Friday, June 29, 2018

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  • Wheat futures ended the week mixed following reports that showed Canadian and U.S. farmers planted more spring wheat than traders expected. Seasonal harvest pressure and a strong U.S. dollar also weighed on wheat futures. CBOT futures found limited support from reduced wheat production forecasts for Russia, Ukraine and France. CBOT July wheat added 6 cents to $4.97/bu, KCBT lost 18 cents to close at $4.71/bu, and MGEX dropped 27 cents to $5.21/bu. CBOT July corn decreased 7 cents to close at $3.50/bu and CBOT July soybeans closed 36 cents lower this week at $8.58/bu.
  • Routine maintenance at Pacific Northwest (PNW) export elevators limiting export elevation capacity in July and stagnant farmer selling are supporting export basis. Conversely, farmer selling tributary to the Gulf continues to be brisk and elevators in that area continue competing for bushels to fill their storage and secure storage revenue, supporting hard red winter (HRW) and soft red winter (SRW) export basis. The excellent condition of the Montana HRW and hard red spring (HRS) crops are pressuring PNW export basis and protein premiums for those classes.
  • USDA’s weekly Export Sales Report included net wheat sales of 563,700 metric tons (MT) for marketing year 2018/19. Total known outstanding sales and accumulated exports of all classes of wheat for the 2018/19 marketing year were 5.55 million metric tons (MMT), 31% behind last year’s year-to-date total of 8.02 MMT. USDA expects 2018/19 U.S. wheat exports to reach 25.9 MMT.
  • On June 25, USDA reported winter wheat harvest was 41% complete, ahead of the 5-year average of 33%. USDA rated the winter wheat crop 35% good to excellent, down from 39% a week ago and 34% of the winter wheat is in poor or very poor condition. USDA reported 34% of U.S. spring wheat has headed, ahead of the 5-year average of 27%. USDA rated 77% of spring in good to excellent condition, down slightly from 78% last week.

USDA Acreage Report

  • USDA reported U.S. farmers planted 47.8 million acres (19.3 million hectares) of wheat in 2018/19, up 4% from the year prior, but still the second lowest wheat planted area on record since 1919. HRW planted area totaled 23.2 million acres (9.39 million hectares), down 2% from 2017/18. SRW planted area grew 5% to 5.89 million acres (2.38 million hectares) and soft white (SW) climbed 2% to 4.12 million acres (1.67 million hectares). HRS rose to 12.7 million acres (5.14 million hectares), up 23% from 2017/18; while durum planted area fell to 1.89 million acres (765,000 hectares), down 18% percent from the previous year.

U.S. Drought Monitor

  • The June 28 U.S. Drought Monitor reported heavy rain fell across the United States. In Kansas and the southeastern United States, the rain slowed harvest progress, but replenished depleted soil moisture. In Montana, South Dakota and parts of Nebraska, the rain was beneficial for developing wheat. The current forecast calls for additional rain to fall on the Southeast and Northern Plains with above average temperatures expected for most of the United States. The exception is the PNW where cooler than normal temperatures are expected.

  • FranceAgriMer rated 74% of French common wheat in good to excellent condition, down from 75% good to excellent the week prior.
  • Following a French crop tour, Stratégie Grains cut its forecast for 2018/19 French wheat production to 33.2 MMT, down 4 MMT from its prior estimate. If realized, that would be 8% below the 5-year average of 36.0 MMT.
  • Russian consultancy SovEcon decreased its forecast for 2018/19 Russian wheat production to 72.5 MMT, down from the previous estimate of 73.1 MMT due to cold, rainy weather in Siberia. If realized, that would be down 15% year over year.
  • As of June 27, Ukrainian farmers harvested 1.16 MMT of wheat with an average yield of 45.5 bu/acre (3.06 MT per hectare), according to the Ukrainian Agricultural Ministry.

Baltic and U.S. Dollar Indices

  • The Baltic Index fell to 1329, down from 1341 last Friday.
  • The Dollar Index rose to 94.61, up from 94.52 last Friday.

Source: U.S. Wheat Associates