By Claire Hutchins, USW Market Analyst
Navigating U.S. export markets and making purchasing decisions is a complicated, risk-involved process, especially when wheat customers have so many options for sourcing their supplies. As representatives of the U.S. wheat industry, U.S. Wheat Associates (USW) recognizes it has a social contract to ensure our customers have access to accurate, unbiased price information well into the future to help them make timely buying decisions. One of the ways USW has done that over many decades is by publishing a weekly Price Report on Friday afternoon that gives the world’s buyers an independently derived baseline of export prices for U.S. wheat by class, protein level, export region and delivery month. To help customers make timely buying decisions, the Price Report features export basis and export price estimates information seven months into the future. It also the only public source of U.S. wheat export prices available to buyers that features price estimates so far into the future.
USW’s Price Report details export price information for nearly every class of U.S. wheat. This report provides an independent assessment of weekly export prices across a broad segmentation of the U.S. wheat sector and delivers independent estimates of export basis and export prices based on industry surveys. To build the Price Report, USW surveys several grain trading companies—which each have slightly different export basis values—and takes an average of these values, by category, to calculate the final export price. This allows customers to see industry-wide movements in basis and price week-over-week.
Export basis represents the difference between the export price and the futures price. It is significant because it captures domestic transportation and storage costs, local supply and demand conditions, weather disruptions, quality premiums, handling costs and profit margin. Export basis can move up or down, affecting the export price of wheat, due to a variety of these factors. Wheat export prices are also directly tied to movements in the futures market. In the Price Report, USW always details why export basis values and futures values are changing week-over-week, so customers have the most reliable source of information available about export price movement.
In addition to weekly estimates for wheat export prices, the Price Report also includes current and forward futures prices by exchange, grain freight rates for the most commonly-traded vessel sizes and routes, select exchange rates, historic protein premium and basis charts, and market highlights. U.S. wheat export prices are discovered openly through futures exchanges and basis values from the Price Report, giving customers an advantage when it comes to purchase specifications and timing. An open, transparent pricing system is essential to a functioning global market and USW wants its customers to have as many tools available to them when buying wheat, including price discovery tools.