Agricultural News
US Wheat Associates Weekly Price Report Ending May 13
Mon, 16 May 2022 08:08:10 CDT
Wheat futures surged Thursday after the U.S. Department of Agriculture (USDA) cut the domestic harvest estimate for hard red winter wheat in its latest supply and demand report. Kansas City HRW wheat futures extended gains again today (See highlight below). All wheat futures finished the week up. CBOT soft red winter (SRW) futures were up 70 cents to close at $11.67/bu. KCBT hard red winter (HRW) futures were up 93 cents to end at $12.52/bu. MGE hard red spring (HRS) futures were up $1.29 to close at $13.33/bu. CBOT corn futures were up 2 cents to $7.94/bu. CBOT soybean futures were up 68 cents at $17.23/bu.
Basis this week was down in the Gulf and mixed in the Pacific Northwest (PNW). Basis for most wheat classes is competing against higher futures prices and resulting slow export demand. Rain in North Dakota and Minnesota is slowing planting progress. As a result, many farmers are cautious to make forward sales before their crop is in the ground. The latest supply and demand report reduced HRW wheat area more than analysts expected however one wheat trader noted that with high wheat prices, farmers will harvest as much of their crop as possible.
The latest USDA crop progress report, released May 9, rated 29% of the winter wheat crop as good or excellent, a 2-point improvement from the week before. Winter wheat rated as fair also rose 2 points to 32% while wheat rated poor to very poor was 39%. Winter wheat headed is 33%, 7 points below the 5-year average of 40%. Learn more about the current U.S. wheat crop by reading the weekly USW Harvest Report
USDA reported as of May 8, 27% of spring wheat planted compared to the five-year average of 47%. In North Dakota, spring wheat planting was just 8%. In Minnesota, planting for the week progressed just one point from last week to 2%. Farmers are under increasing pressure to get wheat planted. The USDA requires spring wheat to be planted by June 5 in northern Minnesota and North Dakota to qualify for full crop insurance protection.
The USDA released its latest World Agriculture Supply and Demand Estimates (WASDE) report May 12, offering the first projections for marketing year 2022/23. The report lowered global wheat production by 3.6 million metric tons (MMT) MT to 774.8 MMT. Reductions were made for Ukraine, Argentina, and Australia, while increases were made for Canada, Russia, and the United States. Global consumption is projected at 787.5 MMT. U.S farm gate price is forecast to be 65% higher than the same time a year ago.
Commercial Sales
· For the week ending on May 5, net U.S. wheat commercial sales for delivery in 201/22 were 14,100 metric tons (MT), and for delivery in 2022/23 were 124,257 MT. Year-to-date 2021/22 commercial sales total 19.4 MMT. USDA expects 2021/22 U.S. wheat exports to total 21.36 MMT.
U.S. Drought Monitor
· Another round of storms boosted soil moisture in eastern Kansas, Nebraska, and South Dakota. Still, Kansas recorded the 3rd driest April on record. Eastern Colorado experienced higher than average temperatures and no rain for the week, April was the 5th driest month on record. North Dakota averaged its second wettest April according to weather data. Montana and South Dakota both recorded above normal rainfall in April and Minnesota had the 7th wettest April on record. Heavy rain fell in eastern Oklahoma this week while the western portion of the state missed out. Texas experienced record setting heat further expanding extreme and exceptional drought ratings in the western part of the state. In the PNW, steady rainfall continues to improve soil moisture in Washington, Oregon, and Idaho.
Global Wheat Reports:
· Iran will need to import 7.0 MMT of wheat in 2022/23 said the chairman of Iran's Grain Union. This follows an estimated 8.0 MMT of imported wheat this year. Neighboring Pakistan will also need to increase imports by 3.0 MMT. According to the Prime Minister's office, a 2% fall in production, water and fertilizer shortages, and the delayed announcement of support prices led to the production declines.
· A severe drought in Iraq led to a smaller wheat crop this year. Iraqi farmers are instructed by the state on how much wheat to plant. Because of water shortages, Iraqi farmers have planted less wheat. Farmers there say that yields have been half of what they usually are. A spokesman for the agriculture ministry says that Iraq will likely produce 2.5-3.0 MMT of wheat.
· Angola, a sub-Saharan country on the Atlantic coast of Africa, increased wheat milling capacity enough to become self-sufficient according to a recent Foreign Agricultural Service (FAS) GAIN Report . Over the last decade, flour imports have declined while grain imports have risen. Since 2017 the country has built 5 wheat mills with a combined milling capacity of 1.8 MMT. According to FAS data, domestic consumption in Angola has grown 16% since 2010.
· The Rosario Grains Exchange (BCR) said Wednesday that Argentina's wheat harvest in 2022/23 would likely be 19.0 MMT, down from the record 22.1 MMT harvested in 2021/22. The exchange said that wheat planting would fall half a million hectares due to the La Nina weather pattern which reduces rainfall in the center of the country.
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 14% on the week to end at 3,104.
· The U.S. Dollar Index increased from last week's 103.45 to close at 104.54, a twenty-year high.
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