January 15, 2016
Wheat futures markets finished the week mixed after a brief rally following a smaller than expected U.S. winter wheat planted area report, but the strength of the U.S. dollar and ample global supplies continue to limit gains. Underpinning the markets is a large net short position already held by the commodity funds. CBOT March wheat fell 5 cents on the week to $4.74/bu. KCBT wheat rose a penny to $4.74/bu and MGEX lost 8 cents to close at $4.92/bu. CBOT March corn added 6 cents to finish at $3.63/bu and CBOT March soybeans climbed 14 cents this week to $8.79/bu.
Gulf basis for nearby contracts continues to bring a premium due to delays on the Mississippi River from recent flooding. The Great Lakes are now closed, and typically reopen in late March. Farmer selling in the PNW has been slow, causing PNW basis to firm.
In its weekly Export Sales Report, USDA reported net sales of 274,700 metric tons (MT) for delivery in marketing year 2015/16. Sales were up noticeably from last week and in line with trade expectations of 150,000 to 350,000 MT, but still down 3 percent from the prior 4-week average. Total known outstanding sales and accumulated exports of all wheat classes for marketing year 2015/16, through Jan. 7, 2016 were 16.1 million metric tons (MMT), 15% lower than last year's year-to-date total of 18.9 MMT.
USDA’s 2016/17 winter wheat seeding report released Jan. 12 reported U.S. farmers planted 36.6 million acres of winter wheat, 7% less than 2015/16. USDA assessed HRW planted area at 26.5 million acres (10.7 million hectares), down 9 percent from 2015/16, and SRW planted area fell 5% to 6.72 million acres (2.72 million hectares). U.S. white wheat planted area increased 1% from 2015/16 to 3.43 million acres (1.39 million hectares.
In its January World Agricultural Supply and Demand Estimate (WASDE), USDA said it expects global wheat consumption’s steady growth to continue, reaching 716 MMT in 2015/16. With a record 735 MMT now safely in the bins, endings stocks will also reach a new record of 232 MMT.
After consultations with Egypt’s agriculture ministry, the Egyptian agriculture quarantine authority announced it will allow wheat with 0.05% or less of ergot to be imported.
The Baltic Panamax Index continued its downward spiral closing at 373, the ninth straight record low. The index dropped 13% week over week and has fallen 95 points since the beginning of the year.
The Dollar Index closed at 98.85, up slightly from 98.60 last Friday.
Current hard red spring (HRS) price indications are for Northern Spring. Dark Northern Spring is available, but premiums vary. Soft red winter (SRW) indications are for a minimum falling number of 250. Higher minimum specifications will carry a premium.