August 17, 2018

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  • Forecasts for continued hot, dry conditions in Australia and a strong export sales report pushed Chicago and Kansas City wheat futures higher this week, while seasonal harvest pressure caused Minneapolis futures to decrease slightly. CBOT September wheat increased 14 cents to $5.60/bu, KCBT added 5 cents to $5.65/bu and MGEX lost 2 cents to close at $6.08/bu. CBOT September corn rose 6 cents to $3.64/bu and CBOT September soybeans gained 31 cents to $8.81/bu.
  • Seasonal harvest pressured nearby export basis for hard red spring (HRS) across the United States. Hard red winter (HRW) and HRS protein premiums narrowed sharply this week as the market reacted to predictions of ample high protein wheat supply in the U.S. Northern Plains.
  • USDA’s weekly Export Sales Report included net U.S. wheat sales of 803,000 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 8.32 million metric tons (MMT), 25% behind last year’s year-to-date total of 11.2 MMT. USDA expects 2018/19 U.S. wheat exports to reach 27.9 MMT.

U.S. Drought Monitor

  • The August 16 U.S. Drought Monitor noted drought conditions worsened across the U.S. Northern Plains and Pacific Northwest (PNW), with many wildfires. Nearly all of Montana, Washington, Idaho and Oregon topsoil moisture was rated as short or very short. The current forecast shows little relief for the drought-stricken areas. Though these conditions are conducive to harvest progress, rain will be needed before fall planting.

  • Reuters reported the European Union 2018/19 wheat quality is generally good, though quantities are down. German wheat production is expected to fall 20% from last year to 19.2 MMT. French wheat production is projected at 35.1 MMT, down from 36.6 MMT in 2017/18. Wheat production in Poland is estimated at 9.9 MMT, down 12% from the year prior.
  • The Ukrainian Agriculture Ministry reported wheat harvest is nearly complete. To date, Ukrainian farmers have harvested 24.9 MMT of wheat in 2018/19.
  • The Saskatchewan weekly crop report noted winter wheat harvest is now 24% complete, durum harvest is 3% complete, and spring wheat harvest just begun. In Alberta, 61% of spring wheat is rated in good to excellent condition.
  • Bolsa de Cereales, the Buenos Aires Grain Exchange, reported Argentina completed wheat planting August 16, well ahead of last year’s pace. Argentine 2018/19 wheat planted area increased 7% from the year prior to 15.1 million acres (6.1 million hectares).
  • The 90-day forecast from the Australian Bureau of Meteorology shows little reprieve for the drought-stricken country. The report expects below-average rainfall and continued warm weather.

Baltic and U.S. Dollar Indices

  • The Baltic Index increased to 1720, up from 1691 the week prior.
  • The Dollar Index rose again this week to a one-year high of 96.47.

Source: U.S. Wheat Associates