US wheat futures ended slightly lower, and following the recent sizeable rally the market is paying acute attention to changes in US & world weather forecasts. It’s possible that better rain chances develop across E KS/E OK in the extended period, but ARC’s work suggests that a pattern shift – like in Argentina – requires La Nina to fade, and so we doubt US drought conditions improve much in the weeks ahead. The CFS model’s 16-30 day forecast (at left) does hint that normal/above normal precip will develop in March across the driest parts of the HRW Belt, but until operational models include this shift in 10-day forecast we caution against turning bearish based on daily weather forecasts.
Otherwise, the wheat market is still all about changes to major exporter stocks/use in 2018. Russian wheat yields in recent years have moved much closer to those in the US, but trend yield there implies a crop in 2018 closer to 72-73 MMTs, vs. a record 85 MMTs last year. The point is that there’s no doubt old crop wheat stocks are abundant, but changes to surpluses in 2018 are more possible than in recent years. End users should extend flour supply coverage on breaks.
