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December 4, 2015
Wheat futures rallied this week after the U.S. dollar fell 2% on Thursday, triggering short-covering. It was the largest, single-day decline in the dollar in more than six years. Improved crop conditions in Ukraine and increased Canadian wheat production estimates limited gains. CBOT December wheat rallied 5 cents on the week to $4.71/bu, KCBT climbed 13 cents to $4.63/bu and MGEX rose 18 cents to $5.28/bu. CBOT December corn increased 17 cents to $3.76/bu and CBOT January soybeans grew 33 cents to $9.08/bu.

Farmer selling picked up slightly this week after Thursday’s rally. Basis softened slightly, but limited export business made markets difficult to define.

According to USDA’s final weekly crop progress report of the calendar year, winter wheat winter wheat condition improved 2 percentage points from the prior week. The report rated 55% of the crop good to excellent compared to 58% in 2014 on the same date. Winter wheat emergence is also on pace with the 5-year average at 93%.

In its weekly Export Sales Report, USDA reported net sales of 392,200 metric tons (MT) for delivery in marketing year 2015/16, which is up 29% from the previous week and 17% greater than the prior 4-week average; it was also well within trade expectations of 250,000 to 500,000 MT. Total known outstanding sales and accumulated exports of all classes of wheat for marketing year 2015/16, through Nov. 26, 2015 were 14.5 million metric tons (MMT), 14% lower than last year's year-to-date total of 16.9 MMT.

StatsCan’s final 2015 crop report pegged total Canadian wheat production at 27.6 MMT, up 6% from its October estimate, but still 6% lower than 2014/15 levels. Durum production increased an estimated 4% from 2014/15 levels to 5.39 MMT.

CBH Group, Australia’s largest wheat exporter, dropped its production forecast for Western Australia, the country’s largest wheat exporting state to 7.5 MMT. The 300,000 MT decrease is due to fire, wind and frost damaging the region’s crops. Unfavorable weather conditions have also caused quality downgrades, with more rain forecast for the region.

As of Dec. 3, Bolsa de Cereales, the Argentina Grain Exchange, reports harvest is 31% complete, behind 2014’s 42% completion rate on the same date due to rain delays that have also resulted in quality downgrades.

As of Friday, Dec. 4, Ukraine winter wheat emergence is at 83%, up from 80% one week prior. Sixty-six percent of winter wheat is in good and satisfactory condition, up from 64% the previous week, according to the Ukraine Agriculture Ministry.

The Baltic Panamax Index closed at 574, down slightly from 581 last week. Since falling to a record low 498 on Nov. 20, the Index has rebounded 15%.

The Dollar Index closed at 98.37, down 2% from 100.02 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.

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