March 29, 2018

Cash markets were dead today as traders focused on logistics for the long weekend & the shock of the USDA stocks & acreage report. They’re also busy with month end, end of quarter & some end of year reports & M2M.

We spent the day working on the report & the impact on balance sheets. The increased other spring wheat acres mark the end of the spring wheat premium to winter wheats, if growers end up planting those intentions. The spring wheat b/s could increase c/o by 100+ mbu next year & I’ve heard one analyst with HRW & HRS c/o the same next year. The rally in world wheat prices has winter wheats starting to price themselves more competitive & given the value of Argentine wheat northern Brazil millers should start asking for values of HRW, for which they’ll pay some premium for blending. Look at the prices paid by Egypt’s GASC in today’s tender, $220/mt fob equal $233-$235/mt c&f. This was a total shock to see them buy 355 kmt for April 28-May 8 shipment, which is right in the middle of their own wheat harvest. We have been increasing US exports as the spread to other origins has narrowed, & today we would put Morocco back into the HRW b/s with their 400-600 kmt preferential duty tender which they must do each year for November – March positions. We’d also be cutting some of the Black Sea exports into LAM in the 18/19 b/s, where our estimate is 500+ mmt greater this past year when prices were at their peak.



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