Friday, July 23, 2021
Read the full report as a PDF
- After making major gains last week, all wheat futures prices were down this week. CBOT soft red winter (SRW) futures fell 8 cents to close at $6.84/bu. KCBT hard red winter (HRW) futures were down 5 cents to end at $6.46/bu. MGE hard red spring (HRS) futures lost $0.34 to close at $8.83/bu. CBOT corn futures fell 9 cents to end at $5.47/bu. CBOT soybean futures were down 53 cents to close at $14.01/bu.
- Basis was mixed in the Gulf and up in the PNW as dry conditions continued to stress both the HRS and soft white (SW) crops. Basis prices for October and November delivery are higher due to tighter export capacity as wheat shipments compete for space with other commodities. Farmers in the PNW are busy with harvest and slow to sell grain forcing traders to raise their offer prices. Positive harvest momentum and strong yields in the Southern Plains has made HRW the most affordable wheat class in the U.S. causing basis prices from Gulf origins to go down while ongoing drought in Montana has strengthened basis from the PNW as exporters there will need to bring grain from further away.
- On July 19, USDA reported 73% of the U.S. winter wheat crop harvested, just one point behind the 5-year average of 74%. The U.S. spring wheat crop conditions declined this week with 11% rated good to excellent, down from 16% last week. Over half of the crop is rated as being in poor to very poor condition. The USDA also reported 92% of the U.S. spring wheat crop headed, even with the 5-year average of 92%. The latest USW Harvest Report can be found here.
- States growing HRW continue harvesting. For the sixth 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. Protein content for HRW has averaged 11.4% for the last two weeks, slightly below the 5-year average of 11.6% protein.
- New crop PNW SW protein average is expected to be higher, but crop quality data is just starting to come in, making grain traders reluctant to guarantee maximum proteins. For the sixth week in a row, offers for total U.S. SW 9.5% max protein remain limited. Please contact your supplier or local USW office for more information.
- This week’s U.S. wheat commercial sales of 473,200 metric tons (MT) were up 11% from last week’s 424,700 MT and in line with trade expectations of 350,000 MT to 600,000 MT. Year-to-date commercial sales for delivery in 2021/22 total 7.5 million metric tons (MMT), 12% lower than last year at the same time. 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.
U.S. Drought Monitor
- This week, hot dry weather continued to scorch parts of the Pacific Northwest (PNW), Montana, and many Plains states. Smoke from wildfires lowered temperature in parts of the PNW slowing crop maturity slightly. Still, drought conditions prevailed and soil moisture in Washington was reported 98% short or very short. Minnesota, too, saw conditions degrade and soil moisture there was rated 78% short to very short. Soil moisture levels in the South, Midwest and East, where soft red winter will be seeded in September remain adequate.
- Russian bakers say they plan to raise bread prices in August as much as 12% due to higher production costs that are not offset by state subsidies, reported the Russian daily newspaper Kommersant. Russia’s agriculture ministry was quoted saying no significant increase for bread prices was needed because domestic prices of wheat are down 7.2% so far this year. Even so, Russian bread prices are up 4.6% since the start of 2021, said the agriculture ministry. Bread producers receive state subsidies if they do not raise consumer prices.
- Dry conditions continue to dominate Canada’s western wheat growing provinces. Continuous warm weather has also depleted soil moisture with more heat in the 10-day forecast. Some areas are expected to see temperatures get above 40° C (100°+ F). In Saskatchewan, spring wheat was rated 25% good or excellent on July 12, a 33-point drop from June 28. Additionally, Transport Canada ceased all train movement to Vancouver, the busiest grain export port, earlier this month following a wildfire that decimated the city of Lytton, British Columbia, and delayed railcar movement.
- According to AgriCensus, prices for Ukrainian wheat with 11.5% dry matter protein (11.0% on 12% moisture basis) exported from deep water Black Sea ports have jumped $13.00/MT for loading in August and $14.00/MT in September. Concern over quality, harvest delays, and busy port lineups are all adding to local export basis. Weather restricted grain loading at four Black Sea ports on Thursday according to the seaport authority. Harvest is also behind as rain has kept farmers out of the field and there is some concern that fusarium head blight damage could increase feed grade wheat volume. Farmer selling is light, too, on worry about production amounts.
- Kazakhstan’s government says it will ban the export of barley and wheat used for animal feed and completely ban the export of rye for six months as drought in the Central Asian nation has caused a shortage of animal feed. The restrictions will go into effect Aug.15 but are subject to change. The Kazakh Grain Union opposed the move and said the grain industry should be notified of any plans to regulate the market. The USDA lowered its forecast for Kazak spring crops by 1.0 MMT to 13.0 MMT, down 8.8% from 2020.
- Warm, dry conditions in Germany quickly gave way to damage and quality issues after heavy rains caused flash flooding last week. Germany’s Raiffeisen Association (DRV) cut its overall grain production forecast and pegged wheat at 22.82 MMT. Harvest was also delayed in Germany’s southern region where disease pressure concern increased. German traders said the rain’s impact on river grain transportation has been minimal so far. More rain is forecast at the end of the week.
- Stratégie Grains cut its estimate for France’s 2021 soft wheat harvest after a crop tour showed lower than expected yields in the northeastern part of the country. The crop tour also unveiled overall disappointment in wheat quality. Stratégie Grain now expects the soft (non-durum) wheat harvest to be between 37.0 MMT and 37.5 MMT, down from last week’s 38.0 MMT forecast but still well above last year’s 29.0 MMT harvest.
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, increased 5% on the week to end at 3,199.
- The U.S. Dollar Index increased slightly from last week’s 92.71 to close at 92.87.