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July 14, 2017
  • USDA’s reduction of its 2017/18 U.S. wheat production estimate on Wednesday was much smaller than traders expected pressuring U.S. futures lower this week. CBOT September wheat futures fell 24 cents to $5.11/bu, KCBT declined 29 cents to $5.13/bu and MGEX slipped 9 cents to $7.58/bu. CBOT September corn dropped 16 cents to $3.76/bu and CBOT August soybeans lost 12 cents to $9.89/bu.
  • Farmer selling picked up this week for hard red spring (HRS) and hard red winter (HRW), pressuring export basis lower as buyers wait to see which way the weather market moves. Weather forecasts should be watched closely as any type of weather event on maturing HRS will cause export basis to skyrocket. Durum prices also jumped this week in response to the expected smaller U.S. and world crops. Good export demand for soft white (SW) and slow farmer sales supported SW export basis this week. Soft red winter (SRW) quality tests continue to come in, highlighting the high-quality of this year’s crop.
  • USDA’s weekly Export Sales Report included net wheat sales of 357,700 (MT) for marketing year 2017/18. Sales were within trade expectations of 300,000 to 500,000 MT. Total known outstanding 2017/18 sales and accumulated exports of all classes of wheat, through July 7, 2017, were 8.75 million metric tons (MMT), which is in line with 8.78 MMT last year on this date, and 1% above the 5-year average. USDA estimates 2017/18 U.S. wheat exports to reach 26.5 MMT.
  • On July 10, USDA reported winter wheat harvest is 67% complete, slightly ahead of the 5-year average pace of 65%. USDA rated 35% of the spring wheat crop in good to excellent condition compared to 37% last week; 39% of spring wheat is in poor or very poor condition. USDA reported 79% of spring wheat had headed, ahead the 5-year average of 74%.
  • The July 11 U.S. Drought Monitor reported drought conditions continue to worsen and spread across the U.S. Northern Plains. Temperatures averaged 4 to 10 degrees above normal last week, exacerbating dry conditions. Fifty-five percent of North Dakota is in a severe or extreme drought and the remainder of the state is abnormally dry or in a moderate drought. Similarly, 72% of South Dakota and 45% of Montana are in a moderate to extreme drought. The extended forecast expects continued hot, dry conditions across the drought-stricken areas.
  • In its July World Agricultural Supply and Demand Estimate update, USDA forecast world beginning stocks to increase to 258 MMT, up 6% year over year. World wheat production is expected to decline 2% to an estimated 738 MMT. Global trade will slip slightly to 178 MMT and global consumption will reach a record 735 MMT in in 2017/18. U.S. production will fall to an estimated 47.9 MMT, down 24% year over year, if realized. U.S. beginning stocks will climb to a projected 32.2 MMT, up 21% from 2016/17 and the largest beginning stocks since 1988/89, if realized. USDA believes U.S. exports will decrease slightly to 26.5 MMT, down 8% from the current 2016/17 estimate of 28.7 MMT.
  • FranceAgriMer rated 66% of French common wheat in good or excellent condition, unchanged from the prior week. Wheat harvest is 29% complete, up from 6% the prior week.
  • As of July 13, Bolsa de Cereales, the Buenos Aires Grain Exchange, reduced the estimate for Argentine wheat planted area to 13.3 million acres (5.4 million hectares), down 2% from the prior estimate due to flooded fields in Buenos Aires and La Pampa, two large wheat producing regions. Argentine wheat planting is 79% complete, up from 73% the prior week and on par with last year’s pace.
  • The Saskatchewan weekly crop report noted wide variability in crop conditions across the province, with crops hurt from the hot weather and lack of rain. Topsoil moisture conditions continue to vary widely across the province, with 2% of topsoil moisture rated as excessive and 57% rated as short or very short. In Alberta, 73% of spring wheat is rated in good to excellent condition compared to 77% last week. Surface soil moisture decreased significantly this past week due to high temperatures. Currently, 59% good to excellent, down 7 percentage points from last week; 11% is still rated excessive.
  • Reuters reported wheat harvest in Russia and Ukraine has been delayed by wet field conditions. Drier weather is expected in the coming weeks.
  • The Baltic Index rose to 888, up 8% week over week — an exact reversal of the prior week’s downward trend.
  • The Dollar Index slipped to 95.62, down slightly from last Friday’s close of 96.01.
  • 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 170714.pdf
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