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July 15, 2016
  • Seasonal harvest pressure, favorable growing conditions for wheat in the U.S. northern plains and a bearish WASDE pushed wheat futures markets lower this week. A smaller than expected export sales report also weighed on the market. CBOT September wheat fell 10 cents to $4.25/bu, KCBT lost 7 cents to $4.14/bu and MGEX dipped 4 cents to $4.97/bu. CBOT September corn slipped 3 cents to $3.52/bu and CBOT August soybeans dropped 11 cents to $10.72/bu.
  • Storage continues to be more attractive to farmers than selling wheat based on the futures market carry, which supports basis. Increased demand for barge freight pushed Gulf basis higher. Wheat continues to compete with corn and soybeans for elevation capacity. Protein premiums for HRW are expected to remain wide in 2016/17 due to a high-yielding, lower protein crop. Harvest is underway in the Pacific Northwest (PNW) pressuring soft white protein spreads. 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 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 317,700 metric tons (MT) for the 2016/17 marketing year. Sales were below 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 July 7, 2016, were 8.78 million metric tons (MMT), 35% higher than last year's year-to-date total of 6.48 MMT. USDA expects 2016/17 U.S. wheat exports to reach 25.2 MMT.
  • As of July 10, U.S. winter wheat harvest is 66% complete, just ahead of the 5-year average pace of 65% complete on the same date. USDA rated 70% of the spring wheat crop in good to excellent condition, down two percentage points from last week. USDA reported 91% of spring wheat had headed, compared to the 5-year average of just 64% on the same date.
  • USDA forecast world wheat production at 738 MMT, up 3.90 MMT from the 2015/16 record of 735 MMT. If realized, it would be 4% above the five-year average, and the fourth consecutive year of record world wheat production. Global trade will slip to 168 MMT, down 805,000 MT from an estimated 169 MMT in 2015/16. Global consumption will set a new record for the fifth consecutive year at 725 MMT. U.S. production is expected to reach an estimated 61.5 MMT. If realized, it would be the largest crop since 2008/09 and 8% greater than the five-year average. USDA believes U.S. exports will rebound to an estimated 25.2 MMT, up 19% from 2015/16
  • FranceAgriMer estimated French harvest at 7% complete compared to 31% on the same date last year, and rated 49% of French soft wheat in good or excellent condition, down from 59% the prior week.
  • Strategie Grain forecast European Union (EU) wheat production at 145 MMT, down 1% from the prior month’s estimate due to expected decreases in France and Germany, the largest wheat producing countries in the EU.
  • The Brazilian National Supply Company, CONAB, reported Brazilian farmers will plant 12% fewer hectares of wheat in 2016, but an estimated 30% year-over-year increase in yields will more than offset. CONAB pegged Brazilian 2016/17 wheat production at 6.28 MMT, up 13% from 2015/16, if realized.
  • Argentina’s Rosario Grain Exchange expects Argentine farmers to plant 4.5 million hectares of wheat in 2016/17, down 5% from its June estimate due to rain delays.
  • The Baltic Index rallied to 738, 5% higher than last week’s close of 699.
  • The Dollar Index climbed to 96.61, up slightly from 96.34 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 160715.pdf
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