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August 12, 2016
  • Wheat futures rose this week supported by short-covering. Support also came from strong export demand, a softer U.S. dollar and lower expected production in the European Union (EU). Large global supplies continue to limit gains. CBOT September wheat gained 6 cents to $4.22/bu, KCBT added 4 cents to $4.16/bu and MGEX rose 19 cents to $5.14/bu. CBOT September corn lost 2 cents to $3.22/bu and CBOT September soybeans grew 11 cents to $9.99/bu.
  • Basis firmed this week for both nearby and deferred contracts. Corn and soybean export demand is tying up elevation capacity and increasing demand for rail freight. Rail rates will increase in October, accounting for part of the basis increase. Lack of farmer selling and strong export demand for wheat is also supporting basis.
  • USDA’s weekly Export Sales Report included net wheat sales of 607,600 metric tons (MT) for marketing year 2016/17. Sales were above trade expectations of 350,000 to 550,000 MT. Total known outstanding sales and accumulated exports of all classes of wheat for 2016/17, through Aug. 4, 2016, were 10.7 million metric tons (MMT), 20% higher than a total of 8.94 MMT last year on this date. USDA expects 2016/17 U.S. wheat exports to reach 25.9 MMT.
  • As of July 31, U.S. winter wheat harvest is 94% complete, ahead of the 5-year average pace of 91% complete on the same date. USDA rated 68% of the spring wheat crop in good to excellent condition, unchanged from last week. U.S. spring wheat harvest is 30% complete, compared to the 5-year average of 18%.
  • USDA forecast world wheat production at 743 MMT, up 1% from the 2015/16 record of 735 MMT. If realized, it would be 5% above the 5-year average, and the fourth consecutive year of record world wheat production. Global trade will reach 171 MMT, on par with 2015/16 trade. Global consumption will set a new record for the fourth consecutive year at 732 MMT. U.S. production is expected to reach an estimated 63.2 MMT. If realized, it would be the largest crop since 2008/09 and 11% greater than the 5-year average. USDA believes U.S. exports will rebound to an estimated 25.9 MMT, up 23% from 2015/16.
  • Strategie Grains lowered its estimate for EU wheat production to 138 MMT on Aug. 11 due to expected lower production in France, Germany and the U.K.
  • FranceAgriMer estimated French harvest at 75% complete compared to 62% the week prior.
  • Argentina’s Rosario Grain Exchange (Bolsa de Comercio de Rosario) reported Argentine planting at 97% complete on Aug. 11, in line with last year’s pace. According to Rosario, Argentine farmers will plant 4.61 million hectares of wheat in 2016/17.
  • According to Reuters, the Russia Agriculture Ministry announced it would buy up to 100,000 MT of grain from the Crimea peninsula as part of its 2016/17 intervention program.
  • Russian consultancy SovEcon increased its estimate for Russian wheat production to a record high, 71.3 MMT due to sharply higher yields.
  • The Baltic Index rose to 653, 3% higher than last week’s close of 636.
  • The Dollar Index fell to 95.72, down slightly from 96.18 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 160812.pdf
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