Wheat Market Outlook and Prices
The Wheat Market Outlook is provided by Mercantile Consulting Venture Inc.
Click the links below to go directly to that section
- World Wheat Overview:
- Wheat Market Outlook
- Primary Elevator Bids
- Grade Spreads in Canadian Dollars
- Relevant FOB Prices and Calculated Basis
World Wheat Overview:
2017/’18 World Wheat Overview: USDA Export Sales, March 14th, 2018.
- Slow US export sales: The USDA export sales report again confirmed the poor performance of US wheat on the world market. Just 163k mt of US wheat was sold last week, significantly below the 250-500k mt expectation. This is only 80% of the roughly 204k mt weekly sales needed to reach the USDA’s revised export projection.
- Brussels updated export projections on EU all wheat shipments now stands at 20.3mln mt. This is significantly down from the Commission’s 25.4mln mt and the USDA’s 25.0mln mt.
- Russian wheat exports have been the big volume winner this year at the cost of US and EU exports.
Global wheat production and trade:
There is a lot of competition in the wheat markets as wheat is produced around the world. Below is a brief synopsis on this week’s market events in the major wheat origins.
- Futures: May’18 contract Chicago winter wheat closed at 467.6 which was down 11 cents in today’s trade and down 21.4 cents for the week. Meanwhile, May’18 contract Kansas hard red winter wheat closed down 14 cents at 499.4 which is down 21 cents for the week. In Minneapolis, May’18 contract hard red spring wheat closed at 611.5, down 3.6 cents in today’s trade and down 5.4 cents for the week, while Jul’18 hard red spring wheat closed at 618.4, down 3.6 cents for the day and 7.2 cents for the week.
- Funds: Index funds added to their overall long as further protection against inflation. Specs bought additional on weather scares but continue to be short wheat. Funds have a huge soya complex long compared to the USDA’s estimate of the USA soybean carry-out.
In wheat, Spec Funds are currently short 4.6 mln mt, which is down 1.5 mln mt from Mch. 13.
- Matif: Matif wheat futures closed higher on the week at €165, but down slightly from the week’s highs. This was initially from following the CBOT’s reaction to the reports of poor US export sales, but it then continued lower from the Brussels’ update on EU shipments.
- In grain shipping week 32, Canadian producers delivered 306.8k mt of wheat, which is down slightly from the 362.9k mt last week. This makes a total of 11.178mln mt delivered YTD. Exports are down again from 252.7 last week, to this week’s 173.0k mt. This makes a YTD total of 9.323mln mt which is up from last year’s 8.157mln mt.
- There is continued frustration with the tardiness of Canadian rail companies causing the hash tags #moveourgrain and #passc49 to gain popularity on social media sites. In week 31, CN and CP provided an average of 45% of the requested cars. There are reports of farmers in the prairie provinces with overdue grain contracts who are unable to haul because elevators have not been able to source rail cars. The Grain Growers of Canada is calling for the Senate and House of Commons to pass the Transportation Modernization Act (Bill C-49) in hopes that it will cause Canadian rail companies to improve their service to grain producers.
- We note that so far, the higher futures levels have only succeeded to make better cash prices for origins other than North American.
- Thursday’s export sales report again confirmed the lack of competitiveness of US wheat on the world market: Last week’s export sales of 163k mt were down by 58% from the previous week. The main buyers were Mexico, (36.4k mt, 12.4k mt less than last week), China (35.6k mt, up 35k mt from last week), Guatemala (29.1k mt), the Philippines (28.9k mt), and Ecuador (17.7k mt). For the 2018/19 marketing year, last week’s sales were 56.7k mt, with Guatemala buying 46k mt and the rest sold to unknown destinations.
- Last week’s actual exports were 334.8k mt, down 7% from last week with the main destinations being the Philippines (99.1k mt), Morocco (37.8k mt), China (35.6k mt), Mexico (35.6k mt), and Algeria (31,0k mt).
- The drought in the US Plains is reaching record levels. Excessive dryness (that has not been seen since 1895/96) is encompassing over 1/3 of the total US HRW wheat belt, including central and southwest Kansas, the Oklahoma Panhandle, and much of Western Texas.
- The NASS weekly crop report indicated a further worsening of the Kansas winter wheat situation but shows some improvement in Oklahoma and Texas. Kansas winter wheat good/excellent ratings is currently reported at 12%, which is down another 1% from last week. Poor/very poor ratings for the Kansas crop has also increased another 3% from last week and now stands at 53%. On the other hand, Oklahoma winter wheat is reported to be 7% good/excellent (up from last week’s 6%) and poor/very poor ratings have decreased 5% from last week to 72%. Similarly, Texas winter wheat is now reported as 13% good/excellent (up from last week’s 10%) and poor/very poor ratings have decreased to 53% (down from last week’s 64%).
