The US Indicates Wheat Protein Spreads, France Quotes Lower FOB


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The new USDA crop progress report calls US winter Wheat harvest complete. USDA estimated 37% of US spring Wheat as good to excellent. Spring Wheat rated fair was 39%, and 24% came in as poor to very poor. USDA estimates the share of spring Wheat harvested at 54%, up 15 points from the week prior but 9 points below the five-year average.

Wheat futures ended the last week lower as intense global competition drives down markets. September 2023 CBOT soft red winter (SRW) futures were down 26 cents on the week, closing at $5.68/bu. KCBT HRW futures were down 34 cents, at $7.21/bu. MGEX HRS futures were down 42 cents at $7.34/bu. CBOT corn futures were down 6 cents at $4.65/bu. CBOT soybean futures were down 25 cents, at $13.56/bu.  

Basis levels ended the week mixed, while HRS protein premiums come into sharper focus. The basis was up across all Wheat classes in the Gulf. As the market moves into October, November, and December, elevators typically transition to corn and soybean export programs, thus driving Wheat basis higher due to tighter elevation capacity. HRS basis was flat in the PNW, though traders indicate that protein spreads will likely be more significant this year. HRW basis was down, again widening the spread between Gulf and PNW HRW. SW prices were down, tracking CBOT futures. Great Lakes basis increased sharply as HRS protein premiums increased.

For the week ending August 24, 2023, net US commercial Wheat sales of 329,100 metric tons (MT) were reported for delivery in 2023/24, within trade expectations of 250,000 to 700,000 MT. Year-to-date 2023/24 commercial sales total 7.5 million metric tons (MMT). USDA expects 2023/24 US Wheat exports of 19.05 MMT, and commitments to date are 39% of total projected exports.

According to the AgFlow data, the United States exported 3.3 million tons of Wheat in July – August 2023. Key markets were the Philippines (0.57 million tons), Mexico (0.3 million tons), Japan (0.28 million tons), and Taiwan (0.28 million tons). 

Heat and dryness were documented across most of the U.S. Southern Plains this week, with temperatures above average in many areas. Drought intensification was noted in North Dakota and Kansas. In the PNW, degradations in the drought monitor were registered in Oregon, Washington, and Montana. The forecast predicts cool weather and rain across the PNW and Northern Plains.

The United Nations sent Russia new proposals to resume Ukrainian grain exports through the Black Sea before the meeting between Russian Foreign Minister Sergei Lavrov and his Turkish counterpart Hakan Fidan to discuss the issues.

Other Global Wheat Market Situation

According to Statistics Canada, Canadian Wheat production is forecast to fall 14.2% yearly to 29.5 MMT due to diminished yields after a hot, dry summer. Decreased yields offset the increased harvested area of 10.6 million hectares (26.3 million acres).

In a recent tender, the Egyptian General Authority for Supply Commodities purchased 120,000 MT of French Wheat and 120,000 MT of Romanian Wheat at $249/MT free on board (FOB) and $261/MT FOB, respectively. Meanwhile, all Russian offers came in at $270/MT FOB, demonstrating an increased price floor for Russian Wheat. Despite the “price floor,” Russian Wheat exports in the current marketing year are up 77% from last year on the same date at 8.8 MMT.

The Baltic Dry Index (BDI), which assesses the average cost of shipping raw materials such as grains, coal, and iron ore, decreased to 1,065. Markets are up slightly from lows earlier this summer but still have no significant demand trends to provide support.

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