Analysis: Wheat

Wheat Follows Corn Lower, EU Futures Maintain Support

May 25, 4:27 pm | Wheat

Wheat futures ended mixed, with winter wheat lower and spring wheat higher, and MGE’s premium to other markets continues to widen. July Minneapolis settled at $1.32/Bu premium to Chicago, which on a continuous basis is the highest since January. Our work continues to suggest that there’s value in higher protein wheat.   Old crop weekly export sales totaled 7 Mil Bu, with total 16/17 commitments now at 1,043 Mil Bu, nearly 10 Mil above the USDA’s target. New crop sales totaled a decent 13 Mil, and along with outstanding old crop sales, new crop commitments as of mid-May rest at 235 Mil, up 11% from last year. With EU cash prices little changed this week, the US Gulf market remains…

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Wheat Steadies; World Market Rather Dull Ahead of Holiday

May 24, 4:54 pm | Wheat

US futures rallied to modest gains, led by spring wheat futures, while the European market ended exactly unchanged. Interest in new positions is lacking ahead of clarification on summer weather pattern, and there still exists a battle between record old crop stocks and a substantial decline in inventories in 2017/18 crop year, assuming trend yields. Funds bought a net 2,000 contracts in Chicago and ARC estimates managed funds’ net short position today at 119,000 contracts, record large for late May.   A spark is needed to drive funds out of their sizeable short position. Weather moving forward will be key. However, as detailed in this evening’s wire, the longer term wheat outlook is turning a bit more supportive. Pockets of…

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Wheat Ends Weaker Following Condition Rating, Stronger US Dollar

May 23, 4:51 pm | Wheat

US and EU wheat futures reacted to Monday afternoon’s modest boost in US winter wheat ratings, while the US dollar re-captured much of Monday’s loss. Otherwise, volume remains tired and fresh news is absent, but the US continues very well positioned in the world export market for early summer demand.   US wheat’s discount to European origin is displayed below, and in the case of SRW, which is the world’s cheapest milling origin, albeit of lower quality, the discount is a steep $15/MT to French. ARC’s research also suggests that without above trend yields in Europe & the Black Sea, downside risk in world cash markets is limited. New crop offers in Russia are quoted at $175/MT; seasonal lows should…

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Wheat Ends Steady on Further Dollar Weakness

May 22, 4:40 pm | Wheat

US wheat futures ended steady to a bit higher; EU futures were more supported in spite of further strength in the euro, and ARC maintains that the market is working through a seasonal bottom. Note that hot/dry weather is scheduled for Germany, Poland and Western Ukraine in the next 10 days. The ongoing rally in the euro has pushed European origin fob offers to $192-198/MT basis spot, vs. US Gulf offers of SRW and lower protein HRW to $183-185. ARC’s contacts suggest that originating wheat from producers in Russia remains difficult amid the rising value of the ruble.   This afternoon’s NASS crop progress report leans negative. Winter wheat crop conditions were pegged at 52%, up 1% on last week,…

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Wheat Extends Rally; Trades Above 20-Day Moving Average

May 19, 4:14 pm | Wheat

July CME wheat rallied 10 cents, with slightly better gains noted at other exchanges. Crude oil also rallied sharply, thereby supporting currencies in Russia, Canada and Australia, and the US market remains very competitive for early summer export demand. ARC also mentions that managed funds through Tuesday increased their net short Chicago wheat position to 121,000 contracts, up 13,000 on the previous week and compared to a net short of just 73,000 contracts a year ago.   Russian domestic wheat prices this week are unchanged in ruble terms, but up slightly in US dollar terms. Russian fob offers have rallied slightly following Egypt’s surprising tender results, and the US Gulf market maintains its status of the world’s low cost seller…

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Wheat Markets Stable Despite Row Crops, Higher Dollar

May 18, 4:44 pm | Wheat

Winter wheat futures settled unchanged, while MGE futures rallied a few cents, and the wheat market was largely immune from Brazil’s latest political turmoil. Early harvest reports from TX continue to be disappointing with respect to quality, and the US cash wheat markets are getting stronger – slowly but steadily.   Interior HRW basis is still historically weak, but has improved noticeably over the last four months. Select locations from the S & W Plains are displayed below, and generally basis has improved by $.35-.45/Bu (30-35%) since January. New crop bids are firmer. The point is that higher protein wheat prices scored a long term bottom in 2016, and the market is still a long ways from determining just how…

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Wheat Markets End Slightly Higher; Egyptian Tender Somewhat Shocking

May 17, 3:39 pm | Wheat

US & European wheat futures rallied to modest gains, but ended off session highs amid a lack of follow through interest. Planting will accelerate in Canada, and still there are no signs of lasting heat or dryness in Europe and Russia. However, Egypt’s tender results at midday confirmed just how competitive US Gulf wheat is in the world market, and also, surprisingly, how expensive old crop Russian wheat is through July. World cash wheat markets look to inch higher.   Egypt bought 295,000 MTs of optional origin wheat, of which 115,000 was sourced from the US. The average price paid ($193) generally follows the recent trend in futures. However, HRW was offered at $186-187; all other origins were offered at…

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Wheat Ends Mostly Weather; Egypt Finally Returns

May 16, 4:47 pm | Wheat

July CME crawled to a modest 1-cent gain, but otherwise US & European markets ended lower again. After a lengthy absence (9 weeks) Egypt’s GASC has returned to the world market seeking supplies for late June, technically an old crop position (based on the int’l trade year). The tender will provide needed clarity for world cash markets, which have been uncertain amid the recent lull in global trade.   The graphic attached displays quoted global fob offers for June and August. Note that Gulf SRW is the world’s cheapest origin through mid-summer, and EU, Black Sea and HRW are within $4/MT of one another. It’s very likely that Egypt fills its tender tomorrow with supplies from E Europe or Russia,…

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