Winter wheat sowing is 60 percent complete as of October 15 as reported in the weekly crop progress report from USDA.
The Texas crop is going in in a timely manner, 66 percent planted compared to a five-year average of 63 percent. Kansas wheat sowing is at 42 percent compared to a normal level of 75 percent for mid-October and Oklahoma 57 percent, 17 percent below average.
The portion of the Southern High Plains in some degree of drought increased from 21% to 24% this week with more of Arkansas moving from the abnormally dry classification to moderate drought. The drought severity and coverage index (DSCI) for the Southern Plains increased 6 points from 27 to 33.
The heaviest rainfall this week is mostly east of I-35 and covers most of the eastern half of the country. This will skip much of the hard red winter wheat production area but will slow further an already delayed corn harvest in the Corn Belt.
The La Nina Watch continues in this week’s Oceanic Nino Index update from the Climate Prediction Center. The latest weekly temperature reading was -0.5°C below normal, right at the La Nina threshold. The three-month ONI is forecast to drop quickly by the end of December, on a path towards a relatively mild and short-lived La Nina episode. La Nina conditions increase the likelihood of a warmer and drier than normal fall and winter in the Southern High Plains.
Grain Use. After a lackluster week of wheat export sales on October 5th of only 6 million bushels, USDA reported export sales commitments of 23 million for October 12.
Mexico is back in the top spot as the number one importer of U.S. wheat, replacing the Philippines this week. Interestingly, two of the top ten importers of U.S. wheat are also the largest wheat producers in the world, China importing 26 million bushels and the EU-27 14 million bushels.
Commitment of Traders.
Money managers were more bullish soybeans last Tuesday and more bearish the grain markets according to today’s Commitment of Traders report from the Commodity Futures Trading Commission. Corn and KC wheat both saw an increase in new long positions but this was overwhelmed by the increase in short contracts held. KC wheat is net short for the first time since late April, just before snow and freezing weather hit southwest Kansas and the Texas and Oklahoma panhandles.
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Chicago wheat saw fewer longs and more shorts; soybeans just the opposite. Prices were little changed for corn or wheat but up 18 cents for soybeans.
Marketing Strategies Seasonal Index.
The Seasonal Index for the July Kansas City wheat contract shows that the best pricing opportunities of the year often occur before we plant the upcoming crop. This is followed by some price strength again in February and May. Prices in the top 20 percent of the annual range have occurred in August or September 16 times in the last 30 years; prices in the lowest 20 percent have occurred 11 times.
In May and June, prices in the lowest 20 percent occurred 20 times out of 30 and prices in the top 20% of the annual range occurred 12 times. Some years of extreme volatility saw prices in both the top 20 percent and bottom 20 percent in the same two month period right before harvest: 1995, 1997, 2007, 2011, and 2017. These patterns form the foundation of my wheat marketing plan. 2018 Wheat Marketing Plan. 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.