September 14, 2018

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  • U.S. wheat futures ended the week flat to slightly higher with bargain buying and news of several international wheat tenders providing support. The U.S. dollar remained near one-year highs limiting gains. CBOT December wheat futures remained steady week over week at $5.11/bu, KCBT added 1 cent to $5.16/bu and MGEX gained 2 cents to $5.72/bu. CBOT December corn dropped 15 cents to $3.52/bu and CBOT January soybeans lost 13 cents to $8.44/bu.
  • U.S. export basis remained steady this week for Gulf contracts as slow farmer selling continues to offset weaker export demand. With the typical fall Pacific Northwest (PNW) soybean program nowhere to be found, PNW export basis softened due to increased export capacity and decreased freight costs. Soft white (SW) cash prices followed U.S. wheat futures prices lower this week due to pressure from a large, good quality crop.
  • USDA’s weekly Export Sales Report included net wheat sales of 387,600 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 9.74 million metric tons (MMT), 24% behind last year’s year-to-date total of 12.8 MMT. USDA expects 2018/19 U.S. wheat exports to reach 27.9 MMT.
  • On September 11, USDA reported U.S. spring wheat harvest is 93% complete, ahead of the 5-year average pace of 85%. U.S. winter wheat planting is 5% complete, in line with the 5-year average.
  • On September 12, USDA forecast 2018/19 world wheat consumption to exceed world wheat production by 13.1 MMT due to the first decline in world wheat production in 5 years. USDA expects global wheat production to fall to 733 MMT, down 3% from 2017/18. Global trade will reach a record 181 MMT in 2018/19, 4% above the 5-year average. 2018/19 global consumption will set a sixth consecutive record at 746 MMT. World ending stocks will fall to 261 MMT, down 5% from 2017/18, if realized. 2018/19 U.S. wheat production will total 51.2 MMT, up 8% from last year.

U.S. Drought Monitor

  • The September 13 U.S. Drought Monitor noted soil moisture conditions across the U.S. Southern Plains improved following another week of moderate to heavy rain fall. Little to no rain fell across the U.S. Northern Plains and Pacific Northwest (PNW), again this week allowing harvest to wrap up in many areas but causing worsening drought conditions. The current forecast expects rain to fall across the U.S. Southern Plains, providing additional relief to drought-stricken areas, but potentially delaying fall planting.

  • According to Reuters, Russia’s food safety organization Rosselkhoznadzor has increased quality control checks on Russian wheat exports, noting the strengthening of controls is not aimed at limiting exports.
  • The Saskatchewan weekly crop report noted winter wheat harvest is 98% complete, up from last week’s 92% complete. Durum harvest is 73% complete, and spring wheat harvest is 46% complete. In Alberta, spring wheat harvest is 28% complete, up from 13% last week.
  • Bolsa de Cereales, the Buenos Aires Grain Exchange, reported beneficial moisture fell on the La Pampa region and areas around Buenos Aires. However, northwestern areas of Argentina accounting for roughly one-third of wheat acres have received very little moisture to date. Additional rain will be needed in these areas for wheat to reach its yield potential.

Baltic and U.S. Dollar Indices

  • The Baltic Index decreased to 1382, down from 1490 the week prior.
  • The Dollar Index fell to 94.49 this week, down slightly from 95.36 last week.

Due to increased demand for higher protein SW and the low average protein levels of the 2018/19 crop, the USW Price Report will change next week to show min 9.5 protein premiums (currently about a 20 cent per bushel premium to max 10.5 SW prices) and no longer show an unspecified protein level. Unspecified protein SW has priced equal to max 10.5 SW for the last several months. USW will continue to monitor market conditions and make changes to the report as necessary.

 

Source: U.S. Wheat Associates