Afternoon wheat commentary: The mixed day had the markets shift its attention back to the spreads

It was another wild trading session for the wheat complex, but much of the volatility occurred during the night session where we saw futures race out to more than 15 cents higher in Chicago and 17 cents higher in KC. These highs occurred around an hour before the morning break, with futures finishing the night roughly ten cents off those highs. That turned out to be an omen for things to come during the day session as trade never did find that bid again, and price action ultimately moving lower by mid-morning. By then, intra and inner market spreading took over, with Mpls eventually gaining more than twelve cents on Chicago (basically recovering its losses following Tuesday's strong price action), KC gaining almost eight cents on Chicago (getting back to within four cents of its December highs) and the Chicago wheat/corn spread breaking down into new lows and levels not seen since October 2019.

There was plenty of data for the market to try and absorb yesterday, and many times after a data dump such as yesterday, followed by a strong move, it takes a day or two for the spreads to correct and align themselves accordingly. By looking at the ending stocks data yesterday, each class of wheat saw their stocks lowered some and the acreage data showed both HRW and SRW acres increasing year over year and coming in larger than expectations. Going forward, the data did not seem to be influential enough to spark a significant reaction in the inner market spreads, thus the bit of a correction we saw today. As far as corn/wheat, the price action in the spread over the past month (coming in more than 60 cents including almost 12 cents today) sure gives off the impression that the market wants to keep the door open for possible wheat feeding if corn stocks continue to shrink and/or if a larger South American corn crop situation develops. For now, it might be too much to ask for the spread to continue its trend. Look for strong support under 1.20. At that level, we could probably expect wheat to start following corn more closely - even if corn was to continue its rally.

Export sales will be out in the morning. In wheat, we are not looking for anyone other than our usual participants. Meaning, Japan, Mexico and maybe some SE Asian flour mill demand will be among the top buyers. Look for between 250 and 500 TMT.

HRW basis bids saw little change on Wednesday. Bids for 11-pro remained +120/130, the 11 ½-pro stayed +125/135, the 12-pro remained +135/+145, the 12 ½-pro stayed +135/145, and the 13-pro remained +115/125. HRW wheat export bids weakened a little on Wednesday. In Jan, ORD fell three to +123, the 11-pro fell four to +130, and the 12-pro fell two to +158. For Feb/March, ORD remained +127, the 11-pro stayed +136, and the 12-pro fell two to +159. For A/M, ORD fell two to +125, the 11-pro stayed +137, and the 12-pro remained +158. SRW wheat track bids down to the Gulf were mixed on Tuesday. Jan was down five to 110/120, Feb moved to 105/115 (unch/down 5), and March moved to 105/115 (up 5/unch). HRW wheat track bids to the Gulf saw no change on Tuesday. Jan stayed 160/170, and both Feb and Mar remained 161/171.

Headline news:
Russia's Ag Ministry proposed a wheat export tax of 25 euros/mt ($30) between Feb 15 and March 15, and an export tax of 45 euros/mt ($54) which is to be applied starting March 15.

France AgriMer kept its 20/21 soft wheat ending stocks figure at 2.5 MMT, but they lowered their 20/21 soft wheat exports outside the EU estimate down to 7.27 MMT. In comparison, last year's soft wheat exports outside the EU were 13.57 MMT.

Argentina's Ag Ministry said they have lifted all restrictions on old crop corn exports after holding a further meeting with the farming sector.

Ukraine's state operated port authority said severe weather conditions have temporarily halted several Black Sea ports cargo operations.

Export business this week:
*** Jordan bought 60 TMT of opt origin wheat, reportedly paying $269.20/mt.
*** The GASC passed on all offers in their tender on Tuesday.
*** South Korea bought 50 TMT of various varieties of US wheat on Tuesday. They were said to have paid $263.87/mt for 22,710 mt of white, $269.76/mt for 2,320 mt of white, $273.80/mt for 17,220 mt of HRW and $272.33/mt for 10,750 mt of DNS wheat.
*** South Korea also bought 50 TMT of Aussie milling grade wheat, paying $279.95/mt for white wheat, and $287.00/mt for hard wheat.
*** Jan 13 Bangladesh is in for 50 TMT opt origin wheat.
*** Jan 14 Japan is back in, this time for 116,700 mt of Aussie, Canadian and US wheat. The total includes 24,020 mt of Aussie white, 42,760 mt of Canadian red spring, 22,675 mt of US DNS, 13,735 mt of US white, and 13,510 mt of US HRW wheat.
*** Jan 18 Bangladesh is in for another 50 TMT opt origin wheat.
*** Jan 19 Turkey's state grain board (TMO) is in for 400 TMT of milling wheat.
*** Jan 25 Bangladesh is in for another tender, and once again they are seeking 50 TMT of opt origin wheat. This would be their fourth tender in less than a month.