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July 8, 2016
  • Short-covering and a strong Export Sales report pushed wheat futures higher this week. Seasonal harvest pressure and favorable weather in the U.S. Northern Plains limited gains. CBOT July wheat rose 4 cents to $4.21/bu, KCBT added 11 cents to $4.05/bu and MGEX rallied 8 cents to $4.98/bu. CBOT July corn dropped 3 cents to $3.50/bu and CBOT July soybeans fell 79 cents week-over-week to $10.90/bu.
  • Futures markets continue to encourage winter wheat storage, which supports basis. Continued competition for elevation capacity from soybeans and corn and steady wheat export demand also provided support. Protein premiums for HRW continue to increase on the expectation of a high-yielding, lower protein HRW crop. With harvest beginning in the Pacific Northwest (PNW), soft white protein spreads narrowed significantly this week. PNW basis levels are firmer for the last quarter of 2016 due to planned maintenance closures on the Columbia River system. Fourth quarter basis for the Gulf and Lakes remain strong due to competition for elevation and shuttle train capacity from corn and soybeans.
  • In its weekly Export Sales Report, USDA reported net sales of 825,300 metric tons (MT) for the 2016/17 marketing year. Sales were well above trade expectations of 400,000 to 600,000 MT. Total known outstanding sales and accumulated exports of all classes of wheat for the 2016/17 marketing year, through June 30, 2016 were 8.46 million metric tons (MMT), 37% higher than last year's year-to-date total of 6.19 MMT. USDA expects 2016/17 U.S. wheat exports to reach 24.5 MMT.
  • As of July 5, U.S. winter wheat harvest is 58% complete, ahead of the 5-year average pace of 55% complete on the same date. USDA rated 62% of the U.S. winter wheat crop as good to excellent, unchanged from the prior week but greatly improved from 44% good to excellent on the same date in 2015. USDA rated 72% of the spring wheat crop in good to excellent condition, unchanged from last week. USDA reported 74% of spring wheat had headed, compared to the 5-year average of just 45% on the same date indicating crop development is well ahead of normal.
  • The European Commission lowered its projection for European Union wheat production by 500,000 MT to 145 MMT. Improved yield potential in Spain, Romania and Hungary is expected to offset yield reductions in France and Germany.
  • FranceAgriMer estimated French harvest at 1% complete compared to 11% on the same date last year, and rated 59% of French soft wheat in good or excellent condition, down from 65% the prior week, and the lowest rating for the time period in 5 years.
  • The Russian Agriculture Ministry reported Russian wheat harvest at 4% complete on July 7.
  • The Baltic Index rallied to 699, 6% higher than last week’s close of 660.
  • The Dollar Index climbed to 96.34, up 1% from 95.73 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 160708.pdf
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