November 5, 2019

There was more dialog in the cash markets today where domestic HRW basis jumped 7-13 ct/bu for low & mid protein. The export market is back looking for nearby shipments lead by BNSF trains trading at $500/car for a return trip. SRW market is unchanged with no dialog & cash basis well above DVE. The domestic spring wheat closed mixed, down 10 to up 20 ct/bu. The PNW closed unchanged, but exporters will price Japan this week & the spread between track bids & fob offers are 25+ ct/bu.

The calendar spreads reacted today to the firmness in cash basis as we approached the INDEX roll starting on Thursday. This has become a trap where shorts anticipate INDEX funds pressuring the front options as they roll their long positions. It has not seemed to matter when the MM funds have short positions, perhaps this time will be different. Everyone should be in agreement KCBT will reverse the VSR storage rate from .000265 ct/bu per month to .00165 ct/bu per month starting December 19th.

We didn’t get much feed-back from yesterday’s winter wheat planting report. No one has a good handle of SRW acreage, but we’d suggest sources on the ground would agree acreage is less than expected in early October. It is just the opposite for HRW where the rapid harvest for soybeans & drier/warmer fall resulted in a few more acres planted than earlier expected. We’d still call HRW acres down 3%-5% & SRW unchanged to down 2% verse last year. FWIW, USDA’s 2020 outlook would suggest winter wheat acres are up over all. Our winter wheat production estimates are 2020 vs 2019: HRW 740 / 833, SRW 245 / 239, WW 231 / 231 mbu.



Cash Values