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June 17, 2016
  • Harvest pressure pushed U.S. wheat futures lower this week, despite support from a strong Export Sales report. Abundant global carry-in stocks and promising yield potential in top winter wheat producing countries of Russia, France and the United States weighed on the market. CBOT July wheat fell 14 cents to $4.81/bu, KCBT lost 8 cents to close at $4.61/bu and MGEX dropped 14 cents to $5.40/bu. CBOT July corn added 15 cents to $4.38/bu and CBOT July soybeans decreased 19 cents to $11.59/bu.
  • Despite seasonal harvest pressure, basis remained steady this week supported by unusually strong competition for elevation capacity from soybeans and corn. Normally, competition from soybeans and corn for elevation capacity declines in the summer months; however, the corn and soybean harvest problems in the Southern Hemisphere have increased demand for U.S. corn and soybeans. Protein premiums for HRW widened this week on the expectation of a high-yielding, lower protein HRW crop. White wheat protein premiums continue to erode due to pressure from a more normal production year with adequate moisture. Basis levels for the Pacific Northwest are firmer for the last quarter of 2016 due to planned maintenance closures on the Columbia River system. Fourth quarter basis for the Gulf is also firmer due to increased competition for elevation capacity from corn and soybeans.
  • In its weekly Export Sales Report, USDA reported net sales of 762,900 metric tons (MT) for the 2016/17 marketing year. Sales were well above trade expectations of 250,000 to 450,000 MT. Total known outstanding sales and accumulated exports of all classes of wheat for the 2016/17 marketing year, through June 9, 2016, were 6.53 million metric tons (MMT), 29 percent higher than last year's year-to-date total of 5.05 MMT. USDA expects 2016/17 U.S. wheat exports to reach 24.5 MMT.
  • As of June 13, U.S. winter wheat harvest is 11% complete, behind the 5-year average pace of 18% complete on the same date. USDA reported 96% of U.S. winter wheat had headed, and rated 61% of the U.S. winter wheat crop as good to excellent, down one percentage point from the prior week. USDA rated 79% of the spring wheat crop in good to excellent condition, unchanged from last week and on par with wheat conditions at the same time last year.
  • France, the top European Union (EU) wheat producing country, received more than double its seasonal average rainfall in May according to Meteo France. The moisture improved yield potential, but also increased concerns about quality. FranceAgriMer rated 75% of French soft wheat in good or excellent condition, unchanged from the prior week.
  • Strategie Grains pegged EU wheat production at 147 MMT, 3% lower than the record 2015/16 production of 151 MMT. EU wheat exports were forecast at 29.9 MMT, down 3% from the previous month’s estimate due to an expected increase in competition from Russia.
  • According to Reuters, Russia could begin its grain market intervention program as early as August this year.
  • ABARES projects Australian 2016/17 wheat production will reach 25.4 MMT, up from its March estimate of 24.5 MMT due to beneficial rain.
  • The Baltic Index fell to 598, 2% lower than last week’s close of 611.
  • The Dollar Index rose to 94.10, downs slightly from 94.58 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.

File Name
PR 160617.pdf
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