Afternoon wheat: Overall conditions improve marginally week over week

Futures:
Similar to Friday, the bias heading into the session today was negative, this after SovEcon increased their 2019 Russian wheat harvest forecast by 3.4 MMT up to 83.4 MMT, but also and probably more importantly, because of Friday's GASC tender which showed US wheat prices eight to nine dollars out from being competitive again. Granted, we did not see what we perceived to be the correct price action on Friday, but then again, we did not see proper price action all week last week as the wheat complex did an admirable job of shrugging off all the negative impetus that was put in front of them throughout the week. The markets finally started to cave today. HRW wheat traded weaker than SRW, with the defensive price action in both influential enough to wash away the gains that old crop Mpls wheat enjoyed overnight and early morning. KC finished the day between seven and eight cents lower, Chicago finished around a nickel lower, and Mpls finished mixed - with old crop flat, while new crop was a couple cents lower.

Condition reports this afternoon showed overall conditions unchanged week over week at 60 pct G&E, while P&VP remained at 9 pct. SRW wheat conditions may have improved a little, but both classes of wheat had some major changes in each direction week over week. State by states are below. For now, look for the selling on rallies to continue.

Headline news:
Spring wheat planting was seen at 2 pct complete vs 3 pct this time last year and 13 pct average. Idaho and Washington are still the only states to have any significant planting done, but Montana got on the board and is now 1 pct planted.
Colorado conditions fell week over week. G&E was pegged at 62 pct vs 70 pct last week, while P&VP was 4 pct vs 3 pct last week. Conditions remain much better than year ago levels.
Kansas conditions were similar week over week. G&E was pegged at 59 pct vs 58 pct last week, while P&VP was 10 pct vs 8 pct last week. Conditions remain much better than year ago levels.
Nebraska conditions fell week over week. G&E was pegged at 68 pct vs 74 pct last week, while P&VP was unch from last week at 5 pct. Conditions remain much better than year ago levels.
Oklahoma conditions fell a bit week over week. G&E was pegged at 74 pct vs 76 pct last week, while P&VP was 3 pct vs 4 pct last week. Conditions remain much, much better than year ago levels.
South Dakota conditions improved week over week. G&E was pegged at 46 pct vs 38 pct last week, while P&VP was 2 pct vs 3 pct last week. Conditions remain much better than year ago levels.
Texas conditions improved week over week. G&E was pegged at 51 pct vs 47 pct last week, while P&VP was 14 pct vs 19 pct last week. Conditions remain much better than year ago levels.

Arkansas conditions fell week over week. G&E was pegged at 42 pct vs 50 pct last week, while P&VP was pegged at 8 pct vs 9 pct last week. Conditions are below year ago levels.
Kentucky conditions improved dramatically week over week. G&E was pegged at 70 pct vs 56 pct last week, while P&VP was 6 pct vs 14 pct last week. Conditions are better than year ago levels.
Illinois conditions improved week over week. G&E was pegged at 59 pct vs 55 pct last week, while P&VP was pegged at 13 pct vs 13 pct last week. Conditions are slightly better than year ago levels.
Indiana conditions improved week over week. G&E was pegged at 59 pct vs 55 pct last week, while P&VP was 9 pct vs 12 pct last week. Conditions are identical to year ago levels.
Michigan conditions improved week over week. G&E was pegged at 28 pct vs 25 pct last week, while P&VP was 34 pct vs 35 pct last year. Conditions remain much, much worse than last year.
Missouri conditions were unchanged week over week. G&E was pegged at 40 pct vs 40 pct last week, while P&VP was 11 pct vs 11 pct last week. Conditions are below year ago levels.
North Carolina conditions were similar week over week. G&E was pegged at 47 pct vs 48 pct last week, while P&VP was 19 pct vs 23 pct last week. Conditions remain much worse than last year.
Ohio conditions improved week over week. G&E was pegged at 33 pct vs 29 pct last week, while P&VP was unch week over week at 26 pct. Conditions remain much, much worse than last year.
Tennessee conditions fell week over week. G&E was pegged at 59 pct vs 64 pct last week, and P&VP was 8 pct vs 9 pct last week. Conditions are slightly below last year's levels.

Export inspections this morning came in line with expectations. Shipments were 511 TMT vs an adjusted 555 TMT the previous week (increase of 16 TMT) and 505 TMT this time last year. Included 160 TMT of HRS, 160 TMT of HRW, 70 TMT of SRW, 118 TMT of white and 2,845 mt of mixed. Total shipped to date is 19.917 MMT vs 20.862 MMT this time last year. Much of the business looked to be rather routine, with over 150 TMT going to the Philippines.

Weekly EU data showed 490 TMT of soft wheat exports in the latest reporting period ending April 14, bringing the 2018/19 marketing year season to date total to 16.080 MMT vs 16.319 MMT this time last year, a variance of only around 1 pct.

Black Sea prices for 12.5 pct pro Russian wheat was mostly unchanged week over week. According to IKAR, on a FOB basis, Russian wheat prices look to be trading around $225/mt, while SovEcon put prices at around $227/mt. According to SovEcon, Russia has exported 31.081 MMT of wheat between July 1 and March 31, and they project 1.8 MMT of wheat exports during the month of April.

SovEcon analysts increased their 2019 Russian wheat harvest forecast by 3.4 MMT up to 83.4 MMT.

Egyptian officials over the weekend acknowledged that after re-testing French wheat cargo, ergot fungus levels were now found to be at acceptable levels and accepted the cargo.

Ukrainian wheat shipments during the April 6-12 timeframe were 777 TMT, with wheat shipments accounting for 156 TMT of that total. The country has exported 11.7 MMT of wheat thus far this season, which runs until the end of June.

MARS, the EU crop monitoring group, lowered their 2019 soft wheat yield forecast to 6.01 mt/hectare from 6.04 mt/ha last month.

A top Brazilian wheat industry group official said there is a US wheat delegation visiting Brazilian mills and food processors, assessing prospects of future import demand after Brazil opened a duty-free import quota of 750 TMT in early April.

Spreads:
Moving over to the July spreads, as open interest in the July has moved well ahead of that in the May. The wheat/corn spreads were under pressure most of the night, and that trend continued throughout the day - something we were actually looking for on Friday, but such trade never materialized. Today's trade took the spread below the April lows, but we probably need a settle below those lows to get trade excited enough to make a push for the old March support area in the lower 80's. The April highs of 1.04 ½ should provide strong resistance, but we first should start to find selling near the 1.00 level.

Moving over to the July spreads, as open interest in the July has moved well ahead of that in the May. The KC/Chicago spreads started the night a little better, but the spreads quickly weakened and then traded slightly weaker the rest of the night. The defensive price action continued during the day, with the spreads weakening into the close before settling right off its session's lows. With the trading range over the past several days being very similar, was thinking that maybe today's price action in the spread could give us a hint at what the condition reports might say this afternoon. With the spreads settling a couple cents lower, it gave us a strong indication that we were going to conditions across HRW wheat belt country continue to improve. Did not get that in the condition reports, so should we expect the spread to find a bid overnight?

Export business this week:
*** April 16 Jordan back in for 120 TMT of opt origin milling wheat.
*** April 19 Ethiopia is in for around 400 TMT of milling wheat.
*** April 29 Jordan's general supply company is in for 25 TMT of milling grade wheat for LH July or FH August delivery.
*** April 30, in a second tender, Ethiopia is in for 600 TMT of milling grade wheat.