- All futures prices were all up this week. CBOT soft red winter (SRW) futures gained 8 cents to close at $6.45/bu. KCBT hard red winter (HRW) futures were up 11 cents to end at $6.11/bu. Dry conditions continued to drive MGE hard red spring (HRS) futures up 41 cents to close at $8.63/bu. CBOT corn futures rose 61 cents to end at $6.97/bu. CBOT soybean futures gained $1.22 to close at $14.51/bu.
- Basis was up this week in the Gulf and the Pacific Northwest (PNW) for hard red spring (HRS) and hard red winter (HRW). Farmers remain reluctant to sell ahead of harvest due to concern over protein content. Dry weather conditions also factored into higher basis this week said traders. Despite dry weather and historic high temperatures basis eased on soft white from the Pacific Northwest.
- States growing hard red winter (HRW) are harvesting with some delays from rain in the Southern Plains. For the third 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 third week in a row offers for SW 9.5 max remain limited. Please contact your supplier for more information.
- On June 28, USDA reported overall U.S. winter wheat conditions at 48% good to excellent, dropping one point from last week’s 49%. The USDA also reported 33% of the winter wheat crop harvested, well ahead of the 5-year average of 40%. The U.S. spring wheat crop conditions is rated 20% good to excellent, dropping significantly from last week to the lowest level in decades. The USDA also reported 48 percent of the U.S. spring wheat crop headed, above the 5-year average of 39%. The latest USW Harvest Report can be found here.
- This week’s U.S. wheat commercial sales of 226,300 metric tons (MT) were down 40% from last week’s 374,100 MT and on the low end of trade expectations of 200,000 MT to 500,000 MT. Year-to-date commercial sales for delivery in 2021/22 total 6.4 million metric tons (MMT), 12% lower than last year. USDA expects total 2021/22 U.S. wheat exports will reach 24.5 MMT, 9% lower than last year, if realized.
- View the most recent USW Commercial Sales report here.
- The southern and central Great Plains experienced cooler temperatures and precipitation this past week, while the northern Great Plains saw sporadic rains and average temperatures. Any rainfall is welcome, but drought conditions continue to dominate. Warm temperatures and minimal precipitation are forecast in the week ahead. The drought worsened in the PNW with record-setting high temperatures (110-118°F / 43-48°C), Cooler, but still hot, weather is forecast over the next 7-10 days as the region continues to be in moderate to severe drought, with pockets of extreme drought that is stressing the crop. In the Midwest states, where much of the soft red winter wheat (SRW) is produced, an average of 2-7 inches (51-178 mm) of rain fell this week.
- Rising international freight rates are countering softer Black Sea wheat prices, reported AgriCensus. Ukrainian feed wheat prices dropped about $4/mt over the last week with the arrival of new crop wheat. But freight to Asia increased around $10/MT during the same week. “Sea freight is killing the FOB market,” said one trader.
- Taiwan and the United States held talks to discuss a mutual Trade and Investment Framework Agreement (TIFA) this week. Taiwan’s chief trade negotiator John Deng said he hopes the two countries can eventually sign a Free Trade Agreement (FTA). The U.S. Trade Representative’s (USTR) office pledged deeper U.S. collaboration with Taiwan but did not commit to negotiations on an FTA. Taiwan bought over 1.0 MMT of U.S. wheat in 2020/21, making it the 7th largest buyer of U.S. wheat globally. So far in the 2021/22 marketing year, Taiwan has purchased 184.0 TMT.
- Russia will increase wheat exports in 2021/22 despite lower production, said Vladimir Petrichencko, General Director of proZerno, a Russian grain analyst that forecasts Russia to produce 82.0 MMT of wheat in 2021/22, down 5% year-on-year due to lower planted acres. Despite this, the large carry-over stocks will be more than enough to increase exports, said Petrichecnko. SovEcon, a Black Sea based research firm, forecasts Russian wheat exports to total 38.4 MMT while the June USDA supply and demand report forecast Russian wheat exports to total 40.0 MMT. Russia has put into place an export tax which changes weekly. The tax, based on an average index price published by the Moscow Exchange (MOEX) decreased 10 cents from last week to $41.20/MT for a total FOB price of $258.90/MT. The tax rate will be applied between July 7-13 before the agriculture ministry revaluates the tax rate.
- According to government data, Australia exported 2.7 MMT of wheat in May, up 80% compared to the 5-year average and the highest level in 11 years. This follows a record-setting April export program. Pacific neighbor Indonesia was the leading buyer, importing 457.5 TMT, followed by Vietnam, Kenya, and the Philippines. Since October 2020, Australia has shipped 15.7 MMT of wheat. Trade sources also reported that there is nearly no low protein wheat left to sell in Australia.
Baltic and U.S. Dollar Indices
- The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, gained 5% on the week to end at 3,338.
- The U.S. Dollar Index increased from last week’s 91.85. to close at 92.18.