Afternoon wheat commentary: Spring wheat conditions fall 10%
It was an odd start to the day for wheat with futures initially selling off once trade moved into the day session. But all three classes of wheat quickly turned that around and surged higher (rallied between 25 and 30 cents) during the opening hour of the session. Mpls led the gains, reaching 13 cents higher before the move stalled. Chicago topped out at around ten cents higher, and KC a nickel higher. The markets would hold these gains for a couple hours, before gradually weakening over the latter half of the session. Ultimately, Mpls finished a couple cents higher, Chicago finished a penny lower, and KC finished around seven cents lower.
KC struggled against Chicago as harvest is quickly moving further along in HRW country than SRW. Mpls continues to find bids under the market as crop conditions deteriorates. The avg expectation was for Spring wheat conditions to fall between 2 and 4% this afternoon, and they fell 10%. Expect Mpls futures to have a strong start this evening. To no surprise HRW conditions fell slightly, but SRW conditions improved much more than expected, which could give the KC/Chicago spread a little bit of a bounce tonight/tomorrow, especially after six consecutive lower closes in the spread. Over the past eight sessions, from high to low, the spread has lost roughly 25 cents.
HRW basis bids saw little change to start the week. Bids for 11-pro remained +120/130, the 11½-pro stayed +125/135, the 12-pro remained +145/+155, the 12½-pro stayed +145/155, and the 13-pro remained +150/160. HRW export bids also saw little change on Monday. For June, ORD stayed +85, the 11-pro fell two to +118, and the 12-pro stayed +165. For July, ORD stayed +88, the 11-pro remained +122, and the 12-pro stayed +167. For Aug/Sept, ORD stayed +85, the 11-pro stayed +120, and the 12-pro fell one to +167. SRW wheat track bids down to the Gulf saw no changes on Monday. June stayed 60/67, July stayed 55/62 and August remained 65/70. HRW wheat track bids down to the Gulf also saw no changes. June stayed 165/175, July remained 167/177 and August remained 168/178.
This afternoon's condition reports showed overall Winter wheat conditions improving 1% week over week to 49% G&E. HRW conditions fell 1% to 51% G&E. South Dakota was off 10%, while Colorado improved 5%. All other states saw a 1% move in either direction. SRW conditions improved 4% week over week to 69% G&E. Michigan and North Carolina each improved 8% Illinois improved another 5% and Missouri improved 3%, while Indiana and Ohio declined slightly. The crop is 96% headed vs 92% last week, and 17% harvested vs 4% last week. Not one state is ahead of its five-year avg. The top states behind that avg are Illinois (26%), Arkansas (23%), Missouri (17%), North Carolina (16%), Oklahoma (16%) and Kansas (11%). Spring wheat conditions fell 10% week over week to only 27% G&E. P&VP jumped 10% to 37%. Every state saw their conditions decline. Minnesota was off 20%, South Dakota was off 12%, North Dakota was off 10%, Montana was off 7% and Idaho and Washington were each off 1 to 2%. The crop is 27% headed vs 8% last week, 11% last year and the five-year avg of 18%.
Wheat shipments came in at 549 TMT vs last week's adjusted 500 TMT (20 TMT increase from the week prior) and 686 TMT this time last year. Marketing year-to-date shipments now stand at 1.242 MMT vs 1.485 MMT this time last year. The breakdown was 177 TMT of HRS, 229 TMT of HRW, 18 TMT of SRW, and 125 TMT White. There was no durum shipped. The largest addition from last week saw a 16,141 mt SWW vessel get shipped off to Japan. This week, the Philippines (100 TMT) was the top destination, followed by Mexico (82 TMT), Nigeria (81 TMT) and Thailand (57 TMT). Smaller vessels were shipped off to Colombia, Korea, Yemen and Japan.
The commitment of trader's report this afternoon (delayed a day because of the Federal Holiday) was expected to show that the large spec was sellers of around 12,000 contracts of Chicago wheat during the week ending June 15. What the data showed was that they were sellers of 8,252 contracts. At the time, it increased their net short position to 44,886 contracts. In KC, funds were sellers of 3,096 contracts, which at the time, lowered their net long position to 1,944 contracts. Managed money was sellers of 7,022 contracts in Chicago, which at the time, increased their net short position to 8,396 contracts. In KC, managed money sold 2,226 contracts, which at the time, lowered their net short position to 15,298 contracts. In Spring wheat, managed money bought 1,708 contracts, which at the time, increased their net long position to 15,298 contracts.
EU data shows in the week ending June 20, soft wheat exports were 69 TMT, bringing the season to date total to 25.104 MMT vs 34.284 MMT this time last year.
MARS, the EU crop monitoring committee, increased their 2021 EU soft wheat yield forecast to 6.01 mt/ha vs their estimate of 5.91 mt/ha back in May.
IKAR said prices for new crop 12.5 pro Russian wheat out of Black Sea ports fell around $7 last week to around $248/mt.
SovEcon kept their cumulative Russian wheat exports (thru May) at 34.131 MMT. Their first stab at June wheat exports were 2.4 MMT.
Export business this week:
*** Russia is expected to ship 28 TMT of wheat to Algeria, marking the first time since 2016 that Russia has sent wheat there. Back in October Algeria changed some specs to allow Black Sea grain imports.
*** June 22 Jordan is in for 60 TMT of opt origin wheat.
*** June 30 Turkey is in for 395 TMT of red milling wheat.