- US new crop wheat commitments are down to a 6-year low on concerns of the poor HRW crop.
- The 5-day forecast shows rain is expected at the beginning of this week. Rains are supposed to cover the Northern and Eastern Kansas regions as well as the Eastern regions of Oklahoma and Texas.
- Dryness in the US HRS wheat growing regions continue to improve. US HRS wheat growing areas are under 39% moderate and 8% severe drought conditions. With majority of the dryness in northeast Montana and the Dakotas.
- The USDA projected acreage report comes out on March 29. Some analysts are projecting that US total wheat plantings to be 46.9mln acres this year (above USDA’s current forecast of 46.5mln acres): winter wheat is projected to be 32.5mln acres (down 152k acres from last year), spring wheat is projected to be 11.9mln acres (up 915k acres from last year) and durum is projected to be 2.4mln acres (up 114k acres from last year).
- Aussie futures are slightly lower on the week. FOB values have also eased some with the US markets.
- Australian wheat is current trading at US $242.50 per MT Fob Western Australia.
- Forecasts show that Argentina will likely be hit with some rain that will cover 20% of the growing region. This will do nothing to reverse the damage that has already been done but these rains are stull very much needed as wheat planting is soon to start. The only quotes were for April 12% pro at $222 and May 11.5% pro at $215. Domestic values were unchanged as farmers show concerns about planting potential.
- Brazil saw 0.50” of rain falling on 55% of its growing region last Tuesday.
- The EU continues to turn progressively drier as rain is pushed further South and East. Overall there does not seem to be any real problem with EU winter wheat.
- Algeria trimming imports (only purchasing 150k mt this week compared to their last mid-February purchase of 340k mt) in not good news for French wheat. Algeria normally buys about 60% of total French wheat exports. FranceAgriMer cut its export forecast to countries outside of the EU by another 500k mt (down to 8.5mln mt).
- French 11.5% pro closed the week at $208.90, up $3.90 from last week. German 12.5% pro closed the week at $210.70, 40 cents lower than the week before.
Black Sea wheat:
- The GASC tender this week only received 3 offers, each of Romania and Russia Wheat. The lack of offers indicates that not only are logistics influencing price but also the fact that there are other destinations for Russian wheat that have lower execution risks.
- Russian 12.5% protein wheat is currently trading at $203/mt, up $1 from last week.
- Algeria bought just 150k mt of June milling wheat at US$225/mt.
- Japan purchased 120k mt of AU/Cdn.US wheat.
- Egypt (GASC) purchased 240k mt (paying US$2-4/mt more than their previous tender) of wheat sourced equally from Russia and Romania.
- US export sales of 163k mt this week. If this pace is maintained the US will fall 40mln bu short of the USDA’s revised expectation.
- Rain in the Plains: Last Friday’s 5-day forecast was calling for rain at the beginning of this week. Rains are supposed to cover the Northern and Eastern Kansas regions as well as the Eastern regions of Oklahoma and Texas.
- The EU announced last Friday that it would put a 25% tariff on US corn if the US hikes tariffs on EU steel and aluminum.
- Slowdown of Wheat Buying: It seems that global trade is starting to ask if both the crop and domestic demand are supporting the high prices currently being asked. This is evident as Algeria only purchased half the wheat they normally do in this week’s tender, and Korea passed on their tender altogether.
HRW is still the main factor causing wheat prices to be as strong as they are. However, most of the drought has been already built into the price. It is important to keep in mind that winter wheat crops in the EU and Black Sea are showing no real signs of problems, there is an overly comfortable US wheat stock cushion (estimated 27.46mln mt) and spring wheat areas looking to have ample moisture come planting time.
Markets will be looking toward the planting projection report on the 29th, and you can expect the markets will have a strong reaction if the forecasted rain in the US Plains does prove true.
We continue to recommend old crop wheat sales at $7.00 per bushel or better and continue to leave new crop alone for now.
Primary elevator bids data source: PDQ
CLICK HERE to learn what the basis is and why it is important.
|CLICK HERE for the full report in PDF.|
For the archived wheat market outlook and price reports, please CLICK HERE.
Wheat Market Outlook and Prices
- Producer Info
- About Sask Wheat
- Contact Us
- Marketing Info
- News & Events
- Privacy and Disclaimer
- Reports & Presentations
- Thank you for registering for the Sask Wheat Semi-Annual Meeting!
- Wheat Market Outlook and Prices
- Wheat Market Outlook Archive
- Thank you for registering for Think Wheat in Tisdale
- Thank you for registering for Think Wheat in Weyburn
High-throughput omics approaches for effective breeding selection of durum wheat quality
This project will focus on genetic and genomic approaches to predict quality parameters including protein content, yellow pigment content (YPC) and milling quality in durum which will enable larger scale selections for those traits at earlier generations of breeding programs and ultimately accelerate the breeding programs on improving durum wheat quality.view all