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January 22, 2016
  • Technical buying and continued short-covering lent support to wheat futures markets, which closed mixed this week. The commodity funds hold a massive net short position in CBOT and KCBT wheat, underpinning the markets. Bearish fundamentals for 2015/16 continue to limit gains, though the International Grains Council and Strategie Grains reports on Thursday provided some bullish news for 2016/17 wheat production. CBOT March wheat added 2 cents week over week to $4.75/bu, KCBT fell 3 cents to $4.71/bu and MGEX added 8 cents to close at $5.00/bu. CBOT March corn climbed 7 cents to $3.70/bu and CBOT March soybeans dipped 2 cents to $8.76/bu.
  • Gulf basis is firmer for nearby contracts due to river closures and restrictions caused by flooding and fog. Rail freight to the Gulf is also firmer due to increased demand. The Great Lakes are now closed, and typically reopen in late March. PNW basis remained mostly unchanged from last week. Farmer selling continues to be slow.
  • In its weekly Export Sales Report, USDA reported net sales of 362,000 metric tons (MT) for delivery in marketing year 2015/16. Sales, which were in line with trade expectations of 200,000 to 400,000 MT, were up 32% from last week and 33% higher than the prior 4-week average. Total known outstanding sales and accumulated exports of all wheat classes for marketing year 2015/16, through Jan. 14, 2016 were 16.4 million metric tons (MMT), 15% lower than last year's year-to-date total of 19.4 MMT.
  • With Argentine wheat harvest 99% complete, Bolsa de Cereales, the Buenos Aires Grain Exchange, increased its forecast for 2015/16 Argentine wheat harvest by 200,000 MT to 10.3 MMT on Thursday.
  • Accounting for a recent cold spell in Lithuania, Latvia and Poland, European consultancy Strategie Grains marginally lowered its forecast for 2016/17 EU wheat production to 143.1 MMT, a 600,000 MT decrease from its December estimate. EU wheat exports are expected to increase 3% year over year to 28.9 MMT in 2016/17 due to decrease competition from Black Sea exporters.
  • In its first report for 2016, the International Grains Council (IGC) forecast 2016/17 global wheat production will fall 3% year over year to 706 MMT, reflecting decreases in planted area and predicted yields.
  • The Baltic Panamax Index continued its downward spiral closing at 354, the fourteenth straight record low.
  • The Dollar Index closed at 99.53, a two week high, and up 1% from 98.85 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 160122.pdf
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