Friday, July 16, 2021
Read the full report as a PDF
- All wheat futures prices were up sharply this week as dry weather continued to stress crops in the Plains states and Pacific Northwest (PNW). CBOT soft red winter (SRW) futures rose 84 cents to close at $6.92/bu. KCBT hard red winter (HRW) futures were up 52 cents to end at $6.51/bu. MGE hard red spring (HRS) futures rose $1.04 to close at $9.17/bu. CBOT corn futures fell 73 cents to end at $5.56/bu. CBOT soybean futures gained 50 cents to close at $14.54/bu.
- Hard red spring (HRS) and hard red winter (HRW) basis in both the Gulf and Pacific Northwest (PNW) rose slightly this week as farmer selling remains light due to higher futures prices and uncertainty over wheat proteins. Domestic mill demand also supported basis for hard red winter (HRW) as millers see a need to add more HRW to their grist blends.
- On July 12, USDA reported 59% of the U.S. winter wheat crop harvested, below the 5-year average of 65%. The U.S. spring wheat crop conditions are rated 16% good to excellent, down one point from last week. The USDA also reported 83% of the U.S. spring wheat crop headed, slightly above the 5-year average of 81%. The latest USW Harvest Report can be found here.
- States growing hard red winter (HRW) continue harvesting. For the fifth 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 fifth week in a row, offers for SW 9.5% max protein remain limited. Please contact your supplier for more information.
- This week’s U.S. wheat commercial sales of 424,700 metric tons (MT) were up 44% from last week’s 290,800 MT and on the high end of trade expectations of between 200,000 MT to 500,000 MT. Marketing year-to-date commercial sales for delivery in 2021/22 total 7.1 million metric tons (MMT), 15% lower than last year. USDA expects total 2021/22 U.S. wheat exports will reach 23.8 MMT, 12% lower than last year, if realized.
- View the most recent USW Commercial Sales report here.
- Weather across wheat-producing states in the U.S. was mixed this week. In the High Plains, the western half of the region experienced above-average temperatures while the eastern half experienced below-average temperatures. Rain and humid conditions continued slowing HRW harvest progress. Drought deepened in the Pacific Northwest after another week of hot, dry weather.
- France’s farm ministry forecasts a 27.1% increase to the soft wheat crop, citing improved yields, increased planted area, and favorable weather. France is the largest wheat-producing country in the EU. The forecast calls for 37.1 MMT of soft wheat production this year, 11.2% above the 5-year average said the ministry.
- Stratégie Grains, an EU based analyst, increased production forecasts for EU wheat production in 2021/22. The consultancy forecasts 133.0 MMT of soft wheat production in 2021, up from its 131.1 MMT projection made in June and 14.1 MMT above last year’s crop. On Monday, the USDA released its monthly Supply and Demand Report, which forecast wheat production in the EU at 138.2 MMT. Stratégie Grains added that wet weather in the southeastern and western parts of the continent could impact grain quality.
- According to the country’s statistics bureau, China harvested more wheat this summer on higher planted area and yields. Summer wheat output rose 2% compared to 2020, to 134.0 MMT. Abundant rain may have affected quality, however, said analysts. Planting of wheat was up 1%, its first uptick in six years. The statistics bureau said a boost to minimum government purchase prices was one reason for increased planted acres. There will be plenty of space to store the additional wheat, as the state grain stockpiler announced plans to add 10.85 MMT of storage capacity. Sinograin says they will build 120 storage facilities to align with the state’s strengthened focus on food security. China has 650.0 MMT of grain storage capacity, according to state media.
- The Rosario Grains Exchange expects that Argentine farmers will harvest 20.5 MMT of wheat in 2021/22 following good weather and increased planting in the Pampas. The exchange said wheat planting was 90% complete, with nearly 6.8 million hectares sown, the highest level in 20 years. Monday’s USDA report also forecast Argentine wheat production at 20.5 MMT.
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, decreased 8% on the week to end at 3,039.
- The U.S. Dollar Index increased slightly from last week’s 92.25 to close at 92.71.