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December 9, 2016
  • Wheat futures finished the week mixed with MGEX closing lower, but after hitting contract lows earlier this week, CBOT and KCBT wheat futures rebounded supported by technical short-covering. A strong U.S. dollar and large global supplies continue to limit gains. CBOT March wheat added 12 cents to $4.16/bu, KCBT grew 5 cents to $4.13/bu and MGEX wheat fell 7 cents to $5.31/bu. CBOT March corn increased 12 cents to $3.59/bu and CBOT January soybeans climbed 10 cents to $10.37/bu.
  • A winter storm that dropped 25 to 30 inches (63 to 76 cm) of snow across the U.S. Northern Plains supported hard red spring (HRS) export basis as railroads work through the logistical challenges. With the U.S. corn and soybean export programs through the fall glut, January Gulf export basis softened due to increased availability of export elevation capacity. Limited Pacific Northwest (PNW) export elevation capacity in the remaining weeks of 2016 and January is pushingJanuary export basis levels higher for all classes. Protein spreads for PNW HRS also narrowed this week due to continued strong demand. The Columbia-Snake river system closure for planned maintenance will begin Dec. 16. The Great Lakes-St. Lawrence Seaway System will close for the season on Dec. 20 and will reopen at the end of March.
  • USDA’s weekly Export Sales Report included net wheat sales of 503,100 metric tons (MT) for marketing year 2016/17. Sales were above trade expectations of 300,000 to 500,000 MT. Total known outstanding sales and accumulated exports of all classes of wheat for 2016/17, through Dec., 2016, were 19.4 million metric tons (MMT), 32% higher than a total of 14.7 MMT last year on this date. USDA expects 2016/17 U.S. wheat exports to reach 26.5 MMT.
  • USDA forecast world wheat production at 751 MMT, up 2% from the 2015/16 record of 735 MMT. If realized, it would be 6% above the 5-year average, and the fourth consecutive year of record world wheat production. Global trade will reach 177 MMT, 11% above the 5-year average. Global consumption will set a new record for the fourth consecutive year at 740 MMT. The U.S. production estimate remained unchanged from the November estimate at 62.9 MMT, up 12% from 2015/16. USDA left its estimate for U.S. exports at 26.5 MMT, up 26% year over year and on par with the 5-year average, if realized.
  • The Dec. 6 U.S. Drought Monitor reported that most of Oklahoma and western Kansas, (major HRW-producing states), are now in moderate to severe drought with little snow cover to protect wheat during dormancy. Recent rainfall did little to alleviate the moderate to extreme drought conditions in the southeastern United States. The 5-day forecast expects moderate precipitation to prevent further worsening of drought conditions across much of the United States.
  • The Australia Bureau of Agricultural and Resource Economics (ABARES) increased its forecast for 2016/17 Australian wheat production to 32.6 MMT. If realized, that would be a year over year increase of 33% and a new record.
  • On Dec. 7, Bolsa de Cereales, the Argentine Grain Exchange, reported harvest was 41% complete, up from 29% last week. Favorable weather allowed harvest to continue moving south this week. The average yield to date is 2.81 metric ton per hectare (MT/ha) (41.8 bu/acre) compared to 2.48 MT/ha (36.9 bu/acre) on the same date last year.
  • StatsCan reported Canadian farmers produced 31.7 MMT of wheat in 2016/17, up 15% from 2015/16. Canadian durum wheat production increased 44% year over year to 7.76 MMT.
  • According to Reuters, India eliminated its 10% import duty on wheat on Dec. 8. India, the world’s second largest producer and consumer of wheat behind China is normally self-sufficient in wheat production, but two back to back years of drought lowered domestic production and reduced stocks.
  • The Baltic Index fell to 1122, down 6% from last week’s close of 1196.
  • The Dollar Index rose to 101.45, up 1% from 100.76 last Friday.
  • Current hard red spring (HRS) price indications are for Northern Spring. Dark Northern Spring is available, but premiums vary. SRW indications are for a minimum falling number of 250. Higher minimum specifications will carry a premium.

File Name
PR 161209.pdf
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