U.S. Wheat Associates Price Report

Futures prices were mixed this week. CBOT soft red winter (SRW) futures shed 25 cents to close at $6.37/bu. KCBT hard red winter (HRW) futures were down 6 cents to end at $6.00/bu. Dry conditions drove MGE hard red spring (HRS) futures up 60 cents to close at $8.22/bu. CBOT corn futures lost 19 cents to end at $6.36/bu. CBOT soybean futures shed 67 cents to close at $13.29/bu.

Basis in the Pacific Northwest (PNW) was up this week. Farmers and country shippers continue to be reluctant to sell ahead of the start to harvest following dry and hot conditions in wheat growing areas. In the Gulf basis was flat due to slow export activity.

Harvest in the hard red winter (HRW) states has begun. For the second week in a row no offers were made for HRW 12.5% protein exported from the Gulf. As harvest advances and more protein content is known, offers for higher protein HRW may change.

New crop soft white (SW) proteins remain unclear at this time. Hot and dry conditions are raising concerns making grain traders reluctant to guarantee maximum proteins. For the second week in a row offers for SW 9.5 max remain limited. Please contact your supplier for more information.

On June 21, USDA reported overall U.S. winter wheat conditions at 49% good or excellent, up two points from last week. The USDA also reported 96% of the winter wheat crop headed, even with the 5-year average. The U.S. spring wheat crop condition is rated 27% good or excellent while 27% of the crop is headed. The latest USW Harvest Report can be found here.

Commercial Sales

This week’s commercial sales for marketing year 2021/22 were up from last week to 374,100 metric tons (MT), in line with trade expectations of 200,000 MT to 525,000 MT. Year-to-date commercial sales for delivery in 2021/22 total 6.1 MMT, 10% behind last year’s pace. USDA expects the total 2021/22 U.S. wheat exports to reach 24.5 MMT, 9% below last year, if realized.

Temperatures were hot in many parts of the US this week and conditions stretching from North Dakota encompassing all states south to Texas were dry. South Dakota, Nebraska, Kansas, Southwest Oklahoma, northwest Texas, Colorado and Wyoming all experienced above normal temperatures and paltry rain led to an expansion of drought conditions in those states. The west also experienced record high heat and an expansion of dry conditions. Severe drought expanded in western Idaho while areas of Oregon, Washington and Montana saw conditions deteriorate further.

The European Commission trimmed its forecast of usable common wheat in the European Union slightly to 125.8 MMT, from 126.2 MMT estimated in May. Despite the revision, the 2021/22 crop is forecast 7% above the 2020/21 crop of 117.2 MMT. Farmers in the EU were able to expand the area planted with wheat.

Ukraine has exported 16.3 MMT of wheat in 2020/21 according to Reuters, down 20% compared to 2019/2020 when the Black Sea country exported 20.5 MMT of wheat.

Russia loaded its first cargo bound for Algeria in four years this week. Russia has lobbied for access to the Algerian market, and the North African country relaxed terms regarding bug damage last year, making imports from the Black Sea possible. Algeria, a leading world wheat importer, imports most wheat from neighboring France.

Russia’s agriculture ministry announced it will increase the export duty on wheat again. The wheat tax will increase by $3.20/mt to $41.30/mt based off of the seven-day average index price published by the Moscow Exchange (MOEX) of $259.10/mt. The new tax will be for the week of June 30-July 6.

The Parana River, the main export waterway for grains in Argentina is facing low water levels for the second consecutive year. As many as 60 barges have been trapped by impassable water levels, and some vessels may remain stuck until September according to AgriCensus. Water levels at the Port of Rosario in mid-June were 0.60 meters compared to the historic average of 3.5 meters. A lack of rainfall in June is expected to draw down water levels even further.

The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal and iron ore, lost 2% on the week to end at 3,175.