Wheat Update 05/17/13 3:54:41 PM|
|All information provided by Advanced Trading and the ProExporter Network|
· Technicals said to “weigh”; market dismissing heat/dryness in southern Russia but heavy rains expected for W Europe and there’s better chance for showers Down Under: WN, Off 5-6; KWN, Off7-8; MWN, Dn ½ to 1
· Stock rebuilding, better crops said to reduce 13/14 Iranian imports from 6 MMT this year to only 1 in 13/14
· Less than favorable weather in the CIS is leading some analysts to trim production estimates; southern Russia wheat crop said to be “desperately” in need of rain
· Current weather pattern remains nearly ideal for U.S. SRW wheat production prospects, although there is some concern that fusarium could develop if temps warm too much following upcoming rainfall
· T-storm Weather: Temps briefly cool Wed-Thur for Plains HRW wheat but heat quickly re-develops May 24-26
Wheat futures were lower on the day with the exception of MWN3. Wheat sales of 4.6 mbu old crop and 15.3 mbu new crop were solid relative to expectations. HRW at 7.8 mbu total old/new led the way with white’s 7.2 mbu a close 2nd. HRS came in at 2.9 mbu, SRW at 1.9 mbu, and Durum at 100 kbu. The BA grain exchange left Argentine acreage projections unchanged at 3.9M HA. Dryness in Southern Russia and Eastern Ukraine continues to be a production concern. A European analyst participating in a Reuters forum today suggested Russian production at 4.6 mmt below USDA’s current forecast and Ukraine at 1.8 mmt below USDA. Western Ukraine has received some maintenance rains as of late. The driest areas look to remain so in the 10 day forecast with some signs of relief in the 11-15 day window. ATI’s in house wheat tour is early next week with 2 groups travelling through parts of KS and OK. To see spot updates on Twitter, use the tag #ATIwheat2013 or follow participants @tpresleyATI and @sdrabbit72. This writer (@cstrubhar) will re-tweet updates as well. HRW basis remains steady though fairly firm. N/U in just over a week had firmed from a low of 11c carry to today’s close of -7¾. Conversely Z/H at -13½ remains essentially as wide as it has traded
· Weakness in corn lack of news weigh on HRW/SRW while planting delays support spring wheat: WN, Down 8-9; KWN, Down 10; MWN, Up 3/4
· Export sales of 4.6 were mid-range for 12/13 crop (0-9, need 10.4) 13/14 at 15.3 exceeded the 9-13 range
· USDA sees Egypt’s 12/13 imports falling 30% to 8 MMT; 13/14 pegged at 9. French cereal council expresses concern France will lose sales to exporters providing financing, such as Russia and/or the U.S.
· Wheat Sales: Trade expecting between 0-9mbu old crop (10.4 needed) and 9-13mbu new crop
· T-storm Weather: Driest HRW wheat in southwest Plains likely stays mostly into early next week
Wheat had a poor performing day. Weak US dollar and sluggish export sales were to blame. Chicago futures dropped below $7 hitting a two week low, KC was a close follower with KWN3 down 15c. Weather has not been helpful for much of the KS HRW growing areas. The area already plagued by drought & freeze are now seeing unseasonably warm temps in a critical time for the crop. 9% of the HRW was heading out in KS according to NASS on Monday. Much of the crop will be doing the same this week during the extreme temps. Many people use the adage that wheat harvest is 6 weeks after the crop heads out. If that’s proves to be true then we can expect an old fashioned July 4th harvest over a large portion of Kansas. A late harvest can be expected as well for the SRW crop. The difference is we are expecting a very decent sized crop at this point. With tight corn supplies and a large FSU/EU crop; maybe the best home for SRW would be the feed market
− First estimate of winter wheat prod at 1.486 bbu with HRW at 768 mbu and SRW at 501 mbu.
− Increase in world wheat production at a record 701.1 mmt up 7% from ly
− FSU production is expected to be up nicely, that will dampen US demand for SRW this fall. FSU
forecasted to increase exports by 10.8 mmt
− US all wheat ending stocks were estimated by USDA to be 670 mbu for 13/14
− Stocks to use would be 29.8 vs 30.4 in 12/13
− World stocks are forecasted to be up 5/6 mmt.
− Exports are expected to be decent through the rest of the marketing year and into the first
couple months of the new marketing year. (July/Aug)
− ATI has KS crop estimate at 302 mbu; OK at 91 mbu
− HRW production down slightly to 765 using ATI model.
− KS was 80% jointed this week, 96% is the avg
− 9% headed vs 52% avg (If we assume 6 wks from the time we “head out” to harvest then we
can plan on a July 1 harvest?)
− 28% G/E and 41% poor/very poor. Some estimates say that less than ½ of the crop had any
· Slightly improving moisture outlook for W Russian and the Ukraine? More planting delays limit Minneapolis losses: WN, Down 9-10; KWN, Down 7-8; MWN, Down 2
· FranceAgriMer raises French 12/13 soft wheat export forecast from 16.9 MMT LM to 17.05 (16.2 LY)
· Ukraine/Southern Russia dryness persist; additional moisture critical to USDA’s assumption for a 30 MMT output gain and exports rising by nearly 400 mbu to 1.3 billion!
