Welch on Wheat: Strong Exports Continue, Gulf Shipments Resume

Wheat Heads. Photo: Oklahoma State University

Market Situation

Crop Progress. Winter wheat planted for the week of September 17th is 13 percent, reported in today’s Crop Progress from USDA. That is just behind the five-year average of 15%.

In the September Australian Crop Report from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), wheat production is projected to be down 38% compared to 2016/17.

Though precipitation prospects from now through November show about an equal chance of normal precipitation heading into harvest, most major wheat producing areas were dry in early winter (June and July).

Weather. With fall wheat seeding underway, the portion of the Southern High Plains in some degree of drought increased from 6.66% to 12.69% last week. Most of that increase was in the Abnormally Dry category and only a half percent increase in Moderate Drought, which is mostly centered in Kansas.

The precipitation forecast this week shows limited rainfall amounts in these drier areas.

This week’s Oceanic Nino Index update from the Climate Prediction Center includes a shift from a neutral ENSO outlook to a La Nina Watch. This week’s temperature deviation reading was -0.6°C from normal and the average of forecast models shows La Nina development this fall lasting into late spring. La Nina conditions increase the likelihood of a warmer and drier than normal fall and winter in the Southern High Plains.

Grain Use. All wheat export sales commitments for the week of September 7 were 12 million bushels. This is just below the 14 million bushel pace needed to reach the marketing year target of 975 million bushels.

Wheat shipments have resumed out of the gulf with 1.946 million bushels being inspected for export the week of September 7. Inspections had been running about average up to the impact of Hurricane Harvey.

Commitment of Traders. Money managers were little changed in their market positions for wheat last week and continued recent trends in corn and soybeans. Speculators are still net short Chicago wheat and net long Kansas City wheat, but reduced both those bets slightly. The trend of an increasingly bearish position in corn continued while the net short in soybeans continued to decline. Prices were lower across the board.

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Marketing Strategies

2018 Wheat Marketing Plan. The projected price for hard red winter wheat has been set by RMA at $4.87. That compares to $4.59 last year, one of the lowest base prices of the last 10 years.

I am 20% priced on the 2018 crop and expect to add to that total when we get a better handle on acres and yield prospects.

Upcoming Reports/Events.
September 22 – Cattle on Feed
September 29 – Grain Stocks; Small Grains Summary
October 12 – Crop Production and WASDE


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