U.S. corn and wheat this year due to comparatively high domestic corn prices.
Australian wheat output in 2021 jumped to a record 33.0 MMT, said USDA, up 10% from the February estimate on favorable growing conditions. Australian wheat export are expected to more than double last year’s volume at 22.0 MMT, up 56% from the 5-year average, if realized.
On March 11, Cocereal, a European grain trade association, reduced its European soft (non-durum) wheat production estimates for 2021 by 1.50 MMT to 127 MMT on excessive rainfall during February. Stratégie Grains, a European agriculture consultancy, forecasts total European soft wheat production will reach 130 MMT in 2021, up 9% from last year, if realized.

The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials like grains, coal and iron ore, jumped 11% on the week to end at 1,970, the highest since October 2020 on increased Chinese demand for global corn and grain imports and significantly higher crude oil prices. Read more about current ocean freight rate dynamics.
The U.S. Dollar Index fell from last week’s 91.98 to close at 91.67.

Source: US Wheat Associates