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May 27, 2016
  • Technical buying and short-covering ahead of the U.S. holiday weekend drove wheat futures higher this week. Support also came from speculation that wheat could be used in U.S. animal feed this year after the nearby KCBT wheat-CBOT corn spread fell to $0.47/bu on Friday, the lowest level in 3 years and down 57% from January. CBOT July wheat added 14 cents to $4.81/bu, KCBT grew 11 cents to $4.60/bu and MGEX increased 2 cents to $5.28/bu. CBOT July corn climbed 18 cents to $4.13/bu and CBOT July soybeans rose 12 cents to $10.86/bu.
  • Farmer selling remained quiet this week supporting basis. 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 is also firmer due to increased competition for elevation capacity from corn and soybeans.
  • In its weekly Export Sales Report, USDA reported net reductions of 9,900 metric tons (MT) for delivery in marketing year 2015/16, which were down noticeably from the previous week and from the prior 4-week average. Sales which were below trade expectations and included significant quantities switched to 2016/17. Total known outstanding sales and accumulated exports of all wheat classes for marketing year 2015/16, through May 19, 2016, were 20.6 million metric tons (MMT), 12% lower than last year's year-to-date total of 23.3 MMT.
  • As of May 22, 75% of U.S. winter wheat had headed according to USDA, which rated 62% of the U.S. winter wheat crop as good to excellent, unchanged from last week. USDA rated just 8% of the crop as poor or very poor, also unchanged from the prior week. USDA reported spring wheat planting at 95% complete compared to the 5-year average of 77%, with 78% emergence compared to the 5-year average of 51%. USDA rated 76% of the spring wheat crop in good to excellent condition, compared to 69% on the same date last year.
  • The International Grains Council increased its forecast for global wheat production to 722 MMT, up 1% from the prior month’s estimate of 717 MMT.
  • SovEcon expects favorable spring weather and an expected increase in planted wheat area will push Russian wheat production higher in 2016/17. The group’s estimate for Russian wheat production is currently forecast at a record 64.0 MMT, which would be a 3% increase year-over-year, if realized.
  • FranceAgriMer estimates 83% of the French soft wheat crop is in good to excellent condition, down from 86% last week and 91% on the same date in 2015.
  • The European Union will produce 145 MMT of soft wheat in 2016, according to the European Commission. If realized, that would be 4% below the record set in 2015.
  • According to the weekly Canadian provincial reports, Alberta spring wheat planting was 84% complete as of May 17, up from 56% the week prior. Saskatchewan spring wheat planting progress was 51% complete, slightly behind last year’s pace of 63%.
  • The Baltic Index fell to 601, down 5% from last week’s close of 634.
  • The Dollar Index increased to 95.75, up slightly from 95.27 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 160527.pdf
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