Welch on Wheat: New Market Year Export Pace Remains Strong

    Wheat harvest. Photo: Rome Ethredge

    Market Situation

    Crop Progress. The U.S. spring wheat crop condition index this week is down another 6 points to 271. Very poor and poor combined were up 3 points this week with losses in fair and good of the same amount.

    South Dakota spring wheat rated very poor and poor is 75% (-1%), Montana 58% in those same categories (+3%), and North Dakota at 44% (+5%). Spring wheat harvested this week is 9%, the same as last year and the five-year average.

    Weather. Drought conditions worsened in the northern high plains last week, especially parts of Montana and North Dakota where the percentage of exceptional drought was increased.

    The precipitation forecast for the next 5 days offers relief for much of the Dakotas down to the Texas Panhandle and South Plains.

    The temperature outlook is more moderate this week with the forecast calling for readings of normal to just below normal from much of the High Plains eastward.

    The Oceanic Nino Index from the Climate Prediction Center is forecast to fall from the current borderline El Nino conditions to borderline La Nina late this fall, and then rebound back into neutral territory. The temperature deviation reading this week was 0.0° C from normal.

    Grain Use. U.S. wheat export sales were 18 million bushels for the week of July 20th. A sales pace of 14 million per week is needed to reach the current marketing year target of 975 million. Mexico continues to be the top buyer of U.S. wheat with the Philippines moving ahead of Japan into the number two position.

    Commitment of Traders. Money managers were still net long last week in the Commitment of Traders Report from the CFTC, more so in soybeans, less so in the grains. Corn positions were little changed (5,017 decrease in longs, 3,892 fewer shorts), the biggest shift coming in the wheat markets.

    Grain Commentary

    Chicago, Kansas City, and Minneapolis wheat markets had a combined decrease in long contracts held of 22,609 and an increase in short contracts of 1,953. Prices were down again this week, the biggest declines in wheat.

    The spread between the September and December Kansas City wheat futures contracts is 27¼ cents. This amount is above full carry for that 90 day period (3 months x 6 cents per bushel/month = 18 cents). Any percentage of carry above 67% is generally considered a bearish commercial market indicator.

    Marketing Strategies

    2018 Wheat Marketing Plan. I have completed all my sales of 2017 wheat, am 20% priced on 2018, and working on 2018 crop budgets. As we get the 2018 crop planted and have a better handle on acres and yield prospects, I’ll be ready to add to new crop sales.

    Upcoming Reports/Events.
    August 10 – Crop Production and WASDE
    September 18-20 – Master Marketer, Castroville, Texas

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