US winter wheat conditions continue to erode, but weather elsewhere is viewed as mostly favorable. Most importantly, ongoing soaking precip is expected in France, Germany and Southern & Central Russia into late month, further easing concerns of dryness there, and note that the crop’s critical heading stage will occur soon thereafter. Rallies have struggled amid record old crop stocks, and a lack of weather threats in the world’s largest exporting region, but spot CME futures are viewed as cheap at current prices, and we continue to advise patience with respect to advancing cash sales.
Winter wheat ratings fell to 51% GD/EX, vs. 53% a week ago and 62% on this date in 2016. Notice the difference in the trend of last year, and as such NASS is likely to cut US wheat production another 20-30 Mil Bu in its June report. Major weekly downgrades occurred in IL, MT and SD, which was only partially offset by higher ratings in NE and ID.
New crop EU cash offers rest at $183-190/MT, and so Gulf HRW is again rather competitive for Jun-Aug demand. Seasonal weakness should run its course in world cash markets by early June.
