August 20, 2021
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- All futures closed lower this week. CBOT soft red winter (SRW) futures fell 48 cents to close at $7.14/bu. KCBT hard red winter (HRW) futures were down 40 cents to end at $7.02/bu. MGE hard red spring (HRS) futures lost 26 cents to close at $9.18/bu. CBOT corn futures lost 30 cents to $5.38/bu. CBOT soybean futures were down 80 cents to close at $12.93/bu.
- Basis eased in the Gulf region this week for both HRS and HRW as farmer selling picked up and more wheat was on offer. Soft Red Winter basis was slightly higher despite increased supply. Basis in the PNW was up slightly but farmer selling there also picked up. Elevators will need to keep wheat moving to make room for other row crop harvests.
- On August 16, USDA reported 58% of the U.S. spring wheat crop harvested, 22 points ahead of the 5-year average of 36%. The U.S. spring wheat crop conditions were unchanged from last week at 11% rated good to excellent, compared to 70% last year.
- HRW harvest is essentially complete with just Idaho and Montana still harvesting. Again this week, no offers were made for HRW 12.5% protein exported from the Gulf. This week’s U.S. Wheat Associates (USW) Harvest Report on August 20 put average HRW protein content at 11.8%, 0.2% above the 5-year average. Please contact your supplier or local USW office for more information.
- This week’s Harvest Report showed current average PNW SW protein to be 11.1%, below last week’s average of 11.3, compared to the 5-year average of 9.8%. Grain traders remain reluctant to guarantee maximum proteins. For the tenth 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.
- This week’s U.S. wheat commercial sales of 306,700 MT were down 5% from last week’s 293,100 MT and within trade expectations of 250,000 MT to 500,000 MT. Year-to-date commercial sales for delivery in 2021/22 total 9.0 million metric tons (MMT), 19% 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
- Conditions remained mostly the same this week compared to last in the Plains states and the PNW with persistent hot and dry weather. Some pockets of Kansas and parts of Colorado received rain. Hot temperatures ranging between 3 to 6 degrees °F above normal were common in much of the Dakotas and Wyoming. Temperatures were well above normal in Oregon and Washington and dry conditions continued to persist across the region and into Montana. Much needed rainfall is expected in the Northern Plains this weekend and into next week.
- The Bureau of Labor Statistics, an office within the U.S. Department of Labor, in its Consumer Price Index for baked foods and cereal products, showed prices increased 1% in July, the sixth straight month of rising prices and the sharpest month-over-month gain since January 2015. The index measures a range of finished products, including bread loaves, bakery items, and pasta.
- The Parana River in Argentina continues receding, possibly into 2022. The river, which connects inland grain producers to the leading export hub at Rosario, is at its lowest level in 77 years, forcing ships to load 18% to 25% less cargo. The President recently decreed the river in a “state of water emergency” for 180 days. Argentina’s government is currently looking to the Inter-American Development Bank as it seeks a path to contain the effects of the devastating drought decimating the South American river. Additionally this week, the Buenos Aires Grain Exchange said in a weekly report that 43% of wheat is “poor-to-dry,” up from 39% last week.
- Russia’s agriculture ministry halted daily publication of grain harvesting data “while it refines the reporting format used by the country’s growing regions,” reported Reuters. The ministry also said it is “currently doing technical work with the regions to refine the form and structure of the operational data on crop harvesting and sowing of winter grains.” The latest data on the ministry’s website is from August 6, while the analytical center, Specagro, published data as recently as August 11, which showed 74.9 MMT of harvested grain. The ministry has not changed its forecast for wheat, leaving it at 81.0 MMT, according to Interfax news agency.
- This year, Romania has harvested 11.3 MMT of wheat, a bumper crop, after yields improved following a drought-hit crop in 2020. Romania is leading the EU bloc for wheat exports in the 2021/22 trade year, shipping 968.0 TMT of wheat since July 1. Romania has become a leading supplier of wheat to Egypt this year with another tender sold to GASC this week. Neighboring Bulgaria has also harvested a bumper crop, bringing in 7.1 MMT of wheat, up 54% compared to 2020.
- UGA, the Ukrainian grain traders union, is lobbying the Algerian grain authorities to ease conditions for wheat tenders. The union said that relaxing requirements for the W index, an indicator for flour strength, and reducing its spec on insect-damaged kernels would boost the potential for Ukrainian wheat to participate in Algerian wheat tenders. UGA said that Algeria has “expressed readiness to discuss possible changes to the tender procedures.” Ukraine shipped around 200.0 TMT of wheat to Algeria in 2020/21, accounting for 1.2% of exports.
- The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased 15% on the week to end at 4,092.
- The U.S. Dollar Index increased from last week’s 92.59 to close at 93.58.