U.S. wheat cash basis remains strong

The cash basis remains strong across all markets as harvest delays, logistics and lack of transportation forcing exporters and domestic mills to push their nearby bids.  The river system is basically closed down. This is forcing exporters to buy/ship more expensive trains and shippers who have barge commitments have to substitute more expensive trains to fulfill those commitments.  The delay in loading of vessels at the Mississippi River ports is pushing demand to the East Coast ports & the Great lakes. We’ve seen trades of SRW fob Toledo which is now forcing domestic mills to come to the market & paying premiums to the export market to get coverage. We’ve asked for weeks why these SRW mills have been sitting on their hands in face of deteriorating crop condition ratings and record rainfall.  We’re starting to question the yields/production of HRW after record rainfall in May & early June days, but no one on the ground seems concerned.  Could we see a similar surprise to 2016 French harvest, no wants to believe it.  The early harvest in Texas and SW Oklahoma suggests record yields are in order but yielding a low protein crop.  The Northern Plains are starting to show signs of stress from lack of rainfall and growers/shippers are getting bullish when yesterday they wanted to sell at $5.00/bu. The same is true in Canada for Canadian growers/shippers. PNW exporters fell on the knife to sell Japan and CCC SWW tender last night. Exporters sold CCC / Yemen; 58.4 kmt early July traded $227.43/mt, LH July traded 33 kmt at $224.87/mt, and 24.8 kmt at $226.34/mt fob PNW.  Japan purchased their 2 cargoes last night for August shipment.  We believe Malaysia and Philippines buyers purchased cargoes for August shipment, 45-50 kmt & 60 kmt tonnage estimated for NS and WW combo cargoes.  All total we estimate 275 kmt was sold from the PNW this week.

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