Analysis: Wheat

KC Wheat Hits 12-Week Low; Egypt Demand Overstated?

Mar 22, 4:22 pm | Wheat

Wheat’s slide continues, with KC futures breaching chart pattern-based support, and with Egypt reportedly canceling a totals of 10 cargoes from optional origins since early 2017. This is essentially 550,000 MTs of reduced demand in Egypt, and earlier in the week a USDA attaché report lowered total 16/17 Egyptian imports by 800,000 MMTs. Turkey has also added Germany, Romania and even the US to its list of unacceptable origins, which erases hope the US could ship 20-30 Mil Bu to Turkey in the next 2-3 months.    The EU model after the close also added to rainfall amounts and coverage across the heart of the HRW Belt. This isn’t in itself news, as the trade seems to have fully embraced…

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Wheat Falls to Multi-Week Low; Weather Offsets Turkey-Russia

Mar 21, 4:33 pm | Wheat

This week’s decision by Turkey to essentially ban Russian imports may last longer than expected, but the market’s focus remains centered on the coming major weather pattern shift in the US. Indeed, should HRW yield meet or exceed trend the market will have to look for additional export demand.   However, the market is likely to find additional usage in the near term. Even higher protein Gulf HRW is offered this evening some $2-7/MT below comparable Black Sea origin into May, and Russian offers are unchanged despite the potential loss of the Turkish market. Lower protein HRW and Gulf SRW are again the world’s cheapest origins, and so a bearish outlook is not advised below $4.20, May CME, or $4.30,…

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Wheat Extracts Weather Premium; Forecast Trends Wetter in early April

Mar 20, 4:35 pm | Wheat

Lacking other breaking news, wheat fell moderately amid an outlook for even more rain across the HRW Belt in the next two weeks. The eastern half of the Plains will see needed rainfall as soon as Fri/Sat, and though additional model runs are needed, 6-15 day forecasts, as well as 16-30 day forecasts, have trended wetter in recent runs. This forecast leans negative, but rain is no doubt needed amid declining crop conditions there.   After the close, NASS revealed KS winter wheat conditions at 38% GD/EX, vs. 40% a week ago and 57% GD/EX in mid-March of last year. This may trigger a modest bounce on Tuesday, but more important is whether yield can achieve trend amid potential rainfall…

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Wheat Rallies Marginally; Northern Hemisphere Weather Favorable

Mar 17, 3:57 pm | Wheat

Wheat followed corn to modest gains, but both the EU and US markets seem to have completely shrugged off Russian-Turkish tensions. It’s uncertain how long the effective ban on Russian imports will be, and the lack of reaction is in part due to ongoing favorable weather in Europe and the Black Sea. Northern Hemisphere weather issues are isolated to the far Western US Plains, which is significant but will do little to affect global surpluses in 2017. European 30-day % of normal rainfall is at left, with the major wheat producing area highlighted.   Otherwise, like corn, funds were larger than expected sellers late last week. Managed funds as this Tuesday were short a net 101,000 contracts, up 37,000 on…

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Wheat Ends Mixed; Fundamentals also Mixed

Mar 16, 3:47 pm | Wheat

US futures ended steady to higher, with spring wheat contracts again taking the lead. NOAA’s climate update suggest a rather expansive improvement in drought conditions across MO, KS and E OK, and ARC’s climate work suggest that, indeed, a wetter pattern lies in the offing in late March. Even the GFS operational model has extended coverage late next week and beyond to include much of KS and CO. However, Turkey has also moved to effectively stop importing wheat from Russia, possibly due to ongoing Russian issues with importing some Turkish vegetables. As such, higher trading during this evening’s session is likely.   Turkey has been a sizeable buyer of Russian wheat since 2013, and since late July has sourced an…

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Wheat Ends Higher on Dollar, Global Import Tenders

Mar 15, 3:27 pm | Wheat

US wheat futures rallied 5-8 cents on a weak US dollar (and negative reaction to the Fed’s raising of US interest rates) and as both Algeria and Egypt filled another tranche of spring import needs. This is possibly the last round of North African/Mid-East wheat purchases, but world cash market are well supported as the details of these tenders are worked out.   Egypt’s GASC secured 420,000 MTs of wheat from Russia, Ukraine and France (mostly from Russia) at an average fob price of $197/MT, $2/MT below its last tender in early March. Egypt ignored cheaper US wheat on its freight disadvantage, and with Algeria also seeking a large tonnage this AM (details on Algeria are unavailable), EU cash prices…

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Wheat Settles Unchanged; Global Cash Market Weakens Further

Mar 14, 4:49 pm | Wheat

US and EU futures ended near unchanged following Monday’s lashing, and yesterday’s break has attracted Egypt to seek optional origin supplies for late April. Just how much Egypt buys on Wednesday will be key (recall recent purchases have included massive tonnages), but the world cash market as whole continues to weaken. French wheat is offered for spot delivery below $190/MT, which has been rare since late December. Funds were net buyers of 1,000 contracts.   Updated world fob prices are attached. The recent trend is clear, but AgResource does note that Gulf SRW is the world’s cheapest origin, followed closely by lower protein HRW. Sub-$4.50 spot futures may attract some incremental US export interest, which is important. But Russia’s ruble…

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Wheat Ends Lower on World Cash Market, US Weather

Mar 13, 4:15 pm | Wheat

US and world wheat futures began the week falling to moderate losses. In the US it was a function of ongoing expectations of Plains rainfall in late March, and elsewhere world cash markets have been eroding despite recent export demand. AgResource suspects Russian farmers have been better sellers amid relative currency weakness, and also there’s still no evidence of adverse Northern Hemisphere weather outside of the US HRW Belt.   Recent warmth in the Black Sea has also been somewhat negative to the market. Our contacts suggest Russian wheat exports in March could be record large as freezing temps have abated at Russian ports, and of course amid Russia’s ample surplus. The midday GFS still maintains moderate (but needed) rainfall…

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Wheat Extends Losses on Sign of Plains Precip

Mar 10, 3:40 pm | Wheat

US and world wheat futures ended lower again as USDA data was further digested, and as there are at least increasing hints of a wetter pattern change across the US Plains in late March. Key to next week will be whether models maintain better rainfall in TX, OK, CO and KS beyond March 25th.    ARC also mentions that, despite selling this week, funds’ net short position is still relatively week. As of Tuesday, managed funds were short 63,000 contracts, and even today ARC estimates this position at a net short 72,000. This compares to 92,000 on this week a year ago and a peak short position of 150,000 contracts in October. Recall world ending stocks in 16/17 are pegged…

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