July 10, 2018

Resellers/mills are saying it is easier to buy wheat from shippers this week & cash markets are starting to see a few more offers in the winter wheat markets. A few shippers are starting to think about making space as they finish harvest. This isn’t a lot of wheat, but since there isn’t a lot of demand the market may feel it. The interior basis values have stopped going up as well, now that growers have delivered the wheat to the elevators. HRW cash basis has an easier tone at the gulf, but the domestic market closed up 1-4 ct/bu and one mill continues to support the market. SRW barge market saw more offers, but the higher basis brought out some offers July thru September. HRW & SRW exporters said they were getting some quires today, but no confirmed trades. The domestic spring wheat market closed down 15-20 ct/bu on the spot market with more cars offered for sale. Shippers have to be thinking about making space for this massive spring wheat harvest. The PNW market saw Japan announce a small tender this week, only 28.5 kmt US wheat & 34.3 kmt ASW, but the break in flat price has others asking for quotes. The PNW cash basis is called unchanged & SWW basis went up with the drop in futures.

Despite the sharp break in futures, HRW is still $8-$10/mt away from buying demand or even cutting off Russian exports to Mexico/LAM. Sources suggest there is 100+ kmt /month Russian wheat on the books to Mexico for August – December shipment. I don’t know if HRW shippers actually care today since they are focused on harvest. Traders who think CME or KCBT need to rally because the EU/FSU balance sheets suggest wheat demand will be rationed to the USA, this is true but the timing is everything. Winter wheat harvest in the USA is better than 60% complete and grower sales are 50%+ in those areas that are finished. Perhaps the harvest pressure has peaked for winter wheat, but it hasn’t started for the spring wheat.

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