Agricultural News
Wheat Mixed but all Wheat futures Ended the week down
Mon, 14 Mar 2022 08:40:10 CDT
Futures this week were mixed but all wheat futures ended the week down. March CBOT soft red winter (SRW) futures were down $2.58 cents to close at $10.90/bu. KCBT hard red winter (HRW) futures were down $1.25 to end at $10.75/bu. MGE hard red spring (HRS) futures were down 25 cents to close at $10.99/bu. CBOT corn futures were up 8 cents to $7.64/bu. CBOT soybean futures were up 14 cents at $16.90/bu.
· Basis was mixed in both the Gulf and Pacific Northwest (PNW) this week. Wheat traders continue to emphasize that market volatility is creating poor definition in the cash market. Farmers want to sell wheat they still hold on the rally in futures prices. However, the risk associated with prices and volatility is deflecting demand.
· The National Agriculture Statistics Service (NASS) updated Field Crops Reports this week. In Kanas, winter wheat conditions were rated 23% good, 37% fair, and 39% poor to very poor. Topsoil moisture was rated 45% very short and only 18% adequate. In Oklahoma, conditions were rated 15% good to excellent, 28% fair and 57% poor to very poor. Topsoil moisture there is 30% adequate and 36% very short, a 9-point improvement from last week.
· The USDA released its monthly World Agricultural Supply and Demand Estimates (WASDE) this week. The report increased 2021/22 global wheat production by 2.1 MMT to 778.5 MMT and increased the estimate for global wheat consumption. Wheat ending stocks were also raised. A detailed look at the report can be found here
· The United Nations (UN) Food and Agricultural Organization (FAO) released its February food price index , which averaged 140.7 points, breaking the previous record set in February 2011. The index rose 3.9% compared to January and 24.1% year-over-year. The Cereal Price Index rose 3% for an average of 144.8 points, up 14.8% from last year.
· Planned annual maintenance to locks along the Columbia River system continues as scheduled. The annual outage is scheduled to last until March 19.
Commercial Sales
· Net U.S. wheat commercial sales of 307,200 metric tons (MT) were reported for the week ending on March 3 for delivery in 2021/22, up 2% from last week's 300,000 MT and within trade expectations of 200,000 MT to 400,000 MT. Year-to-date commercial sales for delivery in 2021/22 total 18.5 million metric tons (MMT), 23% lower than the same time last year. USDA expects 2021/22 U.S. wheat exports will reach 21.77 MMT, 19% lower than last year if realized. Net sales for delivery in 2022/23 are 63,000 MT.
U.S. Drought Monitor
· Weather this week varied across much of the wheat growing region; HRW region conditions remain dry. In Oklahoma and Texas areas of severe drought expanded to exceptional drought especially in the western panhandles of both states. High Plains precipitation was mixed with some snow and rain in Kansas, Nebraska, and South Dakota. In eastern Kansas and Nebraska, temperatures were above normal and severe drought expanded in the north central part of Kansas. In the western U.S., cooler temperatures and wide-ranging precipitation provided general improvements to conditions in Montana, Idaho, Wyoming, Colorado, and Oregon.
Global Wheat Reports:
• High wheat prices have caused many countries to introduced export bans. Moldova, Hungary, Serbia, Turkey, and Egypt have all implemented some sort of wheat export ban. Millers in Kazakhstan asked their government to ban wheat exports. Russia has banned shipments of wheat to trading partners in the Eurasian Economic Union, an economic bloc of former Soviet states. Argentina's government introduced an export cap and Ukraine this week introduced a requirement for export licenses.
• Australia is expected to export 25.3 MMT of wheat this year but capacity constraints may keep the country from filling recent supply shortages say grain traders. All the shipping slots are booked for the next few months reported Reuters. One analyst noted that they couldn't export enough "to benefit from the global prices."
• Speaking to reporters this week, China's Minister of Agriculture and Rural Affairs said that the winter wheat crop in China could be the "worst in history." The minister blamed heavy rainfall that delayed planting. He added that he is confident of a bumper harvest of summer grains.
• Brazilian consultancy T&F confirmed a deal to export 100,000 MT of wheat from Rio Grande do Sul. The consultancy raised Brazilian wheat exports to 2.7 MMT, up 200,000 MT following strong sales in December and February. Brazil is a net wheat importer, but a StoneX analyst said, "thanks to the high dollar and weak domestic demand, demand for exports grew." The USDA forecasts Brazilian wheat exports to reach 1.7 MMT, up from 1.5 MMT forecast in February.
• In a tender announcement this week, Iran's state grain buyer, the Government Trading Corporation (GTC), permitted the United States as a possible origin for wheat purchase, a rare instance, one European trader noted. Reuters reported that Iran needs to import 8 MMT of wheat this year following the worst drought in 50 years.
Baltic and U.S. Dollar Indices
· The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased 27% on the week to end at 2,718.
· The U.S. Dollar Index increased from last week's 98.63 to close at 98.73.
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