Grain Markets: Limited Elevation Capacity Supports Gulf Wheat Export Basis

Photo: Texas AgriLife Extension

A swift uptick in export demand for U.S. soybeans, corn and sorghum is limiting export elevation capacity out of the Center Gulf, which supports nearby Gulf export basis for all classes of wheat. Between June 12 and June 19, Gulf 14.0 percent protein hard red spring (HRS) export basis increased 6 percent to $1.75/bu.

Over the same period, Gulf 12.0 percent protein hard red winter (HRW) export basis increased 6 percent to $1.65/bu and Gulf soft red winter (SRW) export basis increased 7 percent to $0.75/bu.

Source: U.S. Wheat Associates (USW) weekly Price Report. Click Image to Enlarge

Soybeans

A lot of customers are surprised by the fact that export capacity is filling up so quickly with soybeans,” said one industry contact. A significant increase in U.S. soybean exports to China this year compared to previous years is supporting overall soybean sales.

According to USDA, the United States sold 1.79 million metric tons (MMT) of soybeans to China between May 14 and June 11 for delivery in 2019/20. That is nearly 4 times greater than the 360,000 metric tons (MT) sold to China over the same period in 2019.

Soybean sales to all destinations, between April 2 and June 11, reached 7.34 MMT, nearly double the amount sold over the same period in 2019.

Source: USDA FAS Weekly Export Sales as of June 11, 2020. Click Image to Enlarge

Corn

Between April 2 and June 11, total U.S. corn export sales, to all destinations, reached 9.58 MMT, more than 80 percent greater than the volume sold over the same period in 2019. Export sales to Mexico, the largest market for U.S. corn, increased 79 percent year-over-year to 2.04 MMT during the previously noted 2020 period.

Source: USDA FAS Weekly Export Sales as of June 11, 2020. Click Image to Enlarge

Sorghum

Total U.S. sorghum export sales, as of June 11, 2020, are nearly 4 times greater than this time last year at 4.01 MMT. Like soybeans, weekly sorghum exports to China were significantly greater between mid-May and Mid-June 2020, at 455,000 MT, compared to the same period in 2019.

 Source: USDA FAS Weekly Export Sales as of June 11, 2020. Click Image to Enlarge

According to U.S. grain traders, customers might have difficulty finding export capacity for “grocery boats” (vessels containing multiple commodities or multiple classes of wheat) out of the Center Gulf for nearby deliveries. While the effect of limited elevation capacity is focused in the Center Gulf, it could also support wheat export basis levels out of all export regions.




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