Afternoon wheat commentary: Markets unable to climb out of early hole

After a night session that saw wheat futures gradually decline, combined with general overall weakness across most commodities as we started the day, the prognosis was not very bright early in the session. But similar to what we saw a couple times last week, the wheat complex battled after its tough start. Granted, rally attempts were held in check and did not go very far, but when the macros and the rest of the grain floor is under pressure, that could be expected. After the opening hour of the day the wheat complex mostly stayed within a nickel trading range, with Chicago futures ultimately finishing eight cents lower. Mpls finished the best (started out the day the poorest) at around six cents lower, while HRW futures finished the worst at thirteen cents lower. Meaning, we saw more of a correction in the KC/Chicago spread (has lost more than eight cents the past two days).

Grain news and fundamentals were overshadowed this morning by financial jitters, which continued throughout the day with the Dow trading 984 points lower at one point following the grain close before bouncing back a little late in its session. We may have seen some harvest pressure as well in corn and beans, but make no mistake, today was mostly a "risk off" type of session for many commodities, grains included. As far as headlines for wheat, Global values are holding steady, export demand seems to be also holding at a steady pace, and despite all the disruptions down at the Gulf, export inspections this morning were better than expectations. Hard to get a feel for a market which has outside influences controlling price action. You have to be impressed by the market's performance today, as trade very easily could have rolled over, but it did not. Trade will need to continue to see fresh demand to avoid slipping back down to its September's lows.

Condition reports after the close showed Winter Wheat planting moved up to 21% compared to 12% planted last week, 19% this time last year, and the five-year avg of 18%. There is 3% of the crop emerged vs 3% last year and the 5-year avg of 2%.

Headline News:
Wheat shipments came in at 563 TMT vs last week's adjusted 567 TMT (19 TMT increase from the week prior) and 503 TMT this time last year. Marketing year-to-date shipments now stand at 7.713 MMT vs 8.664 MMT this time last year. The breakdown was 129 TMT of HRS, 242 TMT of HRW, 47 TMT of SRW, 143 TMT of White, and 2,134 mt of Durum. The largest additions from the prior week's saw a 58 TMT cargo of SRW go to Taiwan from Aug 22, and a 19,495 mt vessel of Spring get shipped to Italy from Sept 9. This week, one cargo each was shipped out to China, El Salvador, Japan, Korea, Mexico and the Philippines, and smaller vessels went out to Mexico, Venezuela, Nigeria, and Yemen.

Chinese customs data estimated August wheat imports totaled 710 TMT, up 1% over the year earlier month. The August figure brings the year-to-date imports to 6.96 MMT, up 39% over the year earlier period.

IKAR said prices for early October 12.5 pro-Russian wheat out of Black Sea ports rose marginally last week to $301.00/mt FOB. It was the tenth consecutive week Russian wheat export prices have either stayed flat or risen.

Russian wheat exports thus far this marketing year (started July 1) are said to be 10.1 MMT.

Russia's Ag Ministry is lowering their wheat export tax for the week of Sept 22-28 by $1.60 down to $50.90/mt. This is their first reduction of the tax in over a month.

Ukraine stats bureau estimated as of Sept 1, the country's total wheat stocks 17.7 MMT.

Export business around:
*** The lowest offer in Bangladesh's tender for 50 TMT of wheat is said to be $421.19/my C&F.
*** Pakistan is in for 500 TMT of wheat. At least five offers were submitted, with prices ranging between $383.50/mt and $393.30/mt C&F. No deal has been finalized yet.
*** Sept 21 Morocco's ONICL is in for 363,636 mt of US soft wheat.
*** Sept 22 Jordan is back in for 120 TMT of wheat.
*** Sept 23 Taiwan is in for 49,580 mt of US milling wheat.
*** Sept 23 Algeria is in for a nominal 50 TMT if Durum wheat (but they usually buy much more in their tenders).