Afternoon wheat commentary: Markets unravel throughout the day
The markets battled both sides of unchanged overnight, ultimately finished the night a little better and started the day slightly better as well, but those early gains quickly dissipated, with Mpls leading the downside move. The initial wave of selling took Spring wheat futures down to around ten cents lower, but a second wave of selling late morning dropped futures another ten cents, and trade remained down around its session lows over the balance of the day. Mpls Sept ended up losing more than twenty cents today, and around 34 cents on the week, meaning the market lost around a third of its prior week gains. The selling pressure in Mpls (as well as corn and beans) found its way into SRW and HRW futures, with both markets moving lower by mid-morning and staying lower the rest of the day. Price action in SRW and HRW futures were not as poor as Mpls, but what trade did in the modified might be an omen for what we may see early Sunday night. Both Chicago and KC futures fell another six cents in the modified session - with most of the losses coming in the final minute of trade. Despite the strong start to the week, losses over the past two sessions were enough to give a lower weekly close to both Chicago (eight cents) and KC (five cents).
HRW basis bids saw no changes up front, but they were mixed for the higher pros on Friday. Bids for 11-pro stayed +90/100, the 11½-pro remained +108/118, the 12-pro fell ten to +135/+145, the 12½-pro fell one to +160/170, and the 13-pro (on up) firmed fifteen to +200/210. HRW export bids firmed slightly on Friday. For July, ORD remained +110, the 11-pro firmed two to +127, and the 12-pro firmed one to +176. For Aug/Sept, ORD stayed +110, the 11-pro firmed one to +126, and the 12-pro stayed +180. For O/N/D, ORD stayed +120, the 11-pro stayed +140, and the 12-pro remained +180. SRW track bids down to the Gulf saw no changes on Friday. July stayed 24/33, Aug stayed 30/35 and Sept remained 44/50. HRW track bids down to the Gulf also saw no changes on Friday. July stayed 175/185, and both August and Sept remained 180/190.
The commitment of trader's report this afternoon was expected to show that the large spec was buyers of around 22,000 contracts of Chicago wheat during the week ending July 20. What the data showed was that they were buyers of 22,440 contracts. At the time, it lowered their net short position to 32,718 contracts. In KC, funds were buyers of 4,873 contracts, which at the time, increased their net long position to 9,822 contracts. Managed money was buyers of 19,866 contracts in Chicago, which at the time lowered their net short position to 3,770 contracts. In KC, managed money bought 6,079 contracts, which at the time, increased their net long position to 27,745 contracts. In Spring wheat, managed money sold 122 contracts, which at the time lowered their net long position to 8,860 contracts.
FranceAgriMer said soft wheat harvesting made little progress last, jumping only 10% to 14% complete. This compares to 67% harvested this time last year. Wet weather prevented any acceleration of the harvest. Conditions fell 1% week over week to 75% G&E compared to only 57% this time last year. Its durum wheat harvest progressed a little faster, jumping 23% to 63% complete.
The BAGE kept their Argentine wheat production forecast unchanged from last month at 19 MMT, but they did say that the crops in the country's northern and central farm belt are deteriorating due to a lack of rain.
Strategie Grains lowered their 2021 French soft wheat production forecast to between 37.0 and 37.5 MMT. Their prior estimate was 38.0 MMT, the French Ag Ministry crop estimate is 37.1 MMT, and the 2020 soft wheat crop was 29.0 MMT. The group noted the downward revision due in part to poor yields from crops in the northeast. Quality from a recent tour was noted as "disappointing".
Russia's export duties on wheat for the week of July 28 thru Aug 3 will be $31.40/mt, its fourth consecutive weekly decrease. This week was $35.20, last week was $39.30, week of July 7-13 was $41.20, and week of June 30 thru July 6 was $41.30.
Ukraine's Ag Ministry said wheat exports thus far this marketing year (started July 1) are 399 TMT. They added that wheat harvest is 30% complete, with 8.86 MMT of the grain collected.
Export business this week:
*** Bangladesh passed on all offers in their two tenders, each for 50 TMT of milling wheat. The low offer had been $335.00/mt.
*** Ethiopia is in for 400 TMT of milling wheat.
*** July 27 Jordan is back in for 120 TMT of wheat.