Wheat funds turned sellers on Friday as global supplies and weak demand outlook offset the production problems in the US HRW belt. For the week, Chicago and KC wheat ended ~30¢ higher while Mnpls banked 15¢ in gains. Informa’s wheat production estimates were down from previous guesses, but fell in line with the recent market trend. Their SRW crop was 1 mbu lower at 508 mbu and the HRW crop down 52 mbu at 798 mbu. The combined KS/OK crop total was over 400 mbu, which would seem to represent a fair balance of actual conditions and potential with a little moisture. Overnight temperatures dipped below freezing in the Western HRW belt, but late stage of the crop likely limited damage on what is left in the drought stricken area. It seems as though India is the place to be for raising a wheat crop. India is expected to raise 93.6 mmt of wheat, just shy of last year’s record 94.9 mmt crop and exceeding demand for the 6th consecutive season. Total demand is estimated around 76 mmt, meaning an additional 15+ mmt of wheat will be added to the already burdened supply situation. India is expected to issue several tenders over the next few weeks, but recent values have not been competitive vs world supplies. Active pace of Australian exports and strong domestic demand have stocks declining and internal prices for prime wheat have rallied $10/mt ((27¢/bu) in the last week. Canadian wheat stocks have also declined to 13.5 mmt as of March 31st, a drop of 8% from last year. Bulk of the spring wheat belt missed the heavy rainfall, and expectations are for active planting this weekend, though with cool temperatures. KC July/Dec spread eased back 3½ cents to 27½ cents carry as the short term panic on production problems is offset by the realization of weak demand and adequate supplies of ordinary wheat tributary to the delivery system. Have a great weekend!
· Crop tour pegs 2013 Kansas wheat yield at 41.1 bushels per acre
· ATI Research: Old-crop wheat export sales a solid 8.1mbu, new-crop was strong at 18.3. Worth noting that combined old/new sales are averaging 28/week, which is 10+ above the 5-year average and a 19-year high
· T-Storm Weather: A light to moderate freeze affects all U.S. HRW wheat areas Friday morning
Kansas Wheat Tour results are 313 mbu at 41.1 bpa. Advance crop condition model is at 305 mbu, down from 313 LW. Reaction in the market seems to be mixed. 25 to 32 degree tomorrow morning temperatures are forecast for Kansas, thus muting the impact of the Crop Tour results. The 25 to 32 degree morning low is also forecast for the Whole HRW Belt, including the west half of Missouri. This AM’s export sales report showed 8.1 mbu old, as expected and 18.3 new crop, against expectations of 11-15. KS feeders that bought wheat with seller’s option to ship HRW or SRW, are finding it a struggle to trade out of the wheat because people don’t know what to do with SRW sitting in KS. (Mark up a “win” for the RR’s) With some of the June/July, KS corn basis number we are hearing this afternoon, the need to sell out wheat and buy corn may be going away.
· KS HRW Tour 313.1 mbu and yield of 41.1 bpa
· Crop damage uncertainty, low estimates coming out of KS and OK; strong export numbers bolster futures: WK, Up 5; KWK, 3-4 Higher; MWK, Up 10-11
· Export Sales: Good old crop showing at 8.1 (need 9.7) while new crop were a hefty 18.3. Combined old/new sales at 28 per week for the month of April are at a 19-year high
· Crop tour pegs SW KS/NW OK yields from 17-field survey at 24.8, 7.6 bpa less than LY’s tour: OK Wheat Commission estimates this year’s crop 45% lower at 85.5 million bushels
Export Sales Notes
Week Ending 04/25/2013
WHEAT SALES— Old crop sales came in at a solid 8.1 TW; 2.6 LW; 9.4 LY; 6-9 Expected; 9.7 Needed. YTD: 975 mbu TY; 1,002 LY. O/S: 119 TY; 133 LY. New crop sales were strong at 18.3 TW, 8.6 LW, 16.7 LY with the trade looking for 11-15. Old crop sales by class included HRW: 4.76 TW, 2.6 LW; SRW: 863 K TW, 1.3 LW; HRS: 2.0 TW, -162 K LW; White: 536 TW, -1.1 LW; Durum, -22 K bu TW, -47 K LW. Sales for 2012/2013 were up significantly from last week with increases reported for Spain (2.6 mbu), Egypt (2.4), Sudan (2.2), Nigeria (1.7), Japan (1.7) and Italy (1.5). Cancellations included unknown (8.3), Trinidad (510 K), and Honduras (73 K). Sales for 18.3 million for 2013/2014 went to Guatemala (6.8), unknown destinations (3.7), Thailand (2.0), and Mexico (1.9). In passing, might be worth noting combined old/new sales are averaging 28 per week, 10+ above the 5-year average and a 19-year high.
· Crop tour pegs 2013 Oklahoma wheat crop at 85.5mbu
· Wheat Sales: Trade expecting between 6 and 9mbu old crop (9.7 needed) and 11 to 15mbu new crop
· T-Storm Weather: A freeze affects U.S. HRW wheat areas Thursday and/or Friday mornings
Profit taking was the theme in the wheat markets Wednesday. Chicago wheat was down 10-11 cents while KC was 6-7 lower. The KC wheat tour data was a little friendly prices with yield prospects down with some fields not yielding anything. Tuesdays tour checked 277 fields and estimated a yield of 43.8. Many believe this was the best wheat they will see on the tour. Their summary will be released Thursday. The Oklahoma tour came in at 85.583 vs. the OGFA at 88.022. The ATI condition model indicating a crop of 103 based on last week’s G/E ratings. Cold weather continues to limit planting of spring wheat in the Northern Plains and Canadian Prairies. However, the forecast for the weekend is a little warmer. We could see it widen further however with the tight corn stocks and the later than normal spring we could see more feed demand for wheat.
· T-Storm Weather: Significant rain/snow clips northern and eastern edges of driest U.S. HRW wheat Wed-Thurs
· NWS on Tuesday forecasted equal chances of above- or below-normal rain for Midwest SRW wheat in May
· Concern a significant quantity of intended HRS wheat will not be planted in N Plains due to excessive wetness