- This week, all futures trended up as the market absorbed new information, including smaller production amounts in Russia and North America. CBOT soft red winter (SRW) futures rose 16 cents to close at $7.19/bu. KCBT hard red winter (HRW) futures were up 32 cents to end at $7.05/bu. MGE hard red spring (HRS) futures gained 12 cents to close at $9.16/bu. CBOT corn futures rose 8 cents to $5.55/bu. CBOT soybean futures were up 67 cents to close at $14.22/bu.
- Basis was mixed this week in the Pacific Northwest (PNW) and Gulf. HRS was flat in the PNW while HRW was up as harvest in Montana advances. Production is advancing rapidly, but weather conditions have left many unknown factors making farmers cautious about production prospects, supporting basis prices. Prices for soft white (SW) were up this week and basis for SRW out of the Gulf for nearby delivery was up slightly, while HRW and HRS were slightly down due to sluggish export demand.
- HRW harvest has moved rapidly into the northern and PNW production regions. For the eighth 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. The U.S. Wheat Associates (USW) Harvest Report published August 6 put average HRW protein content at 11.6%, which is in line with the 5-year average.
- New crop PNW SW protein average is expected to be higher, but crop quality data is just starting to come in. This week’s Harvest Report showed average SW protein to be 11.2%, above the 5-year average of 9.8%. Grain traders remain reluctant to guarantee maximum proteins. For the eighth week in a row, total U.S. SW 9.5% max protein offers were limited. Please contact your supplier or local USW office for more information.
- On August 2, USDA reported 91% of the U.S. winter wheat crop harvested, five points ahead of the 5-year average of 86%. The U.S. spring wheat crop conditions improved this week, with 10% rated good to excellent, up from 9% last week and compared to 73% last year. The USDA also reported 17% of the U.S. spring wheat crop harvested, 9 points ahead of the 5-year average.
- This week’s U.S. wheat commercial sales of 308,300 metric tons (MT) were down 40% from last week’s 515,200 MT and on the low end of trade expectations of 250,000 MT to 700,000 MT. Year-to-date commercial sales for delivery in 2021/22 total 10.2 million metric tons (MMT), 18% 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.
- Areas of persistent dryness, including the Dakotas and Pacific Northwest, continued to deteriorate further this week. Areas of eastern Washington, central Oregon, and parts of Montana are experiencing exceptional drought. Conditions in the Plains states stretching from Minnesota west to Colorado and encompassing the states in between continued to experience dry conditions that added to drought ratings.
- Two private Russian consultants cut their outlook for Russian wheat production this week. IKAR cut its Russian wheat forecast by 3.0 MMT, settling on 78.5 MMT of wheat production. SovEcon revised its forecast by 4.0 MMT, settling on 82.3 MMT of wheat production. The revisions were based on low yields reported in the Central and Volga region and a reduction to the winter wheat area made by the Russian statistics service. In reaction to the reduced production, Russian wheat prices rose as much as $7.00/MT compared to the week before.
- France is off to a slow start for the 2021/22 trade year, which began in July. According to Refinitiv data, French soft wheat shipments outside the European Union fell to their lowest level in over a decade in July. Wheat exports are 74.0 TMT less than the same month last year, and the lowest since Refinitiv started tracking export data.
- The Food and Agriculture Organization (FAO) food price index, which tracks international prices of various food commodities, averaged 123.0 points in July, down from 124.6 points in June. Year-on-year prices are up 31%. June was the first month in a year that showed a decline in the index. Cereal prices fell 3%, but wheat prices increased 1.8%, their highest level since mid-2014. The increase was blamed on dry conditions in North America, heavy rain in Europe and lower-than-expected yields in Russia.
- Egypt’s President Abdel Fattah al-Sisi announced plans to raise the price of Egypt’s subsidized bread loaves. Prices were last adjusted in 1977 and were met with substantial opposition. More than 60 million Egyptians benefit from the subsidized program.
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 2% on the week to end at 3,371.
- The U.S. Dollar Index increased slightly from last week’s 92.11 to close at 92.80.